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Public Works and Government Services Canada

The accessible version of the Supply Manual is available online here: supply-manual

1 Chapter 1 - Public Procurement

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1.1 Overview

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  1. The mandate of Public Works and Government Services Canada (PWGSC) is to provide services to all Canadian federal departments, and is summarized in section 5 of the Department of Public Works and Government Services Act. This section stipulates that:

    "The Department shall operate as a common service agency for the Government of Canada, and its activities as a common service agency shall be directed mainly toward providing the departments, boards and agencies of the Government of Canada with services in support of their programs."

  2. The role of PWGSC as a common service provider of both mandatory and optional acquisition services is further elaborated in the Treasury Board (TB) Common Services Policy.
  3. Public procurement by Canada is legislated and guided by a number of international and national trade agreements, and acts, as well as policies, directives, and guidelines provided by TB, the Treasury Board Secretariat (TBS) and PWGSC. Certain departments such as Indian and Northern Affairs Canada and Industry Canada are responsible for programs that have a direct impact on procurement. In addition to the above, and the content in this Supply Manual, contracting officers must also be cognisant of policy notifications, relevant communiqués and internal operating procedures.

1.5 About the Supply Manual

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  1. The Supply Manual with its policies and procedures is written for the use of contracting officers from PWGSC Acquisitions Branch and regional acquisitions offices to assist them in providing procurement services as a common service provider. Contracting officers from PWGSC Acquisitions Branch and regional acquisitions offices may contact the Acquisition Policy and Process Directorate (APPD) for guidance by email at DPPApublications.APPDpublications@tpsgc-pwgsc.gc.ca. Whenever the term "contracting officer" is used throughout this manual, it refers to contracting officers within Acquisitions Branch and the regional acquisitions offices of PWGSC.
  2. PWGSC staff undertaking internal contracting activities, and not providing services in PWGSC's role as a common service provider for procurement under the TB Common Services Policy, should refer to PWGSC internal procurement policies such as the PWGSC Policy on ProcurementThis link is available only to clients with access to Publiservice, the Government of Canada extranet.(Departmental Policy (DP) 099) (accessible to federal government employees only) and procedures such as the Contract Management GuideThis link is available only to clients with access to Publiservice, the Government of Canada extranet.(accessible to federal government employees only), or refer to the TB policies and directives on procurement. The Supply Manual may be used as a reference source for such internal procurements, however, it does not supersede the information contained in the above noted policies, guides, and directives.
  3. Other government departments and agencies are encouraged to use this Supply Manual as reference material for general procurement knowledge. However, for guidance on their own procurement practices, they should refer to their own organizations' policy and guidance procedures as well as Treasury Board contracting policies and directives. Other government departments and agencies should seek advice from their own internal policy group as some Supply Manual policies and procedures are applicable only to PWGSC Acquisitions Branch and the regional acquisitions offices.
  4. The Supply Manual describes the acquisitions-related activities of PWGSC's Acquisitions Branch and regional acquisitions offices. It references laws, regulations, government and departmental policies, directives, and procedures that have an impact on the contracting and procurement activities of the Acquisitions Branch and the regional acquisitions offices.
  5. Contracting officers should be aware that this manual and the contracting policies referenced may be read by and referred to by a number of parties interested in procurement activities such as clients, suppliers, the general public, and the media.
  6. Canadian government procurement is carried out in a decentralized manner. Individual departments award contracts under their own authorities for services, and under certain authorities for goods and construction as delegated by the Minister of PWGSC. They make a considerable number of lower dollar value purchases through the use of these authorities and make purchases of varying values through their authorized use of procurement instruments put in place by PWGSC.
  7. The Supply Manual is to be read in conjunction with other government policies and directives, in particular those released by TB and TBS. Acquisition policies are regularly updated by Policy Notifications as well as by TB Contracting Policy Notices. The Standard Acquisition Clauses and Conditions Manual must be read as a complementary document to the Supply Manual.

1.5.1 Organization of the Manual

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The Manual generally follows the sequence of a typical procurement process. The structure is as follows:

  1. Chapter 1, Public Procurement, provides an overview of the context and the legal framework relating to public procurement for the acquisition of goods or services, including construction.
  2. Chapter 2, Defining the Requirement and Requisition Receipt, is about defining the requirement for the bid solicitation. While this is often the responsibility of the client department, PWGSC involvement is still important.
  3. Chapter 3, Procurement Strategy, describes what the procurement strategy is. This determines how the request will be satisfied.
  4. Chapter 4, Solicitation Process, outlines the actual bid solicitation preparation and process. Most of the various methods of solicitation and items that need to be included in the bid solicitation are found in this chapter.
  5. Chapter 5, Evaluation and Selecting the Contractor, explains how to evaluate and select the contractor based on the solicitations.
  6. Chapter 6, Approvals and Authorities, provides the details of the approvals that need to be obtained before awarding a contract.
  7. Chapter 7, Award of Contracts and Issuance of Standing Offers and Supply Arrangements, relates to the award of contracts, issuance of standing offers and supply arrangements, debriefings, notification to unsuccessful bidders, and other matters surrounding contract award and the issuance of standing offers and supply arrangements.
  8. 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.
  9. Chapter 9, Special Procurements, details procurements where PWGSC has implemented special procedures applicable to identified commodities, clients or projects.
  10. Chapter 10, Cost and Profit, is generally used when a contract is to be awarded on a non-competitive basis for non-commercial goods or services, or in the case of a competitive process for such goods or services, only one compliant bid is received, so price negotiations with this bidder may be required.
  11. The Glossary includes words, concepts, titles, etc., used throughout the Manual.

1.5.5 Supply Manual Format

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  1. Each chapter refers to particular subjects by heading, and subsequent sub-heading numbers. Each chapter also commences with a Table of Contents and concludes with annexes specific to that chapter.
  2. Subjects are numbered as they appear in the chapters, i.e. 1.5.5 appears in Chapter 1 and 8.65.5 Release of Contract Financial Security appears in Chapter 8.
  3. Section and subsection numbering includes gaps to provide for future additions to the Supply Manual.

1.10 PWGSC Procurement Process

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There is one over-arching principle for all PWGSC procurement activities: Integrity. Subordinate to this are guiding principles, which provide the framework for PWGSC procurement process. Contracting officers must always respect these principles, regardless of whether or not the actions are clearly set out in this manual.

1.10.1 Integrity

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PWGSC procurement processes will be open, fair and honest.

1.10.5 Guiding Principles

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All those involved in the procurement process must apply prudence, probity and transparency at each stage of the process.

  1. Client Service

    PWGSC will make every reasonable effort to satisfy the operational requirements of its clients, while obtaining the best value in each procurement process.

  2. National Objectives

    PWGSC procurement activities will advance established government policies, within the limits imposed by international trade obligations.

  3. Competition

    PWGSC procurement will be competitive, with specific exceptions.

  4. Equal Treatment

    PWGSC will ensure that all potential bidders of a particular requirement are subject to the same conditions.

  5. Accountability

    PWGSC is accountable for the integrity of the contracting process. Clients are responsible for ensuring that all information relating to their requirements, which is provided to PWGSC, is complete and accurate. (See Annex 1.1: Matrix of Responsibilities between PWGSC and Client Departments for the Procurement of Goods and Services (Generic).)

1.10.10 Procurement Best Practices

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  1. Ensure Integrity

    Contracting officers must ensure the integrity of the procurement process. If there is any doubt that what is being done (or asked by the client to be done) might bring the integrity of the process into question, the contracting officer should consider suspending the procurement process until the issue is resolved. Issues that cannot be resolved satisfactorily at the contracting officer level must be referred to a higher authority within PWGSC.
  2. Get Involved Early

    The procurement process can be facilitated by advance work being done with clients. This includes helping with needs identification and requirement definition, procurement strategy development, and drafting of solicitation documents before a requisition is actually received. This can be accomplished through ongoing liaison with the client or a review of procurement patterns. These methods can be initiated by a client request for assistance, or by a more formal process of regular consultation.
  3. Consult with Peers

    Contracting officers should consult with colleagues, particularly when working with an unfamiliar situation, such as a new commodity. Their experience and advice may help to arrive at a sound decision. Referring to previous files can also be instructive, particularly for estimating things like business volume under a new contract where there is a current contract covering substantially the same activities.
  4. Liaise with the Client

    The contracting officer should keep clients informed and involved, and in order to develop responsive, creative and flexible procurement strategies, their departmental needs must be understood, as well as their specific technical requirement. When consulting the client, make the purpose plain, so that if there is a problem with a proposed approach a solution that achieves the purpose can be developed. The contracting officer must work with the client towards their operational objectives.
  5. Use Specialists

    The contracting officer should seek advice from the following specialists: Legal Services, policy advisors, Access to Information and Privacy officers, quality control officers, cost analysts and risk management advisors. Specialists are available to provide guidance and recommendations in their areas of expertise. The mandatory or discretionary use of cost and price analysis specialists is detailed in the Acquisitions Program Policy Suite (under the theme of Risk ManagementThis information is only accessible to federal government employees.).
  6. Communicate Effectively

    Contracting officers should be very clear in communications. Written instructions accompanying each bid solicitation, for example, should be clear with no ambiguity, and be easily understood by all parties.
  7. Maintain Confidentiality

    The contracting officer must treat all information of a confidential or personal nature, including bid information, in a secure and confidential manner. This ensures the integrity of the contracting process, and protects the interests of suppliers and clients.
  8. Obtain Confirmation

    The contracting officer should obtain written confirmation of significant information, agreements and discussions, such as confirmation of an unusually low price, or extension of a bid validity period by the bidder.
  9. Select the Appropriate Contracting Method
    1. Depending on which commodity is being procured, the appropriate contracting method may be a standing offer, a supply arrangement, a government-wide or multi-departmental contract, or a normal contract. See 3.15 Non-competitive Contracting Process for details on the usage of the different methods.
    2. Some commodities are available via mandatory standing offers, and these must be used unless there is a valid reason to deviate.
  10. Commodity Knowledge

    Contracting officers should develop their understanding of their commodity's industry, the market conditions, and the pertinent factors of each commodity, which then affects the choices made by contracting officers in determining, for example, such things as the basis of payment and the selection methodology. Clients should also use their understanding of the commodity when defining their technical requirements and scope.

    Contracting officers should also keep themselves informed about such things as the proposed contractor's performance history, financial situation and practices, before recommending a contract award. It also means keeping up to date with a contractor during the performance of a contract.
  11. Life Cycle Management of Assets

    Life Cycle Management of Assets (LCMA) is an integrated approach to materiel management that looks at the process as a complete system rather than separate activities. While this process is primarily the responsibility of materiel managers within client departments, procurement and disposal are a part of this process so contracting officers should discuss with the client the implications of the life cycle management process for each procurement.
  12. Maintain Records

    Contracting officers should keep files up to date for reasons of good management, access to information requests as well as for audit purposes. Current files should be kept up to date for anyone who may have to consult the file or assume responsibility for it at a later date. See Annex 8.1: Guidelines on File Organization and Make-up for further details.
  13. Use Standard Documents

    Contracting officers should use only the templates available on the Standard Procurement Templates page in the procurement process (see 4.15.1 Departmental Standard Procurement Documents.) Contracting officers should obtain from their supervisor the most current standard documents within their respective areas that have been developed in accordance with these templates. Directorates needing assistance in developing documents based on these templates should contact the Procurement Process Tools Division of the Policy, Risk, Integrity and Strategic Management Sector, by e-mail at outilsapprov.proctools@tpsgc-pwgsc.gc.ca.

1.15 The Legal Framework of Contracting

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The legal framework is comprised of:

  1. statutes and regulations;
  2. agreements;
  3. policies, directives, procedures and guidelines; and,
  4. challenge process.

See sections 1.20 Statutes and Regulations to 1.35 Challenge Process for a description.

1.20 Statutes and Regulations

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  1. PWGSC procurement activities are principally carried out pursuant to the following major statutes:
    1. Department of Public Works and Government Services Act;
    2. Financial Administration Act and the Government Contracts Regulations;
    3. Defence Production Act;
    4. Federal Accountability Act;
    5. Government Contracts Regulations.
  2. No legal interpretation should be attempted on the basis of the following sections which summarize the acts. An electronic copy of the acts may be viewed on the Department of Justice Web site.

1.20.1 Department of Public Works and Government Services Act

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  1. The Department of Public Works and Government Services Act came into force on July 12, 1996, to give legislative sanction to the amalgamation of the former department of Public Works and the former Department of Supply and Services together with the Translation Bureau and the Telecommunication Services for government. The legal name of the Department is "Department of Public Works and Government Services"; while "Public Works and Government Services Canada" or " PWGSC" is the common usage name. The legal name of the Department must be used for the preparation and execution of legal documents.
  2. The Act:
    1. constitutes the Department;
    2. provides for the appointment of a minister who has the management and direction of the Department;
    3. provides for the appointment of a deputy minister as deputy head of the Department;
    4. provides that the Minister is the Receiver General for Canada and the Deputy Minister is the Deputy Receiver General;
    5. sets out the powers, duties and functions of the Minister which extends to and includes all matters over which Parliament has jurisdiction, not by law assigned to any other department, board or agency of the Government of Canada.
  3. Sections 6 and 7 outline in detail the powers, duties and functions of the Minister. With respect to acquisitions, the following services are specifically identified in Section 6:
    1. acquisition and provision of articles, supplies, machinery, equipment and other materiel for departments;
    2. acquisition and provision of services for departments;
    3. planning and organizing of the provision of materiel and services required by departments;
    4. acquisition and provision of printing and publishing services for departments; and
    5. construction, maintenance and repair of public works, federal real property and federal immovable.
  4. Section 8 allows the Minister to delegate any of the Minister's powers, duties or functions under the Act to an appropriate minister, within the meaning of the Financial Administration Act, for any period and under any terms and conditions that the Minister considers suitable. Section 8 also provides the Minister of PWGSC with the power to authorize other Ministers, to whom he or she has delegated powers under the Act, to sub delegate those powers to the "chief executive" of the relevant department. Subsection 8(3) empowers a minister receiving the authority to sub-delegate to the officials who are in charge of the departments in that minister's portfolio and subsection 8(4) empowers those officials in turn, to sub-delegate to departmental officials under their jurisdiction.
  5. Section 9 gives the Minister the exclusive authority for the acquisition of goods. All ministers have inherent power to contract; however, the authority given to the Minister in section 9 supplants the authority of each department to contract for goods. That authority may be restored to the extent determined by the Minister of PWGSC through a delegation, in accordance with section 8, from the Minister of PWGSC to the Minister responsible. Departments may enter into contracts for services under their own authorities, up to the limits contained in Appendix C - Treasury Board Contracts Directive; however, they may still choose to have these contracts for services done by PWGSC.
  6. Section 16 empowers the "Minister to do anything for or on behalf of:
    1. any department, board or agency of the Government of Canada or Crown Corporation, or
    2. with the approval of the Governor in Council, any government, body or person in Canada or elsewhere that requests the Minister to do that thing, where the Minister is authorized to do that thing under this or any other Act of Parliament for or on behalf of any department, board or agency of the Government of Canada."
  7. Sections 20 and 21 provide the necessary contracting powers of the Minister, including the power to fix terms and conditions of contracts, and instructions, terms and conditions with respect to other documents relating to contracts and their formation. Section 22 gives the Minister the power to incorporate contractual clauses by reference.

1.20.5 Financial Administration Act and the Government Contracts Regulations

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  1. The Financial Administration Act provides the legal framework for the collection and expenditure of public funds, including the contracting practices of PWGSC and its clients. Sections 32, 33, 34, 37, 40 and 41 are of direct interest to contracting officers.
  2. Section 32 provides that no contract providing for a payment can be entered into unless there is sufficient funding available to discharge any debt that under the contract will be incurred during the fiscal year in which the contract is entered into. Section 33 requires that no charge can be made against an appropriation except on the requisition of the appropriate Minister of the department for which the appropriation was made or of a person authorized in writing by that Minister.
  3. Pursuant to section 34, no payment can be made unless the deputy of the appropriate Minister, or another person authorized by the Minister certifies, in the case of a payment for the performance of work, the supply of goods or the rendering of services, that the work has been performed, the goods supplied or the service rendered and that the price charged is in accordance with the contract, or if not specified in the contract, is reasonable. Under 1.20(a) (ii), payment may be made before completion of the work (i.e. advance or progress payment) but only if such payment is in accordance with the contract.
  4. Sections 37 and 37.1 provide that any unexpended portion of an appropriation lapses at the end of the fiscal year, except that a debt incurred for work performed, goods received or services rendered before the end of the fiscal year must be recorded as an expenditure against the appropriation, even though payment is made during the following fiscal year.
  5. Section 40 provides that it is a term of every contract providing for the payment of any money by Her Majesty under that contract is subject to there being an appropriation for the particular service for the fiscal year in which any commitment under that contract would come in course of payment.
  6. Section 41 provides for regulations with respect to the conditions under which contracts may be entered into.
  7. Sections 61 and 62 restrict the transfer, lease or loan of public property and require each department to maintain adequate records of its public property. However, pursuant to the Public Property Loan Regulations, (SOR/92-745), section 61 permits ministers to loan public property, subject to certain conditions.
  8. Sections 66 to 71 describe conditions under which Crown debts may be assigned, and the procedure to follow.
  9. Contracting officers should be familiar with the Government Contracts Regulations (GCR). Part I of the GCRs deals with conditions of contract entry. Section 4 provides that contracts for legal services are only entered into by the Minister of Justice. Section 5 sets out the requirement for soliciting bids and section 6 specifies conditions under which bids need not be solicited. Section 8 and 9 authorize advance payments and progress payments. Part II deals with bid and contract security.

1.20.10 Defence Production Act

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  1. The Defence Production Act (DPA) gives the Minister of PWGSC the responsibility to administer the DPA and the exclusive authority to buy or otherwise acquire defence supplies and construct defence projects required by the Department of National Defence, subject to exceptions listed at subsection 10(2) of the DPA. All PWGSC contracts for defence supplies or projects are governed by the provisions of the DPA.
  2. The DPA includes the following three parts: (1) Procurement of Defence Supplies; (2) Regulations of Access to Controlled Goods; and (3) Offence and Punishment.
  3. In Part 1, section 11 permits the Minister, if authorized by the Governor in Council, to do or undertake, on behalf of an associated government, any act or thing that the Minister is empowered to do or undertake under the Act. Sections 12 to 15 deal with the Minister's mandate to organize and control the Canadian defence industry. Section 16 provides wide powers to the Minister with respect to the procurement, production or disposal of defence supplies or defence projects. Sections 21 to 25 deal with the administration of defence contracts.
  4. Part 2 deals with the regulation of access to controlled goods, including requirements for registration, offences and prohibitions. Part 3 defines offences, continuing offence and factors to consider when sentencing.

1.20.15 Federal Accountability Act

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  1. The Federal Accountability Act (FedAA) was granted Royal Assent on December 12, 2006. The Act provides for conflict of interest rules, measures respecting administrative transparency, oversight and accountability. The Act enacts two new acts (the Conflict of Interest Act and the Director of Public Prosecutions Act) and makes a series of amendments to existing legislation such as the Parliament of Canada Act, the Lobbying Act, the Financial Administration Act, the Criminal Code and the Department of Public Works and Government Services Act.
  2. The FedAA also amends the Department of Public Works and Government Services Act to provide for the appointment and mandate of a Procurement Ombudsman. See  1.35.5 Procurement Ombudsman for more details.

1.20.20 Other Acts

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In addition to the above statutes, examples of other acts which also apply to contracting for goods and services are as follows:

  1. Conflict of Interest Act;
  2. Access to Information Act;
  3. Privacy Act;
  4. Official Languages Act;
  5. Lobbying Act;
  6. Criminal Code;
  7. Competition Act;
  8. Department of Justice Act;
  9. Bankruptcy and Insolvency Act.

1.25 Agreements

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1.25.1 International and National Trade Agreements

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  1. Canada is a signatory to two international trade treaties aimed at reducing trade barriers between the signatories: the North American Free Trade Agreement (NAFTA) and the World Trade Organization Agreement on Government Procurement (WTO-AGP). Canada has also signed the Canada - Chile Free Trade Agreement (CCFTA) and the Canada - Peru Free Trade Agreement (CPFTA). As well, Canada has signed the Agreement on Internal Trade (AIT) with the provinces and territories.
  2. Some trade agreements have the added force of law as they have been enshrined in legislation (the North American Free Trade Agreement Implementation Act, the World Trade Organization Agreement Implementation Act, the Agreement on Internal Trade Implementation Act).
  3. The procurement provisions of all trade agreements are similarly structured in that if a proposed contract meets certain criteria it is covered by the agreement; if it does not meet all the stated criteria then it is not covered. A proposed contract can be, and often is, covered by more than one agreement.
  4. Coverage Under Multiple Agreements

    For all trade agreements, PWGSC is required to comply with specific procedures when completing certain procurements. Therefore a decision must be made as to whether or not the requisition is subject to a particular agreement, or a combination of agreements. To determine coverage under the various trade agreements, the estimated procurement value (including the estimated amount of the Goods and Services Tax or the Harmonized Sales Tax), the client, the type of good or service or construction, and any exceptions or exclusions must be reviewed. Contracting officers should note that when the procurement is covered by more than one agreement, all agreements must be complied with at the same time. In order to accomplish this, the procedures to be followed are the procedures that are considered the most rigorous. For example, for limited tendering reasons, procurement covered by NAFTA, WTO-AGP and AIT, only the limited tendering reasons that are common to all three agreements are available as options.

  5. For assistance with the application of the trade agreements, contracting officers may contact Trade Agreements Strategy of the Policy, Risk, Integrity and Strategic Management Sector, either by telephone at 819-956-6411, or by e-mail at christine.cowan@tpsgc-pwgsc.gc.ca.

1.25.5 North American Free Trade Agreement (NAFTA)

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  1. The North American Free Trade Agreement Implementation Act (S.C. 1993, c. 44) sets out Canada's commitment to reduce trade barriers between Canada, the United States of America and the Federal Republic of Mexico. Chapter 10 of the Agreement focuses on achieving greater competition for, and transparency in, government procurement, eliminating the protection of domestic products or suppliers or discrimination among foreign products or suppliers. The "National Treatment" clause and the "Non-discrimination" clause are similar as those found in the WTO-AGP.
  2. The use of measures to improve socioeconomic development (offsets) for procurements covered by NAFTA is prohibited. See Article 1006: Prohibition of Offsets. Note that set-asides for minority businesses are permitted as described in paragraph e.v. below.
  3. To determine whether NAFTA is applicable, the agreement (Chapter 10) must be consulted. In the following sections on determining NAFTA coverage, all references to an "Annex" are to the annexes of Chapter 10 of NAFTA.
  4. For purposes of determining coverage, a requisition is considered to be one for:
    1. goods;
    2. services; or
    3. construction services;

    based on the one that represents more than 50 percent of the estimated value of the requisition.

  5. To determine if a procurement is subject to NAFTA, refer to the following:
    1. Determine the value of the requisition. See Article 1001: Scope and Coverage and Article 1002: Valuation of Contracts, and Annex 1001.2c Country-Specific Thresholds of NAFTA. The thresholds in NAFTA are presented in U.S. dollars. The values in Canadian dollars are based upon conversion factors, as agreed upon in the Agreement, and are revised every two years. They are published in Treasury Board Contracting Policy Notice 2011-05. The conversions below are in effect until December 31, 2013.

      A procurement may be subject to NAFTA if the requisition value, in Canadian dollars, is as follows:

      1. for goods being procured by departments and agencies (including some Commissions and Boards): $25,200. See subparagraph 1001(1)(c)(i);
      2. for services being procured by departments and agencies: $80,400. See subparagraph 1001(1)(c)(i);
      3. for construction services being procured by departments and agencies: $10,400,000. See subparagraph 1001(1)(c)(i).
    2. Determine the coverage by client. See Annex 1001.1a-1 Federal Government Entities and Annex 1001.1a-2 Government Enterprises.
    3. Determine the coverage by type of requirement:
      1. goods – See Annex 1001.1b-1 Goods; or
      2. services – See Annex 1001.1b-2 Services; or
      3. construction services – See Annex 1001.1b-3 Construction Services.
    4. Determine if an exception, such as the one for national security, should be invoked for the requirement. Article 1018: Exceptions provides the complete list of exceptions. See Supply Manual section 3.105 National Security Exceptions for more information on National Security Exceptions.
    5. Determine if the requirement is excluded from the Agreement. Annex 1001.2b General Notes provides the complete list of types of requirements that are excluded from NAFTA, for example, paragraph 1.(d) provides for set-asides for minority businesses. Therefore, procurements that are set aside (i.e. reserved) for either CLCA beneficiaries, or for aboriginal businesses under the Procurement Strategy for Aboriginal Business (PSAB), are excluded from the Agreement, making the obligations of NAFTA) no longer applicable. For more information on when procurements can be reserved for CLCA beneficiaries, see 9.35 Comprehensive Land Claims Agreements. For more information on PSAB, see 9.40 Procurement Strategy for Aboriginal Business.

1.25.10 World Trade Organization Agreement on Government Procurement (WTO-AGP)

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  1. World Trade Organization Agreement on Government Procurement (WTO-AGP) is an agreement, which aims to secure greater international competition for government procurement. It provides procurement procedures, which Canada abided to.
  2. The Agreement also contains provisions of national treatment and non-discrimination that Canada must respect (Article III). National treatment means that
    "…each Party shall provide immediately and unconditionally to the products, services and suppliers of other Parties offering products or services of the Parties, treatment no less favorable than:
    1. that accorded to domestic products, services and suppliers; and
    2. that accorded to products, services and suppliers of any other Party."
  3. Non-discrimination means that
    "…each Party shall ensure:
    1. that its entities shall not treat a locally-established supplier less favorably than another locally-established supplier on the basis of degree of foreign affiliation or ownership; and
    2. that its entities shall not discriminate against locally-established suppliers on the basis of the country of production of the good or service being supplied, provided that the country of production is a Party to the Agreement in accordance with the provisions of Article IV."
  4. The use of measures to improve socioeconomic development (offsets) for procurements covered by WTO-AGP is generally prohibited. See Article XVI: Offsets. Note that set-asides for minority businesses are permitted as described in paragraph h.vi. below.
  5. To fully determine whether the WTO-AGP is applicable, the Agreement must be consulted. In the following Sections on determining WTO-AGP coverage, all references to an "Annex" are to the annexes to the WTO-AGP.
  6. Each Party to the WTO-AGP has an Appendix, which includes five Annexes defining the coverage of that Party's obligations.
  7. A procurement is covered by the WTO-AGP if:
    1. its value is equal to or greater than the relevant threshold;
    2. if the type of requirement (e.g. plumbing supplies) is covered;
    3. if the entity for which the procurement is being done is covered, and
    4. if there is no specific exception applicable (e.g. shipbuilding) or invoked (e.g. national security). All four criteria must be met in order for the procurement to be covered by the WTO-AGP. See below for how to determine if these criteria are met.
  8. To determine if a procurement is subject to the WTO-AGP, refer to the following:
    1. Determine the value of the requisition. See Article I: Scope and Coverage; Article II: Valuation of Contracts, and Appendix I, Annex 1 Federal Government Entities (.DOC version) of WTO-AGP. The thresholds in the WTO-AGP are presented in the Special Drawing Rights, the unit of account of the International Monetary Fund. The threshold is converted to Canadian dollars and published in a Treasury Board Contracting Policy Notice, which is reviewed every two years.

      A procurement may be subject to WTO-AGP if the requisition value in Canadian dollars (including taxes) is as follows for the period January 1, 2012, to December 31, 2013:

      1. For goods and services being procured by a federal government entity, including departments, and some Commissions and Boards: $200,900. See Appendix I, Annex 1 Federal Government Entities (.DOC version); and
      2. For construction for federal government entities: $7,700,000. See Appendix I, Annex 1 Federal Government Entities (.DOC version).
    2. Determine whether the client department is covered by determining if they are listed in Canada's Annex 1 Federal Government Entities (.DOC version).
    3. Determine the coverage by the client. See Appendix I, Annex 1 Federal Government Entities (.DOC version).
    4. Determine the coverage by type of requirement:
      1. goods – See Appendix I, Annex 1 Federal Government Entities (.DOC version), or
      2. services – See Appendix I, Annex 1 Federal Government Entities (.DOC version) and Annex 4 Services (.DOC version). The WTO-AGP identifies services coverage, according to the United Nations Central Product Classification system of classification.
      3. construction services – See Appendix 1, Annex 1 Federal Government Entities (.DOC version) and Annex 5 Construction Services (.DOC version).
    5. Determine if an exception, such as the one for national security, should be invoked for the requirement. Article XXIII: Exceptions to the Agreement provides the complete list of exceptions. See Supply Manual section 3.105 National Security Exceptions for more information on National Security Exceptions.
    6. Determine if the requirement is excluded from the Agreement. Canada’s General Notes in Annex 5 to Appendix I provide the complete list of types of requirements that are excluded from WTO-AGP, for example, Article 1.(d) provides for set-asides for minority businesses. Therefore, procurements that are set aside (i.e. reserved) for either CLCA beneficiaries, or for aboriginal businesses under the Procurement Strategy for Aboriginal Business (PSAB), are excluded from the Agreement, making the obligations of the WTO-AGP no longer applicable. For more information on when procurements can be reserved for CLCA beneficiaries, see 9.35 Comprehensive Land Claims Agreements. For more information on PSAB, see 9.40 Procurement Strategy for Aboriginal Business.

1.25.15 Agreement on Internal Trade (AIT)

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  1. The Agreement on Internal Trade (AIT) is a comprehensive agreement on Canadian internal trade in recognition of the need to reduce barriers to trade within Canada.
  2. Chapter Five - Procurement of the AIT, Procurement, is intended to "establish a framework that will ensure equal access to procurement for all Canadian suppliers in order to contribute to a reduction in purchasing costs and the development of a strong economy, in a context of transparency and efficiency".
  3. In the following sections on determining AIT coverage, all references to an "Annex" are to the annexes to Chapter Five, Procurement, of the AIT.
  4. If all of the following AIT criteria are met, the procurement is subject to AIT:
    1. Determine the value of the requisition. A procurement may be subject to AIT if the requisition value is:
      1. $25,000 or greater, in cases where the largest portion of the procurement is for goods;
      2. $100,000 or greater, in cases where the largest portion of the procurement is for services, except those services excluded by Annex 502.1B Services Covered by Chapter Five; or
      3. $100,000 or greater, in the case of construction.
    2. Determine the coverage by client. Entities listed in Annex 502.1A Government Entities Covered by Chapter Five, are subject to the AIT procurement procedures. Entities listed in Annex 502.2A are excluded from Chapter Five of the AIT.
    3. Determine the coverage by the type of requirement:
      1. all requirements for the purchase, lease or rental of goods are covered;
      2. all services are covered except for those listed in Annex 502.1B Services Covered by Chapter Five; and
      3. all construction procurement is covered.
    4. Determine if an exception should be invoked for the requirement or if the requirement is excluded from the agreement. See Article 507: Non-Application; Article 1802: Aboriginal Peoples; Article 1803: Culture; and Article 1804: National Security.
  5. Under Article 1802: Aboriginal Peoples, the AIT does not apply to any measure adopted or maintained with respect to Aboriginal peoples.
    1. There are two ways in which Comprehensive Land Claims Agreements (CLCAs) and AIT interact:
      1. If a procurement is reserved for CLCA beneficiaries because of a right of first refusal under that CLCA, then the contracting authority must indicate in the solicitation document and any tender notice that the procurement is set aside from AIT. In this case, the entire procurement process is not subject to AIT, and the procurement no longer falls under the jurisdiction of the Canadian International Trade Tribunal (CITT). This situation does not eliminate the requirement to comply with the Government Contracts Regulations. For more information on CLCAs, see 9.35 Comprehensive Land Claims Agreements.
      2. For a procurement that is subject to AIT but not to any international trade agreements, any measure for Aboriginals, including CLCA evaluation criteria, is not subject to CITT review, although the rest of the procurement process must be conducted in compliance with the AIT provisions and is reviewable by CITT.
    2. When the procurement has been set aside for Aboriginal business under the Procurement Strategy for Aboriginal Business (PSAB), the entire procurement process is not subject to AIT and the procurement no longer falls under the jurisdiction of CITT. For more information on PSAB, see 9.40 Procurement Strategy for Aboriginal Business.

1.25.16 Bilateral Free Trade Agreements

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  1. It is a government priority to expand Canada's trade by negotiating a number of bilateral trade agreements in the coming years. The Canada - Chile Free Trade Agreement (CCFTA) Part Three this- Government Procurement portion came into effect on September 5, 2008. The Canada - Peru Free Trade Agreement (CPFTA) came into effect on July 1, 2009. Chapter 14 of the CPFTA covers procurement.
  2. Neither the CCFTA nor the CPFTA have any reporting requirements.
  3. In general, the Supply Manual refers only to NAFTA and the WTO-AGP, as procedural requirements of the other international trade agreements will be fulfilled following compliance to the procedural requirements of NAFTA and the WTO-AGP.

1.25.20 Comprehensive Land Claims Agreements

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  1. The federal government, represented by Aboriginal Affairs and Northern Development Canada (AANDC), has negotiated a number of Comprehensive Land Claims Agreements (CLCAs) with Aboriginal peoples. CLCAs are modern treaties that are based on the concept of continued Aboriginal rights and title to lands traditionally used and occupied by an Aboriginal group, which have not been dealt with by treaty or other legal means.
  2. CLCAs are law. The CLCA obligations are legally binding because they are contained in agreements signed by Canada and backed by legislation. Furthermore, the Aboriginal rights detailed within them are constitutionally protected under Section 35 of the Constitution Act 1982.
  3. Most CLCAs include measures dealing with procurement, and although these measures are not always identical in the various agreements, they are all aimed at enhancing economic opportunities of the Aboriginal group benefiting from the agreement, usually through increased possibilities of competing successfully for contracts in their settlement areas or of participating in employment, training or subcontracting opportunities.
  4. To determine whether CLCAs apply to a procurement, and to learn how to address the CLCA obligations during the procurement process, refer to 9.35 Comprehensive Land Claims Agreements.

1.25.25 Other Agreements

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Contracting officers should also be aware that a number of National Park Agreements and Department of National Defence Co-operation Agreements have been signed between individual departments and certain aboriginal groups. Reference to these agreements can be found in sections 7 to 10 of Treasury Board Secretariat Contracting Policy Notice 1997-8.

1.30 Policies, Directives and Guidelines

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1.30.1 Treasury Board

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  1. The Treasury Board (TB) is a Cabinet committee of the Queen's Privy Council of Canada. TB is responsible for accountability and ethics, financial, personnel and administrative management, comptrollership, approving regulations and most orders-in-council.
  2. As the administrative arm of TB, the Treasury Board of Canada Secretariat (TBS) has a dual mandate to support TB as a committee of ministers and to fulfill the statutory responsibilities of a central government agency. TBS provides advice and support to TB ministers in their role of ensuring value-for-money and provides oversight of the financial management functions in departments and agencies. TBS makes recommendations and provides advice to the TB on policies, directives, regulations, and program expenditure proposals with respect to the management of the government's resources.

1.30.5 Treasury Board Contracting Policy

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  1. The Treasury Board Contracting Policy, established under s. 7(1) of the Financial Administration Act (FAA), sets out the policy objective for government contracting as being that to acquire goods and services and to carry out construction in a manner that enhances access, competition and fairness and results in best value or, if appropriate, the optimal balance of overall benefits to Canada and the Canadian people. It provides that:
  2. Government contracting must be conducted in a manner that will:
    1. Stand the test of public scrutiny in matters of prudence and honesty, facilitate access, encourage competition and reflect fairness in the spending of public funds.
    2. Ensure the pre-eminence of operational requirements.
    3. Support long-term industrial and regional development and other appropriate national objectives, including aboriginal economic development.
    4. Comply with the government's obligations under NAFTA, WTO-AGP and AIT.

1.30.10 Treasury Board Common Services Policy

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The objective of the Common Services Policy is to ensure that departments and agencies can acquire responsive, cost-effective support for their program delivery. It further provides that client service organizations will offer services to client departments in a manner that is most supportive of timely, effective and economical delivery of programs to the public. PWGSC is identified both as a provider of mandatory common services under Appendix E - Mandatory Services of the policy, and of optional common services under Appendix F - Optional Services of the policy.

1.30.15 Treasury Board Contracts Directive

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The Appendix C - Treasury Board Contracts Directive, issued pursuant to section 10 and paragraph 41(1)(a) of the FAA, sets basic contracting limits for contracting authorities, and provides specific contracting limits for specific ministers. The TB Contracts Directive sets out the limits above which departments must obtain TB approval. The application of the Directive to PWGSC is set out in Chapter 6 Approvals and Authorities.

1.30.20 Treasury Board Procurement Review Policy

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The objective of the Procurement Review Policy is to enhance the use of procurement in support of industrial and regional development and other national objectives in a manner that is fully consistent with the government's approved procurement objectives, and with Canada's international commitments within the General Agreement on Tariffs and Trade, NAFTA or other trade rights and obligations. See 3.70 Industrial and Regional Benefits (IRB) Program for further details.

1.30.25 Code of Conduct for Procurement

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  1. The Code of Conduct for Procurement consolidates the government's existing legal, regulatory and policy requirements into a concise and transparent statement of the expectations that the government has of its employees and its suppliers. It ensures that public servants and suppliers are working from the same statement of expectations and commitments that clearly outline what is acceptable conduct when contracting with the government. The Code applies to all transactions covered by the Treasury Board Contracting Policy, and it requires that all those involved in government procurement abide by the legislation and policies outlined in the Code. It is a single point of reference to key responsibilities and obligations of public servants and suppliers.
  2. Pursuant to the Code of Conduct for Procurement, all PWGSC standard instructions to bidders include Integrity Provisions (see section 4.21 Integrity Provisions).

1.35 Challenge Process

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1.35.1 Canadian International Trade Tribunal

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  1. The international trade agreements require that each party have an independent bid challenge authority. The Canadian International Trade Tribunal (CITT) is the bid challenge authority for Canada for the North American Free Trade Agreement (NAFTA), World Trade Organization Agreement on Government Procurement (WTO-AGP) Canada - Chile Free Trade Agreement (CCFTA), Canada - Peru Free Trade Agreement (CPFTA) and Agreement on Internal Trade (AIT). A potential supplier may file a complaint concerning a procurement action to the CITT, on the grounds that any aspect of the procurement process relating to a requirement covered by these agreements is unfair or discriminatory.
  2. CITT is authorized to receive complaints pertaining to any aspect of the procurement process up to and including contract award, and also to conduct inquiries and make determinations. In dealing with a complaint, CITT must determine whether the government institution responsible for the procurement under review has complied with the requirements of the trade agreements and such other procedural requirements, as prescribed in the Canadian International Trade Tribunal Procurement Inquiry Regulations.
  3. Contracting officers may contact the PWGSC CITT expert advisor, either by telephone at 819-956-6411 or by facsimile at 819-956-1265 for assistance with respect to an actual or potential CITT action. Contracting officers should encourage suppliers to resolve issues directly with PWGSC before making a complaint to the CITT. Any matter brought to the attention of the contracting officer should be handled with a minimum of delay, while exercising due care and judgment. Experience demonstrates that there are often minor errors, omissions, or other inadvertent actions, which can quickly be clarified or corrected to the satisfaction of all concerned, thus removing the basis of many problems and concerns at the outset.
  4. All PWGSC actions in response to a complaint filed with the CITT are coordinated through the PWGSC Acquisition Policy and Process Directorate (APPD). All requests, decisions, reports, letters, etc, to the CITT will be coordinated by APPD in consultation with Legal Services and the procurement organization. The procurement organization is responsible for preparing a chronology of events that will form the "backbone" of the Government Institution Report (GIR). Legal Services will produce the remaining sections, with input from the procurement organization, other departmental specialists, and the client department, as required. The procurement organization's management remains responsible to review and approve the GIR, before the sign-off.
  5. Contracting officers must ensure that complete documentation and records dealing with the complaint, including a dated record of all communications with suppliers, are maintained in order to substantiate that the procurement process was carried out in accordance with the obligations of the trade agreements. Throughout the complaint process, PWGSC will keep the client informed of actions taken in response to the complaint, as well as any notices, decisions, information, etc. received from the CITT.
  6. The Assistant Deputy Minister, Acquisitions Branch, is the signing authority for requests for the rescission of Postponement of Award Orders.
  7. Details about the CITT, including its complaint and inquiry process, are in the publication Procurement Review Process – A Descriptive Guide. The CITT Determinations and Notices of Motion and Orders can also be viewed on the CITT Web site.

1.35.5 Procurement Ombudsman

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  1. Sections 306 and 307 of the Federal Accountability Act (FedAA)
    amend the Department of Public Works and Government Services Act to provide for the appointment and mandate of a procurement ombudsman. The Procurement Ombudsman has four primary functions, which are to:
    1. review the practices of departments for acquiring materiel and services to assess their fairness, openness and transparency and make any appropriate recommendations to the relevant department for the improvement of those practices;
    2. review any complaint respecting the award of a contract for the acquisition of goods below the value of $25,000 and services below the value of $100,000;
    3. review any complaint respecting the administration of a contract for the acquisition of materiel or services by a department, regardless of dollar value;
    4. ensure that an alternative dispute resolution process is provided, if both parties agree to participate;
    5. a possible fifth function is that the Federal Accountability Act also specifies that the Procurement Ombudsman can also perform any other duty or function respecting the practices of departments for acquiring materiel and services that may be assigned to the Procurement Ombudsman by order of the Governor in Council or the Minister of Public Works and Government Services Canada.
  2. The Office of the Procurement Ombudsman (OPO) performs its duties and functions as set out in the Procurement Ombudsman Regulations.
  3. The role of coordinating supplier complaints to OPO as well as OPO reviews of those procurement practices performed by Acquisitions Branch on behalf of clients has been assigned to the Acquisition Policy and Process Directorate, Policy, Risk, Integrity and Strategic Management Sector.

    For assistance with respect to OPO related activities or potential complaints, contracting officers may contact the OPO Coordination Office, by telephone at 819-956-0912.

1.40 Departmental Delegation of Authority

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1.40.1 Use of Judgment and Knowledge

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  1. The individual requirements of a particular procurement may suggest that a course of action other than one set out in this Manual should be followed. Wherever there is no instruction on a particular subject, contracting officers must use their judgement and knowledge following the guiding principles at subsection  1.10.5 Guiding Principles.
  2. PWGSC may be required to defend publicly a contracting officer's actions, and the contracting officer will be required to substantiate those actions. In the event that there is a need to deviate from an established policy or procedure, the process to be followed can only be presented in general terms:
    1. Any deviation must be identified in advance and must be carefully assessed and justified (including the reason for the deviation and the consequences of not deviating) for approval by the director general.
    2. The director general must determine whether more senior officials must become involved in the decision to deviate.

1.40.5 Contract Approval and Signing Authorities

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Contracting officers are delegated authorities from the Minister of Public Works and Government Services Canada (PWGSC) to provide procurement and acquisitions-related services to departments and agencies. See Chapter 6 Approvals and Authorities for further details.

1.45 Division of Responsibilities between PWGSC and Client Departments

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  1. The matrix at Annex 1.1: Matrix of Responsibilities between PWGSC and Client Departments for the Procurement of Goods and Services (Generic) provides a generic division of anticipated types of responsibilities between PWGSC and client departments. It forms the basis for an effective and efficient partnering relationship for those who are responsible for activities within the procurement process.
  2. The division of responsibilities, as shown in the matrix, represents a standard way of doing business. However, as every procurement and associated contract differs, alternate divisions of roles and responsibilities can be established in advance by way of a written agreement between PWGSC and the client. Such client-specific or procurement-specific arrangements or matrices will take precedence over this generic matrix. Legislation, regulations and policy will also take precedence over this matrix. Annex 1.2: Specific Division of Responsibilities Agreements contains two client-specific agreements with the Department of National Defence.
  3. Two additional Memorandum of Understanding (MOUs) have been signed; one with the Canadian Commercial Corporation and the other with CORCAN. Details for these special procurement processes are described in Chapter 9 - Special Procurements.
  4. The Client Engagement Sector (CES) This link is available only to clients with access to Publiservice, the Government of Canada extranet. (accessible to federal government employees only)maintains copies of separate MOUs signed for individual business requirements, which may be obtained by contacting this sector.
  5. All Major Crown Projects (MCPs) have MOUs signed between the project and the contracting authorities to delineate project management responsibilities between the two departments. Copies of these MOUs may also be obtained from the CES or appropriate MCP office.

1.50 Fairness Monitors

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  1. PWGSC's fairness monitoring process provides independent assurance that specific PWGSC procurements are conducted in a fair, open and transparent manner.
  2. A fairness monitor is an independent third party whose role is to observe all or part of a procurement process, to provide related feedback on fairness issues to the project team and to PWGSC's Departmental Oversight Branch, and to provide an unbiased and impartial opinion on the fairness of the observed procurement process.
  3. The involvement of a fairness monitor in a procurement process in no way diminishes or absolves any PWGSC official of their accountabilities or responsibilities. (See 3.135 Fairness Monitors for more details.)

1.55 Commodity Management

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Commodity management is defined by a framework of governance and processes used to review, plan, acquire and control the total life cycle activities of a distinct group of goods and/or services. Use of the commodity management framework results in the award of Pre-competed Procurement Instrument(s), which should meet operational requirements of government departments while providing the optimal cost of ownership and disposal and achieving the best value for Canada. This is in keeping with Canada's commitment to deliver services smarter, faster and at a reduced cost.

1.55.1 Overview

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Commodity management provides the following:

  1. A government-wide approach to managing commonly used goods and services that meet the operational requirements of client departments and support their program and service objectives.
  2. An effective "best practices" combination of:
    1. market and demand/spend analysis,
    2. total life cycle and risk analysis,
    3. governance and consultation,
    4. strategic sourcing and procurement practices to achieve the best value and reduce total cost to government through:
      1. volume optimization,
      2. purchase specification standardization and improvement,
      3. supply base optimization,
      4. purchasing process improvements and technology integration,
      5. demand, maintenance and spares management,
      6. best value evaluation,
    5. change management and training to improve client procurement process management,
    6. contract management including performance measurement and tracking.
  3. Attention to these elements is done in the context of current procurement values and ethics of transparency, equity and openness as well as government socio-economic, sustainable development and environmental "green" improvement objective.

1.55.5 Goals and Benefits of Commodity Management

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  1. Some of the goals of commodity management are:
    1. to establish performance measures, to assess what, how and at what cost the government procures goods and services, thereby facilitating a successful continuous improvement program;
    2. to identify risk factors to government operations and mitigation strategies to manage those risks (e.g. strengths, weaknesses, opportunities and threats);
    3. to collaborate with client departments through inter-departmental commodity teams, resulting in the commitment to use government-wide procurement instruments, and
    4. to achieve best value for Canada, including lowest overall cost and ability to support socio-economic objectives, sustainable development and aboriginal objectives.
  2. Some of the benefits of commodity management are:
    1. improved transparency, accountability and responsibility for procurement across the federal government;
    2. a simplified process that ensures efficient delivery of goods and services;
    3. ability to better understand, define and meet operational requirements for a full range of government programs, through close collaboration with client departments;
    4. stronger relationships with the supplier community and the use of procurement processes, leading to the selection of top-performing contractors and to obtain high-quality goods and/or services at best value, and
    5. more effective and pro-active contract management strategies and implementation plans.

1.55.10 Pre-competed Procurement Instruments

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  1. Pre-competed Procurement Instruments (PCPIs), also known as Consolidated Procurements Instruments, can result in, but are not limited to, standing offers, supply arrangements, task authorization contracts, or government-wide contracts resulting from the commodity management processes and are put in place between Canada and one or more suppliers for the provision of a specific commodity over a specified period of time.
  2. Departments and agencies should always consider use of these procurement instruments as the first method of supply of goods and services. There are both mandatory and non-mandatory PCPIs. In 2005, Treasury Board distributed a letter to departments and agencies for mandatory use of standing offers and supply arrangements for 10  commodity categories. Further details on the different methods of supply can be found in Chapter 3 Procurement Strategy and Chapter 4 Solicitation Process.

1.60 Environmental Considerations

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1.60.1 Green Procurement Policy

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  1. The Policy on Green Procurement was introduced through the TB Contracting Policy Notice 2006-1, and came into effect on April 1, 2006. The objective of the policy is to advance the protection of the environment and to support sustainable development by integrating environmental performance considerations into the procurement decision-making process.
  2. The Policy is set within the context of "value for money" and a life cycle management approach. The Policy requires that departments integrate environmental performance considerations, as a key factor in procurement decisions that occur throughout the life cycle of assets and acquired services. Departments are also required to establish green procurement targets and monitor and report on their green procurement performance through the annual Report on Plans and Priorities and the Departmental Performance Report; or, if applicable, in the Sustainable Development Strategy section of the Departmental Performance Report. This Policy applies to all departments and agencies.
  3. The Policy is described in further detail in 2.20 Green Procurement and Defining the Requirement and 3.65 Green Procurement Strategy.
  4. The implementation of the Policy in Acquisitions Branch is managed by the Green Procurement Team, within the Procurement Renewal Office (PRO). Contracting officers can contact PRO by e-mail at: AchatsEcologiques.GreenProcurement@tpsgc-pwgsc.gc.ca.
  5. Contracting officers are required to:
    1. take the on-line course Green Procurement (C215E) available through Campusdirect, Canada School of Public Service;
    2. incorporate environmental considerations into the commodity management process for all procurement instruments, if applicable;
    3. advise all clients of the Green Procurement Policy and support them, using the information, tools and guidance available, to meet both the client needs and policy requirements; and
    4. record in procurement files and in contract approval documents that environmentally preferable goods or services have been considered.

1.60.5 Office of Greening Government Operations

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The Office of Greening Government Operations (OGGO) was created in April 2005 within Public Works and Government Services Canada (PWGSC). OGGO's mandate is to accelerate the greening of the government's operations by working with other federal departments, particularly Treasury Board Secretariat and Environment Canada. OGGO works in conjunction with the Green Procurement Team in Acquisitions Branch (AB), to establish procedures to enhance green procurement within AB and throughout the government.

1.65 Policy on Government Security

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  1. The objective of the Policy on Government Security, as it pertains to contracting, is to ensure that sensitive information and assets of the government are properly protected when entrusted to industry. The role of Public Works and Government Services Canada (PWGSC) in this process is to ensure that individuals and organizations that will have access to or will possess sensitive information and assets have first received the necessary security screening or clearance through the Canadian Industrial Security Directorate (CISD), PWGSC.
  2. PWGSC's Industrial Security Sector (ISS) is the lead in the public service to administer the Industrial Security Program. The Industrial Security Program is intended to ensure protection of Canadian and foreign government sensitive assets/information entrusted to industry for contracts administered by PWGSC and, on request, for contracts administered by other government departments. PWGSC’s CISD is responsible to security screen private sector organizations and personnel requiring access to sensitive government information and assets. The Program also identifies the appropriate security terms and conditions to be included in each contract and ensures that contractors comply with the security requirements provided by the client department for safeguarding, disclosing, destroying, removing, modifying and interruption of government sensitive information/assets.
  3. As of April 1, 2011, the Industrial Security Program is under a cost recovery regime. It will cost recover from federal departments and agencies for contract-related security services it provides.
  4. The current approved charging model is an allocation model based on the proportion of all contracts with security provisions accounted for by each client organization. An historic rolling average is calculated over a two-year period commencing three years prior to the year for which they are being charged (e.g. for the fiscal year 2012-2013, the reference period is 2010-2011 and 2011-2012). A weighting factor is used to equalize contract complexity.
  5. The total ISS budgeted costs are then allocated to the client organizations based on their pro rated share as calculated above. The result is that a client department’s current year charge is based on the rolling average of the last 2 fiscal years contract activity for that client department. There is a Memorandum of Understanding (MOU) in place between PWGSC and each of the client departments describing the services to be provided.
  6. The project authority and the departmental security officer are responsible for ensuring that their department adheres to the Policy and that provisions are made for any suppliers used to provide goods or services to ensure that they also meet the applicable security requirements.
  7. CISD is responsible for the following services:
    1. provide the appropriate security clauses to be inserted into solicitation and contractual documents, as required, when a Security Requirements Check List (SRCL) has been used to identify the needs;
    2. provide appropriate security clearance to any companies that are awarded sensitive contracts in order to meet the security requirements and ensure that they maintain their security clearance during the period of the contract;
    3. ensure that inspections are undertaken and regularly renewed at the company facilities if required; and
    4. carry out the security screening of the contractor's personnel as required by the provisions of the contract.

    Note that contracts may still have a security requirement, even though the contractual documents themselves are not designated as PROTECTED/CLASSIFIED.

  8. Upon request, CISD also handles the security requirements of contracts awarded by other government departments under their own contracting authority;
  9. The Policy is issued by Treasury Board under the authority derived from government decision and section 7 of the Financial Administration Act.
  10. Each federal department is responsible for protecting sensitive information and assets under its control not only in its own operations but also throughout the bidding, negotiating, awarding, carrying out, and terminating of any contracts it manages. In contracting, the SRCL is used by PWGSC and client departments to define their security requirements in a contract. See 2.50 Industrial Security Requirements, 3.55 Industrial Security Requirements (Personnel or Organization)and 7.55 Industrial Security Requirements for more information on security.

    Note: The Canadian Industrial Security Directorate will not do a risk assessment; it will provide the results of their screening to the contracting officers/client departments, which will make the proper decision concerning the contracts. CISD will not approve/disapprove the decision. It is not its role.

1.70 Privacy in Contracting

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  1. Effective April 1, 2008, TB released a Policy on Privacy Protection. Canadians value their privacy and the protection of their personal information. They expect government institutions to respect the spirit and requirements of the Privacy Act. This policy must be read in conjunction with the Policy Framework for Information and Technology and the Policy on Access to Information. Additional mandatory privacy-related requirements are set out in the Privacy Impact Assessment Policy.
  2. The Policy on Privacy Protection applies to government institutions as defined in section 3 of the Privacy Act (the Act), including parent Crown corporations and any wholly owned subsidiary of these corporations. It does not apply to the Bank of Canada and to the information excluded under the Act.
  3. The Government of Canada is committed to protecting the privacy of individuals with respect to the personal information that is under the control of government institutions. The government recognizes that this protection is an essential element in maintaining public trust in government. The Supreme Court of Canada has characterized the Act as "quasi-constitutional" because of the role privacy plays in the preservation of a free and democratic society.
  4. Privacy protection in this sense means limiting government interventions into the private lives of Canadians to lawful and necessary purposes. It also means that government must ensure a high standard of care for personal information under the control of government institutions. The government also has to respond to requests for access to personal information. Sound information management plays a key role in facilitating the exercise of access rights under the Act and ensuring privacy protection.
  5. Through government contracts, contracting authorities, clients and other departmental organizations are privy to individual and company private information. It is imperative that precautions are taken in contracting to safeguard this information. Some examples include such things as individual resumes that contain very personal information and secondly company private information that in the wrong hands may provide competing companies technical advantages, trade secrets or financial information.
  6. PWGSC must ensure safeguards are put in place to protect individual and company private information by ensuring information is stored securely and that information is handled through limited distribution and provided only as necessary. Under no circumstances should a company's private information or an individual's personal information be shared with competitors or placed in the public domain without the written authorization of the originator of the information.
  7. Contracting officers should review the Guidance Document: Taking Privacy Into Account Before Making Contacting Decisions whenever personal information about Canadians is to be handled or accessed by private sector suppliers or agencies under contract.

Annex 1.1: Matrix of Responsibilities

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Annex 1.1.1:  Matrix of Responsibilities between Public Works and Government Services Canada (PWGSC) and Client Departments for the Procurement of Goods and Services (Generic)

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Introduction
  1. The following matrix provides a generic division of anticipated types of responsibilities between Public Works and Government Services Canada (PWGSC) and client departments. It forms the basis for an effective and efficient partnering relationship for those who are responsible for activities within the contracting process.
  2. The division of responsibilities as shown in the matrix represents a standard way of doing business. However, as every procurement and associated contract differs, alternate divisions of roles and responsibilities can be established in advance by way of a written agreement between PWGSC and the client department. Such client department or procurement-specific arrangements or matrices will take precedence over this generic matrix. Legislation, regulations and policy will also take precedence over this matrix.
  3. Regular communication between PWGSC and the client department is considered essential to success in all activities, even for those activities where no contributing role is indicated within the matrix.

Note: The matrix does not represent a delegation of procurement authority by the Minister of PWGSC, and it does not remove from contracting officers their overall contracting responsibilities.

L: Lead
C: Contributing
S: Shared

Generic Matrix of Responsibilities between PWGSC and Client Departments for the Procurement of Goods and Services
No. Activities Responsibility
Client PWGSC
1 - Requirements Definition
1.1 Define client's operational requirements:
1.1.1 Define essential characteristics (i.e., Statement of Requirements) L C
1.1.2 Consider all feasible solutions to meet client's operational needs L C
1.1.3 Develop preliminary project cost estimates and schedule L
1.1.4 Conduct cost benefit analysis of alternatives (including life cycle costing analysis) L C
1.1.5 Determine the total resource requirements and implications; for example, training, priority of allocation amongst operational needs and security requirements L
1.1.6 Obtain approval-in-principle to continue with project L
1.1.7 Develop Total Project Plan, including substantive cost estimates and schedules, special project management needs, project phasing, maintenance support requirements, etc. L
1.2 Define client's technical requirements:
1.2.1 Develop Statement of Work (SOW) and/or performance specifications or standards, as appropriate, for the goods/services required in order to meet the operational needs. L
1.2.2 Define the technical requirements for quality assurance, acceptance, warranty, training, documentation, packaging, transportation, initial provisioning, etc. L
1.3 Raise the requisition (form PWGSC-TPSGC 9200):
1.3.1

Prepare the funded requisition for goods/services to be forwarded to PWGSC. Include the Security Requirements Check List (SRCL), with the security clauses provided by CISD, and the Request for Private Sector Organization Screening (PSOS) form, if applicable. Information on how to obtain the PSOS form can be found in section 4.30.10 Industrial Security in Contracts.

*The requirement for a SRCL may not apply to all Royal Canadian Mounted Police (RCMP) contracts due to an existing Memorandum of Understanding (MOU) between CISD and RCMP. Refer to Annex 1.2 Memorandum of Understanding between the Royal Canadian Mounted Police (RCMP) and the Canadian Industrial Security Directorate (CISD).

**It is important to note that the Canadian Border Services Agency has unique security screening requirements. Refer to Annex 1.3 – Canadian Border Services Agency (CBSA) - Security Requirements when Public Works and Government Services Canada (PWGSC) does the procurement.

L C
2 - PWGSC Procurement Plan
2.1 Assess potential sources of supply (Canadian vs. offshore, etc.) C L
2.2 Identify applicable major contracting policy issues/ considerations, which must be resolved to accomplish the procurement. C L
2.3 Examine potential problems in relation to patents, licencing, royalties and technology transfer. C L
2.4 Develop Procurement Plan including:
2.4.1 Delivery schedule and acceptance requirement L C
2.4.2 Contracting approach (including sourcing strategy) C L
2.4.3 Target cost and cash flow plan C L
2.4.4 Statement of appropriate quality and inspection system standards and qualification approvals L C
2.4.5 Communications strategy C L
2.4.6 Contractual risk management C L
2.4.7 Evaluation methodology and selection method C L
2.4.8 Industrial Benefits (IBs), where appropriate C L
2.4.9 Interdepartmental and international agreements related to procurement plan L C
2.5 Obtain Procurement Plan approval. L
3 - Contracting Process
3.1 Prepare the translation of procurement documents (the client is responsible for the translation of the SOW and/or performance specifications or standards and technical evaluation criteria) C L
3.2 Prepare and distribute/post procurement notice on GETS (Government Electronic Tendering Service) and the bid solicitation package. L
3.3 Prepare and distribute technical data packages, as required. L C
3.4 Receipt of bids on bid closing. L
3.5 Evaluate technical elements of bids. L C
3.6 Evaluate time, cost and other contractual elements of bids. L
3.7 Prepare consolidated evaluation and selection of the bidder. C L
3.8 Negotiate the contract, where applicable. C L
3.9 Obtain the contract approval. C L
3.10 Prepare and issue the contract. L
3.11 Debrief unsuccessful bidders. C L
4 - Contract Administration
4.1 General:
4.1.1 Monitor work of the contractor; and receive the contract deliverables. L C
4.1.2 Monitor the cash flow. L C
4.1.3 Report any problems to the contracting authority. L
4.1.4 Resolve any contractual problems. C L
4.1.5 Monitor compliance with the terms and conditions of the contract. S S
4.1.6 Determine that goods and services received are in accordance with the requirement. L C
4.1.7 Determine that goods and services received are in accordance with the contract. C L
4.1.8 Process the claims for payment. L C
4.2 Contract Amendements:
4.2.1 Identify the need for additional work or revisions; confirm the funding. L
4.2.2 Confirm that the contract amendment is the appropriate vehicle. L
4.2.3 Negotiate the contract amendment. C L
4.2.4 Obtain an approval for amendment/change order. L
4.2.5 Prepare and issue the contract amendment. L
5 - Contract Close-out
5.1 Settle the outstanding claims for payment. C L
5.2 Issue the contract closing amendment. L
5.3 Finalize the disposition of Crown assets. L

Annex 1.1.2:  Specific Division of Responsibilities Agreements

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Section A 1.1.2.1:  Division of Responsibilities between Public Works and Government Services Canada (PWGSC) and Department of National Defence (DND) for the Acquisition of Goods and Services

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  1. This matrix is an assigned division of responsibility, agreed by the Ministers of the Department of National Defence (DND) and Public Works and Government Services Canada (PWGSC). 1. It forms the foundation for an efficient and effective partnering relationship for those who are responsible for activities within the procurement process.
  2. This matrix is to be used for all DND goods and services procured by PWGSC. An "X" represents the assignment of each activity to a "Lead" and "Participatory" department. An "M" represents the norm for major crown projects (MCP) and like projects.
  3. The assignment of each activity to a "Lead" and "Participatory" department as indicated in this matrix is to be considered the normal way of doing business. However, as every procurement and associated contract differs with respect to complexity, risk, value and availability of skilled resources, deviations can be agreed jointly in advance as long as justifications are formally filed in an agreement between the two departments, which consider reasons why the norm cannot be applicable in specific areas.
  4. In all activities, it is incumbent upon each "Lead" department to always consider as prudent, continuous communication with the procurement representatives of the other department, even if this "Lead" department is identified as the sole "X". Finally, it is important to note that this matrix of assigned responsibilities is not necessarily sequential.
  5. Effective communications between DND and PWGSC must be worked out on a project-by-project basis. The matrix below sets out anticipated DND internal responsibilities. For any individual project, DND requests that communications be through the procurement functional contact, the applicable DND Procurement Manager/Officer, unless otherwise discussed and agreed to with that procurement functional contact.
DND/PWGSC Responsibility Matrix

This matrix is an assigned division of responsibility, agreed by the Ministers of the Department of National Defence (DND) and Public Works and Government Services Canada (PWGSC).

CODE DETAIL RESPONSIBILITY
CODE PO (Procurement Officer)
PM (Project Manager)
TA (Technical Authority - includes LCMM)
PD (Project Director)
M (denotes for MCP or MCP-like projects where role is defined in the PMP)
PM/TA - usually the PM for Capital/NP project procurement and the TA for in-service procurement
PWGSC DND PWGSC Normally Participates DND Normally Participates
1 - DEFINE DND OPERATIONAL REQUIREMENTS
1.1 Define essential characteristics - Statement of Capability Deficiency or Statement of Requirement   PD    
1.2 Seek procurement input/ advice from DND procurement authority   PO    
1.3 Delineate all feasible solutions, within government policy, to meet operational needs (ROM costs)   PD M  
1.4 Identify Total ROM project cost and schedule estimates for SSID   PO    
1.5 Obtain operational approval to continue with project (SSID)   PD    
1.6 Preparation of cost benefit analysis including life cycle costing analysis of alternatives and uncertainties   PD    
1.7 Determine requirement for cooperation & involvement of other Departments/Countries (excluding 3.5.9)   PD    
1.8 Determine national and international obligations applicable to operational need   PD    
1.9 Determine requirement for phased cycles for project implementation   PM X  
1.10 Determine maintenance and support requirements   PM/TA X  
1.11 Determine total resource requirement for the project   PM X  
1.12 Identify Total Project cost (substantive) and schedule estimates        
1.12.1
Obtain and collate cost and schedule information
  PD/PO X  
1.12.2
Develop Total Project cost and schedule estimates
  PO    
1.13 Initiate a PMP (formerly PIP) for project (Responsibility Assignment Matrix)   PM X  
1.14 Develop DND's Procurement Master Plan   PO    
1.15 Obtain approval (SRB and PRC/SPAC)   PM X  
1.16 Prepare project submission and obtain approval (PMB, SS PPA and SS EPA, and Project Briefs)   PD/PM & PO    
1.17 Prepare Memorandum to Cabinet (for MCP's only)   M M  
1.18 Execute DND's Procurement Master Plan   PO    
2 - DEFINE TECHNICAL REQUIREMENTS AND RAISE PROCUREMENT INSTRUMENT
2.1 Establish team (formal or informal as appropriate) for an individual procurement instrument, including required stakeholder   PO X  
2.2 Identify appropriate DND authorities in the PI (e.g. requisition, technical, QA)   PO    
2.3 Statement of Work (SOW)        
2.3.1
Define SOW and/or Performance Specifications in support of the operational need
  PM/TA    
2.3.2
Identify Earned Value requirements (for MCP's or MCP-like projects)
  M    
2.3.3
Review and Refine SOW   PO X  
2.4 Define Government Furnished Resources (e.g. tools, test equipment)   PM/TA    
2.5 Define Quality Assurance and Acceptance requirements   PM/TA    
2.6 Define other technical requirements (e.g. warranty, training, documentation, Initial Provisioning, etc.)   PM/TA    
2.7 Define Technical Evaluation Criteria   PM/TA    
2.8 Prepare Procurement Instrument and Associated Documents        
2.8.1
Validate cost estimate and secure funding for this PI
  PO    
2.8.2
Develop Technical Bid Evaluation Plan
  PM/TA X  
2.8.3
Establish Technical Bid Evaluation Team
  PM/TA X  
2.8.4
Develop proposed procurement schedule (activities and timeline) for this PI
  PM/TA    
2.8.5
Identify and mitigate DND risks associated with this PI
  PO    
2.8.6
Develop Content of Procurement Instrument
  PO    
2.8.7
Review Draft Procurement Instrument
  PO X  
2.9 Approve Procurement Instrument (Requisition)   PO    
3 - DEVELOP PWGSC PROCUREMENT PLAN (*based on DND Procurement Instrument)
3.1 Assess the industrial capability* X      
3.2 Identify applicable major contracting policy which must be considered to accomplish procurement* X      
3.3 Review applicable CITT cases and Federal Court Rulings of Procurement X     PO
3.4 Examine potential problems in relation to patents, licensing, royalties, and technology transfer X PM/TA    
3.5 Develop Procurement Plan including:        
3.5.1
Delivery schedule and acceptance requirement
  PO X  
3.5.2
Contracting approach*
X      
3.5.3
Target cost and cash flow plan
  PO    
3.5.4
Stating of appropriate quality control and inspection system standards and qualification approvals
  PM/TA    
3.5.5
Communications Strategy (e.g. press release, etc.)
X PM/TA    
3.5.6
Risk Management*
X      
3.5.7
Evaluation Methodology*
X      
3.5.8
Industrial and Regional Benefits
X     PM/TA
3.5.9
Interdepartmental and international agreements related to Procurement Plan (excluding DND/ PWGSC)
  PM/TA X  
3.6 Obtain approval of procurement plan X      
4 - CONTRACTING PROCESS
4.1 Review requisition or procurement instrument X     PO
4.2 Review SOW and Technical Evaluation Criteria for its contractibility X     PO
4.3 Prepare Solicitation Bid Package        
4.3.1
Identify Applicable Terms and Conditions (including Basis of Payment)
X     PO
4.3.2
Develop Contractual Evaluation Criteria (time, finance incl. transition, contractual & consolidated evaluation plan)
X     PO
4.3.3
State appropriate authorities (e.g. requisition, technical, contract, quality, etc., as applicable)
X      
4.4 Dispatch "Solicitation - Bid" (RFP/ITT) documentation to Industry and DND X      
4.5 Distribute technical data packages to suppliers as required and as applicable   PM/TA X  
4.6 If competitive (RFP, ITT or equivalent process), Evaluate Bids and Recommend Supplier        
4.6.1
Carry out Technical evaluation (SOW and associated t's & c's) in accordance with the Evaluation Plan
  PM/TA X  
4.6.2
Carry out Contractual evaluation (including contract t's & c's) in accordance with the Evaluation Plan
X     M
4.6.3
Consolidate evaluation and recommend supplier
X     PO
4.7 If sole-source, Negotiate contract X     PO&PM/TA
4.8 Review draft contract documentation   PO    
4.9 Obtain TB or Departmental contract approval, as required X     M
5 - CONTRACT ADMINISTRATION
5.1 Initiate Contract Administration        
5.1.1
Implement Tools and Processes for Administration
X PO    
5.1.2
Kick-Off Meetings with Parties, Stakeholders
X     PO&PM/TA
5.2 Provide Government Furnished Resources (GFR) in Support of Contract Work   PO X  
5.3 Ascertain Contract Performance        
5.3.1
Technical and Quality of the Deliverables
  PM/TA    
5.3.2
Contractor's Engineering, Production and Quality Systems
  PM/TA    
5.3.3
Contractor's Financial and Management Systems
X      
5.3.4
Contract Cash Phasing/ Cash Flow
       
5.3.4.1
Cash Flow Actual versus Contracted Cash Flow
X     M
5.3.4.2
Cash Flow Actual versus DND Planned Cash Flow for Financial Forecast
  PO    
5.3.4.3
Earned Value (monitor progress of work versus planned work and associated cost) for MCP's
X M    
5.3.5
Delivery
       
5.3.5.1
Monitor materiel and services delivery date
  PO    
5.3.5.2
Acceptance Trials and Tests
  PM/TA    
5.3.5.3
Schedule compliance
X M    
5.3.6
Progress Review Meetings
       
5.3.6.1
Requirements/Technical Work Group Meetings
  PM/TA X  
5.3.6.2
Contract Progress Review Meetings with Contractor
X     PO&PM/TA
5.4 Apply Contract Provisions and Processes        
5.4.1
Interpretation and Notifications
X      
5.4.2
Change Control
       
5.4.2.1
Technical (Engineering Change Notices/Proposals)
  PM/TA    
5.4.2.2
Contract Amendments
X     PO
5.4.3
Warranty Provisions
       
5.4.3.1
Invoke Warranty
  PM/TA    
5.4.3.2
Enforce Warranty
X      
5.4.4
Contractual Issues
       
5.4.4.1
Identify contractual issues
X PO    
5.4.4.2
Enforce contractual issues
X      
5.4.5
Accept Contract Deliverables
  PM/TA    
5.4.6
Certify and Process Payments
X PO    
5.5 Close Out Contract        
5.5.1
Crown Asset Disposition
  PO X  
5.5.2
Final Contract Audit
X      
5.5.3
Final Payment and Amendment
X PO    
List of Acronyms:
CITT
Canadian International Trade Tribunal
DND
Department of National Defence
GFR
Government Furnished Resources
ITT
Invitation to Tender
LCMM
Life Cycle Material Manager
MCP
Major Crown Project
NP
National Procurement
PI
Procurement Instrument
PIP
Project Implementation Plan
PMB
Program Management Board
PMP
Project Management Plan
PRC
Procurement Review Committee
PWGSC
Public Works and Government Services Canada
RFP
Request for Proposal
ROM
Rough Order of Magnitude
SOW
Statement of Work
SPAC
Senior Project Advisory Committee
SRB
Senior Review Board
SS(ID)
Synopsis Sheet (Identification)
SS(EPA)
Synopsis Sheet (Effective Project Approval)
SS(PPA)
Synopsis Sheet (Preliminary Project Assessment)
TB
Treasury Board

Section B 1.1.2.2:  Division of Responsibilities between Public Works and Government Services Canada (PWGSC) and Department of National Defence (DND) for the Quality Assurance of Materiel and Services

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  1. Public Works and Government Services Canada (PWGSC) and the Department of National Defence (DND) agreed in principle to a division of responsibilities between the two departments for the quality assurance of materiel and services acquired on behalf of DND. This agreement will be amended, if and when required, only with the consent of both departments.
  2. This agreement identifies the division of responsibilities as agreed by each department for the quality assurance of materiel and services, as it applies to military specifications, acquired on behalf of DND.

    It does not deal with materiel and services to non-military specifications (see Section A: Division of Responsibilities between PWGSC and DND for the Acquisition of Goods and Services) or with the division of responsibilities for materiel and services managed by an interdepartmental project management office, which are the subject of a separate agreement.

    Materiel and services to military specifications: Includes all materiel and services, including repair and overhaul, as well as research and development for which a military or other DND specification or requirement is included in procurement documents. Also included in this category are materiel and services which are not covered by DND or military specifications but which are of sufficiently significant concern to DND as to require the division of responsibilities annotated under this heading.

  3. PWGSC will also participate with DND in identifying the application and use of quality assurance techniques at the earliest possible stage in the product life cycle and the development and implementation of cost-effective quality assurance support programs.
  4. DND will be solely responsible for the designation of materiel and services as "Military" or "Non-Military" in technical and procurement documentation.
  5. The division of responsibilities identified for a subactivity does not mean exclusive involvement by one department. Close participation and coordination by both departments is essential throughout the various phases of the procurement program.

    Where participation by the other department is indicated, the responsible department is expected to initiate the consultation. However, it does not preclude either department from requesting participation in, or consultation on, any given subactivity relative to an established program.

Materiel and Services for Military Specifications Sub-activity Description
  1. Definition of Requirements- DND assigned overall responsibility

    Quality assurance services which support achievement of the quality of design, its practicality for manufacture and the means by which conformance will be demonstrated. The tasks involve participation in:

    A.1
    The evaluation with DND of technical data for completeness, clarity, freedom from irrational or excessive tolerances, contradictions, over stipulation of quality requirements, ability to meet interface requirement, etc.

    A.2
    Review of design to determine completeness of definition, the methods for demonstrating conformance and analysis of system effectiveness of such major elements as:

    1. Safety
    2. Maintainability
    3. Reliability
    4. Performance
    5. Human Engineering
    6. Interchangeability
    7. Configuration Control.

    A.3
    Establishment and definition of test methods with respect to practicality, suitability and cost as related to:

    1. Qualification Approval
    2. Design Approval Model (Prototype)
    3. Production Unit Conformance
    4. Acceptance Trials.

    Responsibility for Sub-activity- DND
    Normally Participates in Sub-activity- PWGSC

    A.4
    Applicability of technical data to current programs of maintenance, repair and overhaul and reprovisioning.

    Responsibility for Sub-activity- DND

    A.5
    Selection of parts, components or process, with avoidance of those which are difficult to control, subject to excessive variation or high failure rate, etc.

    Responsibility for Sub-activity- DND
    Normally Participates in Sub-activity- PWGSC

    A.6
    Classification of quality characteristics with respect to their importance to design objectives.

    A.7
    Designation of quality control and inspection system standards.

    A.8
    Definition of preferred warranty requirements.

    A.9
    Establishment of requirements for technical reports from suppliers.

    Responsibility for Sub-activity- DND

  2. Quality Assurance Support Programs- DND assigned overall responsibility

    Develop, support and maintain programs conducive to efficient procurement and quality assurance which includes such tasks as:

    B.1
    Development as appropriate of contractor quality system standards/specifications for contract use.

    B.2
    Maintenance of qualified/approved product programs.

    B.3
    Evaluation of the acceptability of suppliers' quality control/inspection systems, commercial test, laboratory and calibration facilities.

    Responsibility for Sub-activity- DND
    Normally Participates in Sub-activity- PWGSC

    B.4
    Selection of suppliers with acceptable quality control/inspection systems, commercial test, laboratory and calibration facilities.

    Responsibility for Sub-activity- PWGSC
    Normally Participates in Sub-activity- DND

  3. Requisitioning- DND assigned overall responsibility

    Quality assurance tasks associated with requisitioning (contract demands, local purchase orders).

    C.1
    Review of the requisition with DND for applicability of the technical data.

    Responsibility for Sub-activity- DND
    Normally Participates in Sub-activity- PWGSC

    C.2
    Development of Quality Assurance Plan.

    C.3
    Assurance that workmanship standards are established.

    C.4
    Determine which contractor quality control/inspection requirements are applicable.

    C.5

    1. Designation of the Quality Assurance Authority, and
    2. Designation of government quality assurance at source or inspection at destination.

    Responsibility for Sub-activity- DND

    C.6
    Develop and include special clauses of significance to the assurance of quality.

    Responsibility for Sub-activity- DND
    Normally Participates in Sub-activity- PWGSC

  4. Preparation of Bid Solicitation- PWGSC assigned overall responsibility

    Quality assurance tasks associated with the preparation of bid solicitations.

    D.1
    Review of quality requirements on the requisition for completeness and clarity.

    Responsibility for Sub-activity- DND

    D.2
    Establishment of criteria for the evaluation of bids/proposals for compliance with quality requirements.

    D.3
    Review of past performance of potential bidders in respect of their quality history, to determine potential suppliers.

    D.4
    Explanation of quality requirements at the prebidders' conference.

    Responsibility for Sub-activity- PWGSC
    Normally Participates in Sub-activity- DND

  5. Bid Evaluation and Supplier Selection -PWGSC assigned overall responsibility

    Quality assurance tasks associated with evaluation and supplier selection in relation to:

    E.1
    Evaluation of bidders' quality capabilities based upon their quality history and pre-award survey of their quality control/inspection systems.

    E.2
    Evaluation with DND of the quality/quality assurance implications of selecting alternative products.

    E.3
    Trade-off analysis of performance cost and schedule.

    Responsibility for Sub-activity- DND
    Normally Participates in Sub-activity- PWGSC

  6. Contract Preparation and Final Award- PWGSC assigned overall responsibility

    Quality assurance tasks associated with contract preparation and final award in relation to:

    F.1
    Resolution of negotiations with contractor on quality-cost matter not finalized at the bid evaluation stages and review of contract quality requirements to ensure mutual understanding

    F.2
    Verification with DND that the contract includes the required quality system requirements.

    Responsibility for Sub-activity- PWGSC
    Normally Participates in Sub-activity- DND

  7. Contract Administration- PWGSC assigned overall responsibility

    Performance of the following activities in support of PWGSC contract administration throughout the duration of the contract, as applicable:

    G.1
    Quality Assurance Verification of the continuing effectiveness of the contractor's methods for controlling his product quality. These elements are:

    1. Management control system review
    2. Planning
    3. Quality Assurance documentation
    4. Corrective action
    5. Design, development, control and engineering features
    6. Documentation control and change
    7. Control of inspection, measuring and test equipment
    8. Control of contractor purchased materiel
    9. Manufacturing and process control
    10. Purchased and/or supplied materiel standards and specifications
    11. In-process and final inspection and test
    12. Sampling procedures
    13. Control of non-conforming materiel
    14. Inspection status
    15. Handling, storage and packing.

    G.2

    1. Verification of the conformance of preproduction or first-off unit.
    2. Periodic sampling as appropriate during production to ascertain conformance to specifications.
    3. Timely reporting to PWGSC in the event of deviations from specifications.
    4. Verify acceptability of product and authorize release to consignee.

    G.3
    Quality assurance action in technical change procedures such as initiation, and recommendation.

    G.4
    Review of contract quality requirement with contractor to ensure mutual understanding.

    Responsibility for Sub-activity- DND
    Normally Participates in Sub-activity- PWGSC

  8. Contract Close out and Clean-up- PWGSC assigned overall responsibility

    Quality assurance tasks performed during contract close-out and clean-up:

    H.1
    Verification from DND of the condition and disposition of Crown-owned production tooling, inspection and test equipment

    H.2
    Verification from DND of the completeness, suitability and proper disposition of technical data and documentation.

    Responsibility for Sub-activity- DND
    Normally Participates in Sub-activity- PWGSC

  9. Post-delivery Appraisals- DND assigned overall responsibility

    Quality assurance tasks arising during the life of the product in relation to:

    I.1
    Quality History

    1. Accumulation and assessment of quality assurance histories for the purpose of recommending need for modification of product technical data, quality assurance standards, or quality assurance plans for the product, based on quality data acquired from the following:
      1. Product Qualification
      2. Supplier Evaluation
      3. Bid Evaluation
      4. Product Quality Assurance
      5. Post-delivery Appraisal.

    I.2
    Unsatisfactory Condition Report/Complaints

    1. Review of failure reports where the complaint has been associated with quality defects.
    2. Analysis and identification of cause.
    3. Seeking of corrective action with contractor or through PWGSC. In all instances, DND should notify PWGSC immediately in writing.

    Responsibility for Sub-activity- DND
    Normally Participates in Sub-activity- PWGSC

  10. Disposal- DND assigned overall responsibility

    Quality assurance tasks related to the disposal of equipment and data.

  11. Warehousing and Distribution- DND assigned overall responsibility

    Quality assurance tasks associated with the development of a quality program which, will assure product quality on receipt, during storage and on issue, including such elements as:

    K.1
    Preparation of Inspection Plans, including inspection on receipt, during storage, on issue and after repair.

    K.2
    Control of technical data.

    K.3
    Control of adequacy of inspection equipment.

    K.4
    Incoming inspection.

    K.5
    Identification of defective material.

    K.6
    Procedures for material handling.

    K.7
    Packaging and shipping.

    K.8
    Inspection records.

    K.9
    Quality audit.

    K.10
    Corrective action.

    Responsibility for Sub-activity– DND

1The matrix does not represent delegation of procurement authority by the Minister of PWGSC, and does not affect the responsibility of the contracting officer as defined in Treasury Board Contracting Policy.

Legislation, regulations and policy will take precedence over this matrix in the case of any ambiguity.

Annex 1.2: Memorandum of Understanding between the Royal Canadian Mounted Police (RCMP) and the Canadian Industrial Security Directorate (CISD)

()

Note: This annex contains only the references relating to Security Requirements in contracting documents – The complete Memorandum of Understanding (MOU) has not been reproduced here.

The MOU between RCMP and CISD assists in fulfilling the security requirements of Public Works and Government Services Canada-let contracts, including Standing Offers and Supply Arrangements, where the RCMP is the client and PWGSC is the contracting authority. Two scenarios apply:

  1. Scenario A does not require the Security Requirements Check List (SRCL) to be sent to CISD, but clauses have been agreed upon that Acquisition’s Branch can utilize. See Scenario A below.
  2. Scenario B requires a SRCL and the process is outlined below.
1. Scenario A - Process
  1. When the RCMP indicates on the TPSGC-PWGSC 9200 Requisition for Goods and Services and Construction form that there are security requirements, but no SRCL is required, PWGSC Acquisition Branch may use the following clauses, pre-approved by CISD.
    1. NIL security screening required, no access to sensitive information or assets. Contractor personnel will be escorted in specific areas of the facility or site, as and where required by RCMP personnel or those authorized by the RCMP to do so on its behalf.
    2. Contractor personnel must submit to local law enforcement verification by the RCMP, prior to admittance to the facility or site. The RCMP reserves the right to deny access to any facility or site or part thereof to any contractor personnel, at any time.
  2. When these clauses are invoked, PWGSC Acquisitions Branch is not required to notify CISD of the RCMP requirement, as no action is required from CISD.
2. Scenario B - Process
  1. The RCMP will:
    1. Indicate on the TPSGC-PWGSC 9200 Requisition for Goods and Services and Construction Form that there are security requirements;
    2. Attach the SRCL with Section 17 signed; and
    3. Stipulate that it is pursuant to this MOU.
  2. PWGSC Acquisitions Branch will follow the usual procedure for obtaining clauses from CISD.*

    (*Note: Currently, the usual procedure for obtaining clauses from CISD is that the client obtains the clauses directly from CISD and includes them in the SRCL that is to be attached to the TPSGC-PWGSC 9200 Requisition for Goods and Services and Construction Form.)

  3. CISD will provide similar sample clauses to the ones listed below:
    1. The Contractor must, at all times during the performance of the Contract, hold a valid Designated Organization Screening (DOS) or Facility Security Clearance (FSC), issued by the Canadian Industrial Security Directorate (CISD), Public Works and Government Services Canada (PWGSC).
    2. The Contractor personnel requiring access to sensitive work site(s) must EACH hold an appropriate RCMP clearance, granted or approved by the RCMP. (NOTE: All security screenings undertaken by the RCMP, on behalf of PWGSC for this contract, will also be duplicated to CISD.)
    3. The Contractor personnel must submit to local law enforcement verification by the RCMP, prior to admittance to the facility or site. The RCMP reserves the right to deny access to any facility or site or part thereof to any Contractor personnel, at any time.
CISD/RCMP Security Screening Procedure

The procedure for both Participants is as follows:

  1. Reliability Status Screening
    1. PWGSC Acquisitions Branch will identify the winning bidder to CISD and initiate the organization clearance using the Private Sector Organization Screening (PSOS) form. The contract number involved should be clearly indicated on the form. Information on how to obtain the PSOS form can be found in section 4.30.10 Industrial Security in Contracts.
    2. Individuals of the organization will be guided by PWGSC Acquisitions Branch to contact the local RCMP personnel screening team to begin the screening process.
    3. Individuals are required to complete the TBS/SCT 330-23E form. Upon completion of the form, with signature by the individual, the RCMP will clearly indicate that both the RCMP and PWGSC/CISD will provide a clearance as a result of this process.
    4. The RCMP will process the file
    5. The RCMP will grant the clearance to the individual
  2. Security clearance (Secret or Top Secret)

    NOTE: The RCMP will security clear the individuals necessary to perform the work, as well as key Senior Officers identified by CISD, in order to facilitate the granting of the Facility Security Clearance (FSC) for the organization.

    1. PWGSC Acquisitions Branch will identify the winning bidder to CISD and initiate the organization clearance using the Private Sector Organization Screening (PSOS) form. The contract number involved should be clearly indicated on the form. Information on how to obtain the PSOS form can be found in section 4.30.10 Industrial Security in Contracts.
    2. Individuals of the organization will be guided by PWGSC Acquisitions Branch to contact the local RCMP personnel screening team to begin the screening process. The RCMP will process the file and will grant the clearance to the individual.

Annex 1.3: Canadian Border Services Agency (CBSA) - Security Requirements when Public Works and Government Services Canada (PWGSC) does the procurement

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  1. IMPORTANT: CBSA has its own unique security requirements. The client will conduct its own personnel Reliability Status assessment on the proposed contractor and its personnel* as per the Treasury Board Secretariat of Canada’s (TBS) Security and Contracting Management Standard and the Policy on Government Security – Personnel Security Standard, irrespective of whether such assessment has already been conducted under any such policies. The Reliability Status assessment conducted by the CBSA will include a credit check performed by an authorized security official with the CBSA’s Personnel Security Screening Section (PSSS), which is independent of PWGSC's Canadian Industrial Security Directorate (CISD) and the International Industrial Security Directorate (IISD).

    *In some instances, "contractor and its personnel" can include landlords, property management employees and principles of companies when the latter have access to the premises where the CBSA designated or classified information/assets are kept.

  2. For each proposed resource, the bidder must submit a completed signed original TBS/SCT 330-23E – Personnel Screening Consent and Authorization Form upon request of the contracting authority prior to contract award.
  3. PWGSC Acquisitions Branch can use the following clauses when provided to them by CBSA. CISD recognizes and is aware of the requirement to insert CBSA clauses, however, the usual CISD process still applies for CBSA requirements which include the provision of a Security Requirements Check List (SRCL) and CISD clauses. CISD will issue the organizational, personnel, and any necessary physical security clearances required pursuant to the SRCL. Prior to contract award, assurance must continue to be obtained from CISD.
    • Clause 1: Until the credit check and all other security screening processes required by this Request for Proposal have been completed and the Contractor and its personnel is considered suitable by the CBSA, no contract will be awarded and the recommended Contractor / Offeror (specifically the Contractor / Offeror personnel) shall not be permitted access to Protected / Classified information or assets, and further, shall not be permitted to enter sites where such information or assets are kept.
    • Clause 2: In the event the Contractor / Offeror (specifically the Contractor / Offeror personnel) does not pass the security screening process required by the CBSA, the said Contractor’s proposal will be considered non-responsive and the next ranked bidder will be contacted. If only one bid was obtained and the proposed bidder does not meet the security requirement, then, the contracting officer will determine the next steps in order to ensure all requirements are met.

2 Chapter 2 - Defining the Requirement and Requisition Receipt

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2.1 Requirements Definition

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  1. Defining the requirements of a procurement is the cornerstone of a successful procurement process. The contracting officer must understand completely what he/she is about to procure. There are many aspects to consider.
  2. When defining the requirement, client departments must keep in mind not only the goods and services needed, but also the legal framework regulating the goods and services being procured (see 1.15 The Legal Framework of Contracting). Client departments can save significant time and money if there is a clear and well-prepared description of what is required. Early involvement of Public Works and Government Services Canada (PWGSC) contracting officers in the process can help achieve this.
  3. The greatest contribution to achieving the best good or service and price can in fact be made at the earliest stages of requirements definition. Identifying the needs and carefully developing the requirements can minimize the need for changes later.
  4. Requirements are best defined in a manner that allows competition and ensures best value. Contracting officers may be able to suggest wording, which defines requirements in terms of operational requirements rather than using brand names or proprietary technical specifications.
  5. PWGSC can help client departments identify special requirements related to green procurement, security, progress reports, special packaging, transportation, bonding, etc. that suppliers may need to address in their bids.
  6. The contracting officer and the client department must work together to ensure that all concerns are addressed from the beginning of the process to receipt of the final deliverable.
  7. Writing clear and concise contractual documents, using the right words and plain language, is the best method to adopt, to obtain satisfaction and avoid disputes.
  8. For more information on the requirements definition, consult the Statement of Work Guide (available on GCpedia - Acquisitions Program Policy Suite - Procurement ProcessThis information is only accessible to federal government employees.).

2.5 Project Approvals

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Government departments and agencies are guided in the management of projects by Treasury Board (TB) Policies and Guidelines addressing Project Approval Policy and Project Management Policy. For projects that require TB approval, consideration should be given to requesting advance approval to enter into contract, along with the applicable project approval submissions. Working closely with the client at the program development stage, advance approvals may be possible, saving time and effort.

2.10 Special Procurements

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A number of special procurements require a different approach when handling the requirement. On receipt of a requisition relating to any of the following programs, the contracting officer should review Chapter 9 - Special Procurements before proceeding further.

  1. Real Property Contracting;
  2. Purchases from CORCAN;
  3. United States Foreign Military Sales;
  4. Co-operative Logistics (COLOG) and Blanket Order Cases with the United States Department of Defence;
  5. Use of the Defence Production Revolving Fund and Loan Account;
  6. Canadian Commercial Corporation;
  7. Major Crown Projects;
  8. Procurement Strategy for Aboriginal Business; and
  9. Comprehensive Land Claims Agreements.

2.15 Agreement with Other Governments Departments or Agencies

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It is the mandate of Public Works and Government Services Canada (PWGSC) to provide services to departments, boards and agencies of the Government of Canada or to Crown Corporations. Section 16 of the Public Works and Government Services Canada Act further allows PWGSC to make its services available with the approval of the Governor in Council to any government, body or person in Canada, or elsewhere, if so requested by them. This means that the Act permits PWGSC to obtain an order in council to allow it to provide services, such as the procurement of goods and services, to entities that are not part of the Government of Canada. Contracting officers must consult Legal Services when they receive such a request. An agreement must be established between the entity, PWGSC and Legal Services to help with the preparation of the required order in council.

2.16 Aboriginal Consultation and Accommodation

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  1. Canada has contractual, statutory and common-law obligations to consult and, where appropriate accommodate, when Canada contemplates conduct that might adversely impact potential or established aboriginal and treaty rights.
  2. The common law duty to consult is based on judicial interpretation of Canada’s obligations in the context of existing aboriginal and treaty rights, recognized and affirmed in section 35 of the Constitution Act 1982.
  3. All federal departments and agencies are required to comply with the legal duty to consult.
  4. Whenever a procurement may impact on potential or established aboriginal and treaty rights:
    1. It is the clients’ responsibility to comply with the legal duty to consult and, where appropriate, accommodate when the proposed activity, to which the procurement relates, may adversely impact on potential or established aboriginal or treaty rights. Proposed activities could be approvals of natural resource development projects, land transactions, road construction, pipeline routes, etc.
    2. Accommodation measures may include a range of possibilities, such as: adjusting an activity; placing terms and conditions on approvals or authorizations; financial compensation; inclusion of Aboriginal benefits as part of the procurement strategy, etc.
    3. The consultation process should take place prior to the client sending the requisition to Public Works and Government Services Canada (PWGSC), as consultation and accommodation may impact the procurement strategy as a whole, including the statement of work, procurement process timeline, funding, approval level required and even the decision to proceed with the proposed activity.
    4. The contracting officer should remind the client of its obligation to consult and accommodate and encourage the client to undertake consultation with Aboriginal groups, where required.
    5. If the client asks the contracting officer to be present during the consultation process, the contracting officer may do so as an observer, or by limiting its role to providing information on the proposed procurement process. The contracting officer should not get involved in any negotiation of the procurement strategy.
  5. For further information on consultation and accommodation, clients should refer to the Government of Canada Updated Guidelines for Federal Officials to Fulfill the Duty to Consult.
  6. Consultation-related queries can be sent to Aboriginal Affairs and Northern Development Canada at cau-uca@aandc-aadnc.gc.ca.
  7. Clients can also find more information by consulting the Aboriginal and Treaty Rights Information System on the Aboriginal Affairs and Northern Development Canada’s website.

2.20 Green Procurement and Defining the Requirement

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  1. The Government of Canada is committed to implementing the Policy on Green Procurement. This is to ensure that the government cost effectively procures, operates and disposes of its assets in a manner that protects the environment and supports sustainable development objectives. This policy is all encompassing and it applies across all four stages of the procurement process, from planning and acquisition through use and disposal.
  2. The contracting officer, in assisting a client with the needs definition process, should analyze with the client what opportunities may exist to support their obligations, as well as their departmental targets related to green procurement. A key consideration is whether it is actually necessary to make the new purchase. Ultimately, avoiding a purchase will be the most environmentally preferable and economical option.
  3. Some key considerations in defining the requirement are to:
    1. evaluate the need, utilization and scale of the procurement, and reduce the need if possible;
    2. determine that the quantity requested is appropriate and definitely will be used (the feasibility of short term leasing, renting or sharing of the good should be investigated);
    3. inquire as to whether or not the requirement could be satisfied internally, through a different division or section of the organization or through government surplus supplies;
    4. combine the requirement, if appropriate, with one or several other departments to take advantage of economies of scale, to reduce packaging and to save other resources.
  4. See Annex 2.2: Green Procurement: Environmental Factors and Evaluation Indicators for factors and indicators that will aid the client in managing the resource, from planning to disposal.
  5. More information can be found in the Environmental Awareness Tool Kit under the Green Procurement Considerations in the Planning Phase, and in section 2, Planning and Identifying Requirements of the Guideline for Integration of Environmental Performance Considerations in Federal Government Procurement.
  6. Planning and Identifying Requirements will provide help in terms of planning and identifying environmental requirements to reduce or eliminate impacts on the environment.
  7. The Green Procurement Tools Web site includes valuable information such as the Completed Green Procurement Plans and the related templates, a list of green standing offers (SO), supply arrangements (SA) and contracts and a repertoire of existing contracting language related to green procurement.
  8. For commodities under the Commodity Management Policy, contracting officers must develop a green procurement plan, and procurements must be conducted in accordance with this plan.

2.25 Comprehensive Land Claim Agreements

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Contracting officers who receive a requisition that may be subject to Comprehensive Land Claims Agreements (CLCAs) must refer to 9.35 Comprehensive Land Claims Agreements for information on the CLCA obligations that have to be addressed during the procurement process.

2.30 Requisition Receipt

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  1. Client departments must complete the Requisition for Goods and Services and Construction form PWGSC-TPSGC 9200 (PDF Version 438 KB)This information is only accessible to federal government employees. - (Help on File Formats), and submit it to a PWGSC Allocation Unit (AU). The client Requisition Checklist PWGSC-TPSGC 195 (PDF Version 289 KB)This information is only accessible to federal government employees. - (Help on File Formats) is a tool that can assist client departments in completing the requisition and in determining the required supporting documents.
  2. Client departments must submit completed requisitions to the AU by e-mail, fax or mail, although e-mail is the preferred format. Contracting officers who receive a requisition directly from the client must forward it to the AU and inform the client department of the procedures to follow. The AU will acknowledge receipt of a requisition to the client department within one business day for electronically (e-mail) submitted requisitions, and within two business days for hard copy (fax/mail) submitted requisitions. While processing the requisition, the AU will contact vet the requisition received against the mandatory requirements and contact the client for any missing information as detailed in Requisition Checklist PWGSC-TPSGC 195 (PDF Version 289 KB)This information is only accessible to federal government employees. - (Help on File Formats). Only when all mandatory information is received, will the AU allocate the requisition to the appropriate contracting area.
  3. Within five business days of an acquisitions office's receipt of a requisition from an allocations unit, the responsible contracting officer must advise the client department that he/she has been allocated the requisition and provide the client department with his/her contact information.

2.30.1 Funding

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  1. Clients are responsible for submitting accurate requisitions and are accountable for the estimate on the requisition. The requisition approval must be in accordance with the client department's internal delegation of authority. Requisitions must be funded in Canadian currency, including Goods and Services Tax/Harmonized Sales Tax (GST/HST), and provide the information required on the PWGSC-TPSGC 9200 (PDF Version 438 KB)This information is only accessible to federal government employees. - (Help on File Formats) form. (Note: Only government employees have access to this form). This includes procurements to be made by PWGSC organizations located outside Canada.
  2. The authorized requisitioning authority must sign the mandatory signature blocks on the requisition. One signature block signifies that the funding is provided in accordance with Section 32 of the Financial Administration Act. A procurement cannot be completed until proper funding has been provided through the requisition approval process. The other mandatory signature block signifies that the requisition is approved, the necessary approvals have been obtained, and the client request PWGSC to acquire and provide the goods, and/or services, or construction as describe in the requisition.

2.30.5 Requisition Allocation within Public Works and Government Services Canada

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  1. Client departments may direct their requisitions and price and availability (P&A) enquiries directly to the Public Works and Government Services Canada ( PWGSC) office of their choice (Canada only).
  2. When the client stipulates the PWGSC Allocations Unit of choice on the requisition, it will normally be allocated to that office. The major exceptions are:
    1. Restricted Commodities:

      Restricted Commodities include: advertising, public opinion research, production of audio visual, bulk buys for fuel and vehicles and United States Foreign Military Sales (U.S. FMS). Requisitions will be allocated as follows:

      1. when a requisition is for a Restricted Commodity, the requisition will be allocated to the headquarters ( HQ) division/section responsible for that NATO Stock Number (NSN) Goods and Services Identification Number (GSIN);
      2. when there is more than one line item of a Restricted Commodity, the requisition will be allocated to the HQ division/section responsible for the Restricted Commodity line item with the highest value;
      3. when the monetary value of the line items cannot be determined, the requisition will be allocated to the HQ division/section responsible for the GSIN code of the first line item, which represents a Restricted Commodity; and
      4. when a requirement will be sole-sourced under the U.S. FMS Program, see Chapter 9 - Special Procurements.
    2. Commodity Managers

      Where a requisition relates to a specific commodity (i.e. monitors or printers) or to a specific geographical client (i.e. Northwest Territories), PWGSC will customarily inform the client that the requisition is being forwarded to the specific commodity management office that is able to satisfy their request.

    3. Major Projects

      If the requisition is part of a major project, it will be allocated to the office responsible for that project.

  3. When a client does not specify a preference, the following rules apply:
    1. when there is only one consignee point, the requisition will be allocated to the PWGSC office closest to the consignee within the same regional sector. If the closest PWGSC office is HQ, it will be allocated in accordance with PWGSC HQ procedures;
    2. when a requisition originates in a region with more than one consignee in the same regional sector, it will be allocated to an office designated by the regional director Acquisitions;
    3. when there are multiple consignee points within the same regional sector, and the consignee points are not close to one PWGSC office, then the requisition will be allocated to an office designated by the Regional Director, Acquisitions. When the multiple consignee points are all close to the same PWGSC office, then the requisition will be allocated to that office;
    4. when consignees in two or more regional sectors appear on a single requisition, it will be allocated to the PWGSC office closest to the originator of the requisition;
    5. when there are multiple consignees where the closest PWGSC offices are in two or more regional sectors, then the requisition will be allocated to the PWGSC office closest to the originator of the requisition, based on the requisition number of the ordering office. If the closest PWGSC office is HQ, then it will be allocated in accordance with PWGSC HQ procedures;
    6. requisitions sent to HQ will be allocated to the section responsible for the greatest value of line items based on the line item NSN or GSIN; and
    7. if the value of the line items are equal, or otherwise cannot be determined, then the requisition will be allocated to the office or division/section responsible for the GSIN code for the first line item on the requisition (clients should be encouraged to enter NSN or GSIN by line item on their requisition).

2.30.10 Allocation of Work by Complexity

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  1. Each requisition undergoes an assessment to determine the complexity of the procurement in order to direct the requirement into the appropriate process stream (Basic, Standard or Complex) and to allocate it to a contracting officer with the necessary skill set to handle the procurement. The definitions can be found in the Glossary while the characteristics of Basic and Standard are included in the Complexity Assessment, which can be found on the Procurement ToolsThis information is only accessible to federal government employees. Intranet site.
  2. The assessment of the complexity is conducted by the Manager (or whomever assigns the work) and is documented on file.

2.30.15 Complexity Code

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The chosen complexity stream must be entered into the Automated Buyer Environment (ABE) using the Workload Management function. Enter the chosen Complexity Code (Basic : 1, Standard : 2, Complex : 3) in the Workload Management function prior to allocating the requisition to a contracting officer.

2.30.20 Changes to the Complexity Level

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  1. If, at anytime during the procurement process, the contracting officer believes that the procurement has been streamed incorrectly or if new factors arise that affect the complexity level, the Manager, or whomever assigned the work, is to be consulted to determine the appropriate level.
  2. If it is determined that the procurement has been streamed incorrectly, the contracting officer is to send the electronic file back to the Workload Manager where the Manager (or whomever assigns the work) will re-assign the file using the revised Complexity Code. The procurement must then follow the new process in accordance with the new complexity level.

2.35 Extract Files

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  1. At times it is necessary to separate a client's requirement as it will be procured by two different procurement groups. In this instance, the main contracting officer will create an extract file.
  2. The main file holder (the original contracting officer) must:
    1. procure items not extracted;
    2. control requisition funds;
    3. act as the coordinator for client enquiries;
    4. ensure that all procurement actions under extracted files are completed;
    5. record commitments on extracted items;
    6. request additional funds from the client, if required;
    7. process all invoices for payment by the client, and
    8. close the file once the procurement is complete.
  3. The extract file holder (the contracting officer who received the extract file) must:
    1. procure the assigned items;
    2. request funds from the main file holder after the total funding requirement has been identified;
    3. ensure that funds have been allotted before contract award;
    4. obtain the contract number from the main file holder before contract award, if the procurement is done outside of ABE, and
    5. forward to the main file holder copies of all contracts and amendments issued against an extract file, if the procurement is done outside of ABE.

2.35.1 Part Files

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When there is a need to prepare and issue more then one solicitation on a requisition main file or on an extract file, then part files may be created for each solicitation required. When part files are created under an extract file, the extract file will be treated, for record purposes, as though it were a main file.

2.40 Price and Availability Enquiries

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  1. A price and availability ( P&A) enquiry is generally received from the client and handled in the same manner as any requisition. A P&A enquiry is prepared and sent to suppliers to obtain information concerning approximate prices and availability of specific goods or services. It is used when such information is needed by PWGSC or by a client for program planning or budgetary purposes. A P&A enquiry could be made directly to selected suppliers or it may be publicly posted on the Government Electronic Tendering Service (GETS).
  2. P&A enquiries sent to suppliers, or posted on the Government Electronic Tendering Service, must clearly indicate that the request is not a bid solicitation and that there are no commitments with respect to future purchases or contracts.

2.45 Requests for Information and Letters of Interest

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Clients may request or the contracting officer may propose that a Request for Information (RFI) or a Letter of Interest (LOI) be issued to obtain feedback from industry, before finalizing the requirements definition or procurement strategy. Additional information on the RFI/LOI process may be found in 4.5.5 Request for Information or Letter of Interest.

2.50 Industrial Security Requirements

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2.50.1 Security and Requisitions

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  1. All requisitions and requisition amendments for contracts, standing offers or supply arrangements that contain a security requirement must include a Security Requirements Check List (SRCL) (form TBS/SCT 350-103) and associated security guides/documents with the security clauses provided to the client by the Canadian Industrial Security Directorate (CISD). Some clients have an agreement with CISD with separate instruction. Please refer to Annex 1.2 Memorandum of Understanding between the Royal Canadian Mounted Police (RCMP) and the Canadian Industrial Security Directorate (CISD) for requirements from the RCMP and Annex 1.3 Canadian Border Services Agency (CBSA) - Security Requirements when Public Works and Government Services Canada (PWGSC) does the procurement for requirements from CBSA.
  2. The security section of all requisitions received by PWGSC on form PWGSC-TPSGC 9200 (PDF Version 438 KB)This information is only accessible to federal government employees. - (Help on File Formats) must be completed by the client to indicate whether or not security provisions are included in the requirement. ( Note: Only federal employees can access this form.)
  3. Note that the financial systems of some departments are not yet equipped to print this section. In such a case, contracting officers can accept the previous version of the requisition form PWGSC-TPSGC 9200 (PDF Version 438 KB)This information is only accessible to federal government employees. - (Help on File Formats) from clients as long as certification against the wording of the new security section is provided, either by replicating the new security wording (see below) in the "Special Instructions" section of the requisition, or by providing it as a separate document.

    "Requisition No. __

    Security: __

    Does this requisition include security provisions?
    ( ) No ( ) Yes

    If yes, is a Security Requirement Check List (SRCL) required?
    ( ) No ( ) Yes

    If an SRCL is required, attach the properly completed and signed SRCL to this requisition. If an SRCL is not required, but the requisition does include security provisions, explain why in the requisition.

    The Undersigned certifies that this requisition, including any attached SRCL, accurately details the security provisions of this requirement.

    Signature (mandatory) __

    Date __"

  4. The contracting officer must ensure that the completed security certification is included on each procurement file when the requisition lacks a properly completed security block.

2.50.5 Security Requirements Check List (SRCL)

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  1. The client department may complete the SRCL, either electronically via the online SRCL service (referred to as E- SRCL) or in hard copy using the form Security Requirements Check List (SRCL) (PDF Version 383 KB)This information is only accessible to federal government employees. - (Help on File Formats).
  2. The online service provided by the Canadian Industrial Security Directorate (CISD) allows client departments to complete the SRCL form on the Internet in a secure environment using a Smart form, which eliminates errors. With the online service, CISD can provide the security clauses to be included in the solicitation documents before receiving the signed hard copy of the SRCL, which expedites the process. Once CISD receives the E- SRCL, its turnaround time to provide the security clauses is two working days as opposed to 15 working days for the hard copy. The electronic process results in the reduction or elimination of errors, in this way, it enables the production of clauses in a more timely manner.
  3. For further information, see 1.65 Policy on Government Security, 3.55 Industrial Security Requirements (Personnel or Organization)and 4.30.10 Industrial Security in Contracts or contact CISD, being the organization responsible for security screenings and clearances for PWGSC procurements.
  4. Upon receiving the SRCL, which must be attached to any requisition submitted to PWGSC, CISD will provide the client department with the appropriate security clauses to be used in the solicitation. In all cases where clarification is required, CISD will contact the client department and the departmental security officer as required. Security clauses provided for a similar solicitation should never be used without the prior authorization of CISD.

2.55 Employer-Employee Relationships

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  1. When contracting for the services of individuals, including temporary help, contracting officers should carefully review the circumstances in order to avoid establishing an employer-employee relationship which would be contrary to or in conflict with the Public Service Employment Act and common law principles dealing with employer-employee relationships.
  2. As per sections 4.1.9(e)and 16.3 Employer-employee relationships of the Treasury Board Contracting Policy, contracting officers must ensure that an employer-employee relationship will not result when contracting for the services of individuals.
  3. Criteria for assessing an employer-employee relationship have been established by the Canada Revenue Agency (CRA) and pertinent court rulings. For guidance, seek legal advice or consult the CRA publication RC 4110, Employee or Self-Employed?. If there is any uncertainty, the contract should be signed at a level higher than the individual who would normally approve the initial entry into the contract.
  4. Legal advice should be sought where it is not feasible for contracting officers to determine whether a contract is a contract for services or a contract of employment (i.e. employment status is not easily identifiable). It is ultimately the responsibility of the contracting officer to ensure that contracts do not create employer-employee relationships.

2.60 Requisition Review

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  1. Contracting officers must review all requisitions for completeness in accordance with Annex 2.1 Requisition Review before procurement action can proceed.
  2. Issues must be resolved through consultation between the client and the contracting officer. Example of issues are as follows:
    1. if a requirement is not clearly defined, then the client must be encouraged and helped to define the objectives and the performance criteria to be met. The client must be encouraged to use generic or performance specifications;
    2. any unreasonable delivery requirements or unrealistic delivery dates should be discussed;
    3. if the sole source justification provided by the client is inadequate, then the contracting officer should seek further justification. If the request cannot be substantiated to the satisfaction of the contracting officer, then the contracting officer must advise the client that the procurement will be competed, and
    4. for justified sole source requirements, the contracting officer should work with the client to develop responses to Annex 3.1 Treasury Board Questions for Sole Source. For more information on this process, see 3.15 Non-competitive Contracting Process.

2.65 Procurement Process Initiated by Client

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Public Works and Government Services (PWGSC) is sometimes asked to process requirements when the procurement process was initiated by client departments (e.g. sourcing, bidding, evaluation, selection). The client department remains responsible for all of their actions, which may or may not be in compliance with TB or PWGSC policies or applicable legislation. PWGSC will attempt to mitigate risks associated with such a requirement; however, the client department will remain responsible even if PWGSC agrees to continue or restart the procurement process. To reduce the risk of complaints and challenges associated with these procurements, the following procedures must be followed:

  1. Upon receipt of a requisition for a contract or contract amendment, where the client has already taken certain steps in the procurement process, the contracting officer must alert the manager to the situation.
  2. The contracting officer will review the procurement process already initiated by the client, to identify any deviations from standard practice or policy. The contracting officer must develop a clear understanding of all procurement-related activities that have been completed, including whether a contract has been awarded or the supplier has been given the go-ahead to commence work. Where a contract has been awarded, or the supplier authorized to proceed with the work, 2.75 Confirming Orders and Contracts Involving Pre-contractual Work will apply.
  3. In the event that some of the actions of the procurement process initiated by client departments do not adhere to the established supply policy guidelines, PWGSC may have to restart the procurement process. Whenever a contracting officer must act in a way not clearly set out in this Manual, integrity and its supporting principles provide necessary guidance (see 1.10.5 Guiding Principles).

2.70 Ratification by Treasury Board

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For information on ratification by Treasury Board, please refer to section 6.30.1 Ratification by Treasury Board.

2.75 Confirming Orders

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  1. PWGSC does not normally place contracts to confirm the actions of departments or agencies. The practice of providing such service to client departments should be discouraged to the maximum extent practical. However, it may be necessary for PWGSC to become involved because of its exclusive goods procurement authority. PWGSC may have some value to add in processing confirming orders when the work is complete.
  2. Requests for confirming orders must be evaluated and processed on the basis of the circumstances surrounding each instance. Where the request is the result of attempts to circumvent normal procurement procedures, return of the request to the client department should be a prime consideration.
  3. When the work has been completed, Legal Services will prepare a confirming order that will contain only the information necessary to document the transaction, which includes the parties, the work performed, the dates, the amount, a release and, if required, a transfer of intellectual property rights. The appropriate director or higher authority, as determined by the contract value and non-competitive contract approval authority limits, must approve the confirming orders processed by PWGSC.
  4. The client department will remain liable for any complaints resulting from their actions.
  5. For information on attaining approval for contracts involving pre-contractual work, see 6.30.10 Confirming Orders and Contracts Involving Pre-contractual Work.

Annex 2.1: Requisition Review

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  1. Has the requisition been properly directed or allocated to the appropriate office?
  2. Has the current version of the requisition form been used? (If the previous version is used, then the proper security certification must be included.)
  3. Is the requisition authorized properly, and does it contain the mandatory signatures in all signature blocks on the requisition? The client must certify that:
    1. pursuant to subsection 32(1) of the Financial Administration Act (FAA), funds are available;
    2. the requisition is approved, the necessary approvals have been obtained, and the client requests Public Works and Government Services Canada ( PWGSC) to acquire and provide the goods and/or services, including construction, described; and
    3. the requisition, including any attached Security Requirements Check List (SRCL) for which clauses have already been provided to the client by the Canadian Industrial Security Directorate (CISD), and, if applicable, the Request for Private Sector Organization Screening (PSOS) form, accurately details the security provisions of the requirement. Information on how to obtain the PSOS form can be found in section 4.30.10 Industrial Security in Contracts.

      Note: Requisitions received via e-Purchasing or via the Universal ABE Interface (U ABE I) electronic interfaces are deemed to have been properly authorized with all signatures pursuant to the Financial Administration Act (FAA).

  4. Does the estimated funding seem adequate?
  5. Are the destination/consignee codes specified?
  6. Have environmental performance considerations been addressed?
  7. Is this requirement subject to the provisions of a Comprehensive Land Claims Agreement (see 9.35 Comprehensive Land Claims Agreements)?
  8. Are invoicing instructions provided?
  9. Are the financial codes identified?
  10. Has the client indicated whether the requisition includes security provisions and whether a Security Requirements Check List (SRCL) is required? If no SRCL is required but security provisions are included, this must be explained.
  11. Is there support for a sole source or no-substitute request? Has the client provided responses to Annex 3.1: Treasury Board Questions for Sole Source?
  12. Are delivery lead times and schedules realistic, or will special action be required to meet delivery objectives?
  13. What could be the consequences resulting from a late delivery, and is there a need for liquidated damages provisions or other performance incentives?
  14. Is the good or service adequately defined in the requisition, attached technical documentation or statement of work?
  15. Have appropriate standards, specifications or purchase descriptions been included? If not, can an existing one be used; or
    1. is there a need for the development of a new standard, specification or purchase description?
    2. is the NATO Stock Number or the Goods and Services Identification Number ( GSIN) of the products shown?

      Note: Although clients must detail the GSIN in the requisition, due to trade agreement implications, the contracting officer must ensure the GSIN is accurate as per the commodity codes published on the Buy and Sell site.

  16. Is a design change/deviation procedure specified?
  17. Is the extent of required product quality management and assurance specified?
  18. Is the inspection or quality assurance authority specified?
  19. Does the requisition or attachments contain any clauses or conditions that conflict with any PWGSC or government contracting policies and procedures (i.e. Standard Acquisition Clauses and Conditions Manual (SACC) and Supply Manual)?
  20. Does the nature of the work include work to Canadian specifications?
  21. Does the requisition contain any form of predefined types of pricing basis?
  22. Are evaluation criteria specified and are the mandatory requirements clear?
  23. Is special production tooling or special test equipment required?
  24. Is government-furnished equipment or government-supplied materiel specified?
  25. Are there unrestricted rights to the use of technical data or are royalty payments involved?
  26. Is a trade-in specified?
  27. If radio-transmitting equipment must be acquired, has the client obtained radio frequency equipment clearance from Industry Canada? Are there other special considerations of a similar nature?
  28. If there are multiple items on the requisition, should any of these items be grouped together, or put in a part or extract file?
  29. Could repetitive items be bought on an annual basis through standing offers, supply arrangements, phased delivery, task authorization, contracts with a call-up feature, or be included as contract options for additional quantities?
  30. Are items required available on a standing offer or a supply arrangement (or a mandatory standing offer)?
  31. Has the client department included instructions concerning the treatment of any intellectual property that may result from the procurement?
  32. Has the client department claimed and substantiated exemption from taxes or duties, by referring to a certificate of exemption, or remission or drawback order in council?
  33. Are controlled goods identified?
  34. Has the client department identified the requirement as a "defence contract"as defined in the Defence Production Act
  35. Is the GSIN shown and accurate?
  36. Is the block "Current Funding"completed? Does it include the Goods and Services Tax or the Harmonized Sales Tax?
  37. Does the requirement involve contractor's access to personal records?
  38. Has the procurement been set aside under the Procurement Strategy for Aboriginal Business?
  39. Are option/extension period(s) specified/needed?
  40. Is the sole source directed to a former public servant?
  41. Is this procurement a renewal of an existing contractual arrangement for the same services, or have the services been procured before? If yes:
    1. Who is the incumbent contractor?
    2. What is the previous contract number?
    3. When does it expire?
    4. Was it procured by PWGSC or the client?
    5. Did the previous contract have special pricing or terms and conditions?

Annex 2.2: Green Procurement: Environmental Factors and Evaluation Indicators

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Client departments, with the assistance of Public Works and Government Services Canada (PWGSC), are responsible for all four stages of the procurement process, from planning and acquisition through use and disposal. The following lists are an example of aspects to be considered:

  1. Environmental Factors and Related Cost Elements

    Examples of environmental factors that should be taken into consideration in assessing value for money are provided below. These are expressed in terms of cost elements that client departments may take into consideration in the evaluation of bids. These include but are not limited to:

    1. operation costs, such as energy or water consumed by the good over its life;
    2. indirect costs (e.g. less energy efficient information technology equipment will produce more heat causing the building's air conditioning system to work harder, and increase electricity costs);
    3. administrative costs, such as complying to the Workplace Hazardous Materials Information System (WHMIS);
    4. investing up front to save costs later, such as specifying higher levels of insulation where the extra expenditure can be recovered from lower energy costs;
    5. use of refurbished parts or products, where possible;
    6. Recyclability: This is thought to be the key since purchasers can create markets for their own waste, such as paper, toner cartridges, etc., through the transformation and sale of products containing recycled materials;
    7. cost of disposal arrangements;
    8. establishing minimum environmental performance standards for commodities where there is a sufficient supplier base to support competition;
    9. where the supplier base is limited, include incentives for meeting extra environmental performance criteria; and
    10. use of contractual terms, to define environmental obligations, such as packaging take-back, use of certified recyclers for e-waste.
  2. Environmental Evaluation Indicators

    Examples of indicators that should be examined to develop evaluation criteria are as follows:

    1. Environmental Certification
      1. Has the good/service been certified through an independent program, such as the Environmental Choice Program or Energy Star?
      2. Have studies of the environmental attributes of the good been completed?
    2. Energy and Resource Efficiency
      1. Do you purchase used, remanufactured, rebuilt or refurbished goods and/or materials?
      2. Does this good make efficient use of resources and energy throughout its life cycle?
      3. Does this good reduce waste?
      4. Suppliers should be instructed to indicate if the good has any energy, water or fuel saving features, such as Power Down Mode.
      5. Are there measures to extend the useful life of the good; for example, re-use, refill, recharge, recondition?
    3. Recycled Content
      1. Does the good include post-consumer recycled content?
      2. What type and what percentage are recycled materials?
    4. Hazardous Replacement
      1. Does the supplier offer a non-hazardous replacement or alternative for this good?
      2. Does the good require Material Safety Data Sheets (MSDS)?
    5. Performance Testing
      1. Is it possible to test the good/service, prior to purchase?
      2. Does the good meet the performance specifications?
      3. Is there any documented past performance? (For example, annual reports, environmental performance reports).
    6. Packaging
      1. Is packaging reduced to the bare minimum required to ensure that the good is delivered in perfect working condition?
      2. Can the good be acquired in bulk or concentrated form?
      3. Will the supplier remove the packaging from the site following installation?
      4. Is the packaging reusable, contain reusable parts or is it recyclable?
      5. Does the packaging material contain post-consumer recycled materials?
    7. On Site Waste Management
      1. During the project, will all waste be source separated on site and recycled?
      2. Request information and reward environmentally sound stewardship and use of certified haulers/sites.
      3. Is the good or service designed to minimize waste (for example, catering service using dishes that are made of china rather than Styrofoam)?
    8. Return for Disassembly and Recycling
      1. Does the good include a return for recycling policy?
      2. Can the good be recycled in your area?
      3. Will consumables (such as toner cartridges) be accepted for recycling?
      4. Is the good easily disassembled?
    9. Warranties
      1. What is the expected useful life span of the good?
      2. How long is the warranty, and should you purchase an extended warranty?
    10. Maintenance
      1. Is the good designed for easy maintenance and repair?
      2. Are maintenance and replacement parts readily available and reasonably priced?
      3. Is the good easy and cost effective to upgrade?
    11. Environmental Attributes of the Supplier
      1. Does the supplier have a certification or registration (for example, ISO 14001 registration)?
      2. Has the supplier received any regulatory environmental violations within the past five years?

Annex 2.3: List of Public Works and Government Services Canada Allocations Units

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Headquarters
Mailing address Fax number Email address
Central Allocations Unit
0A1, Portage III
11 Laurier Street
Gatineau, Quebec K1A 0S5
819-956-7827 NCRCentralAllocations.RCNAttributionsCentralisees@pwgsc-tpsgc.gc.ca
Atlantic Region
Mailing address Fax number Email address
PWGSC, Acquisitions
3 Queen Street
Charlottetown, PEI C1A 7M8
902-566-7514 Darlene.reay@pwgsc-tpsgc.gc.ca
PWGSC, Acquisitions
P.O. Box 2247
Halifax, NS B3J 3C9
902-496-5016 ATL.NSRequisitions@pwgsc-tpsgc.gc.ca
PWGSC, Acquisitions
1045 Main Street, 3rd Floor

Moncton, NB E1C 1H1

506-851-6759 ATL.NBMCTRequisitions@pwgsc-tpsgc.gc.ca
PWGSC, Acquisition

Room 421, 189 Prince William St.
Saint John, NB E2L 2B9

506-636-4376 Linda.Morrison@pwgsc-tpsgc.gc.ca
PWGSC, Acquisitions
P.O. Box 4600
St.John's, NL A1C 5T2
709-772-2932 Rhonda.Manning@pwgsc-tpsgc.ca
Ontario Region
Mailing address Fax number Email address
PWGSC Acquisitions
33 City Centre Drive, Suite 480C
Mississauga, ON.  L5B 2N5
905-615-2060 ONT9200MIS@PWGSC-TPSGC.GC.CA
PWGSC Acquisitions
86 Clarence Street, 2nd Floor

Kingston, ON K7L 1X3

613-545-8067 ONT9200KIN@PWGSC-TPSGC.GC.CA
PWGSC, Acquisitions

Real Property Contracting
4900 Yonge Street, 12th Floor
Toronto, ON M2N 6A6

416-512-5862 ONT9200RPC-SAMI@PWGSC-TPSGC.GC.CA
PWGSC Acquisitions

PWGSC Building S-111, C114,
CFB Petawawa
Petawawa, ON K8H 2X3

613-687-6656 ONT9200PET@PWGSC-TPSGC.GC.CA
Quebec Region
Mailing address Fax number Email address
Place Bonaventure, South-East Portal, Suite 7300

800 de La Gauchetière West
Montréal, Qc, H5A 1L6

514-496-3822 QueRequisitionsMontreal.QueMontrealRequisitions@pwgsc-tpsgc.gc.ca
1550, D'Estimauville Avenue
Québec, QC G1J 5E9
418-648-2209 QueRequisitionsQuebec.QueQuebecRequisitions@pwgsc-tpsgc.gc.ca
Western Region
Mailing address Fax number Email address
PWGSC, Acquisitions
Requisition Receipt and Allocations
1650, 635 - 8th Ave SW

Calgary, AB T2P 3M3

403 292 5786 WST-ALLOCATION@pwgsc-tpsgc.gc.ca
Pacific Region
Mailing address Fax number Email address
Marine Procurement
including purchase, construction, refit or repair of vessels for boats of all size, and other associated marine equipment:

PWGSC

401 - 1230 Government Street
Victoria, BC V8W 3X4

250-363-3960 Pac.Marine@pwgsc-tpsgc.gc.ca
Commercially available goods or services including professional services and R&Ds on Vancouver Island or in the Yukon Territory:

PWGSC
401 - 1230 Government Street
Victoria, BC V8W 3X4

250-363-0395 Pac.Vicca@pwgsc-tpsgc.gc.ca
Commercially available goods or services
including professional services and R&D on
the BC Mainland:

PWGSC
641 - 800 Burrrard Street
Vancouver, BC V6Z 2V8

604-775-7548 Pac.Vanca@pwgsc-tpsgc.gc.ca
For requisitions related to Real Property:
Contracting {construction, maintenance and
Architectural & engineering services}:

PWGSC
641 - 800 Burrard Street
Vancouver, BC V6Z 2V8

604-775-3366 Pac.Rpc@pwgsc-tpsgc.gc.ca

3 Chapter 3 - Procurement Strategy

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3.1 Introduction

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  1. A procurement strategy defines in general terms how a good, service, or construction will be procured, and will include, at the highest level, the determination to proceed competitively or non-competitively and applicable details in support of industrial and regional benefits or other national objectives. The strategy could be quite straightforward, such as the decision to use a standing offer, or could be more detailed, which would be used for major projects.
  2. The development of a procurement strategy begins with the first meeting between Public Works and Government Services Canada and the client, and often even before this point. It is the most important step in the procurement process as it influences the scope of the requirement and determines the extent of competition.
  3. In developing the procurement strategy, the guiding principles described in 1.10.5 Guiding Principles must be taken into consideration. Specifically, the procurement strategy must satisfy the client's operational requirements and comply with legal requirements, while achieving best value, and advancing national objectives.

3.1.1 Planning the Procurement

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  1. A non-exhaustive list of some of the factors that the client and the contracting officer can take into account when developing the procurement strategy are listed as follows:
    1. the method of supply;
    2. total estimated cost including all options, as well as maintenance and storage costs, as applicable;
    3. contract period;
    4. delivery requirements;
    5. the procurement schedule;
    6. evaluation procedures and method of selection;
    7. environmental factors;
    8. commercial products versus customized solutions;
    9. risk factors;
    10. possible use of a fairness monitor;
    11. the participation of small and medium enterprises;
    12. aboriginal considerations;
    13. other national objectives;
    14. compatibility with existing solutions,
    15. the opportunity to consolidate requirements;
    16. disposal of the product, if applicable, and
    17. renewal (procurement of a replacement good or service and all transfer costs).
  2. The approval authority must be given the opportunity to approve or reject the proposed procurement strategy as early as possible in the process, to avoid the situation where a contracting officer has done significant work following a strategy which may not be approved.
  3. The procurement strategy must identify any deviations to contracting policies.
  4. If events during the procurement process result in a significant change in the procurement strategy, a revised procurement plan must be approved before implementation or completion of the procurement process.
  5. For related information, see 6.5 Procurement Approval Documents.

3.1.5 Procurement Risk Assessments for Basic and Standard Requirements

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  1. As soon as the key elements of the procurement strategy have been determined, the contracting officer must complete a Procurement Risk Assessment (PRA), prior to preparing an approval document (e.g. Procurement Plan or Contract Planning and Advance Approval (CPAA) as applicable).
  2. The PRA process is applied to procurements in order to determine the level of risk the Government of Canada faces when entering into contracts. The assessment process also provides the foundation for risk response strategies that will be employed to reduce contract risks. It also provides guidance and instructions to the Contracting Officer when high risks are identified.
  3. The PRA process places an emphasis on:
    1. The early assessment of contract risk factors that may put a procurement at risk;
    2. Recording the risks and identifying the response strategies in the approval documents;
    3. Communicating these risks to Managers and clients during the consultations and when seeking approval; and,
    4. Ensuring that risks are re-assessed in the procurement when circumstances dictate, as part of monitoring and continuous improvement.
  4. At any time prior to approval, there may be a requirement to re-assess the complexity of, or risk in, the procurement because of changing factors in the procurement. If this occurs, a revised PRA must be prepared to determine if any of the risk factors have changed.
  5. The Procurement Risk Assessments for Basic and Standard streams are available in the Procurement ToolsThis information is only accessible to federal government employees. section of The Source, the Government of Canada intranet website (available internally only).
  6. Contracting officers must provide a description of the risk response measures for those risks identified as high.
  7. For more information on the Risk Assessment Framework, see the Acquisition Program Risk Assessment Framework.

3.1.10 Addressing Identified Risks in the Approval Document

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  1. The approval document should contain the following elements:
    1. Risk Statement: This statement describes what risk may occur, the harm it may cause, the likelihood of the harm occurring and the extent (or severity) of its impact.
    2. Risk Response: This describes the action that can be taken to reduce the level of risk. Risk response measures can take the form of risk reduction so that the impact of the risk is lowered. Alternatively, avoidance and prevention measures can also reduce the likelihood of occurrence.
    3. Residual Risk: The residual risk is what remains after risk response measures have been applied. In theory, no risk can be completely eliminated, and so there must be a description of the remaining level of risk involved in the procurement. The level of the residual risk can be a critical factor in determining how to proceed with the procurement because the residual may be at an unacceptable level.
  2. A copy of the completed Procurement Risk Assessment (PRA) (see 3.1.5 Procurement Risk Assessments for Basic ad Standard Requirements) must accompany the approval document.
  3. The approval authority may direct the contracting officer to review the procurement strategy or risk factors; to seek review by Legal Services, Cost Analysts or other subject matter experts; or to repeat the complexity assessment or risk assessment.
  4. In cases where the PRA is revised, a copy must be attached to the approval document indicating which version it is and the reason for the revised PRA.

3.1.15 Complex Procurement

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  1. For Complex procurements requiring Treasury Board approval, refer to section 6.5.15.1 Complex Procurements requiring a Treasury Board Submission.
  2. For Complex procurements which do not require TB approval, the contracting officer:
    1. Assesses the risks while preparing the procurement strategy in consultation with the client and various stakeholders;
    2. Produces a risk narrative in the approval document with a risk statement and the risk response measures that will be used to treat the risk; and,
    3. Re-visits the identified risks in the procurement as circumstances dictate.
  3. More information on risk assessment is available through the Acquisition Program Risk Assessment Framework

3.5 Existing Procurement Instruments

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  1. Before determining a new method of supply for the requirement, the contracting officer should first ensure that the good or service is not already available from an existing procurement instrument. Clients should be encouraged to use mandatory or non-mandatory standing offers/supply arrangements to satisfy their requirements, whenever possible. A list of standing offers and other instruments is available from the Standing Offer Index (SOI)This information is only accessible to federal government employees..
  2. The Standing Offer Coordination Office provides information associated with the administrative aspects of standing offers and other procurement instruments, including:
    1. facilitate the exchange of information on standing offers and supply arrangements between Public Works and Governments Services Canada ( PWGSC) and clients;
    2. prepare, update and coordinate the distribution of indices of all National Master Standing Offers (NMSOs), Departmental Individual Standing Offers (DISOs), Regional Master Standing Offers (RMSOs) and supply arrangements;
  3. Federal government employees who require additional information or assistance with locating standing offer information can contact the PWGSC Acquisitions Services Support Desk, Business Operations and Service Management, by phone at 819-956-3325 or 1-866-664-6609.
  4. Suppliers requiring additional information on standing offers and supply arrangements can contact the Office of Small and Medium Enterprises InfoLine at 1-800-811-1148, or by email at: RCNContratsCanada.NCRContractsCanada@tpsgc-pwgsc.gc.ca.

3.5.1 Mandatory Standing Offers and Supply Arrangements

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  1. PWGSC has put in place a number of standing offers and supply arrangements that must be used before any new procurement is considered in accordance with the Treasury Board Policy Notice: Business Transformation Initiative – The Way Forward.
  2. The use of standing offers and supply arrangements for the commodity groups listed below is mandatory and these mandatory commodities are listed in the Standing Offer Index (SOI) WebsiteThis information is only accessible to federal government employees..
    • N84: Clothing, Individual Equipment and Insignia
    • N58: Communication, Detection, and Coherent Radiation Equipment
    • N91: Fuels, Lubricants, Oils and Waxes
    • N71: Furniture
    • N70: General Purpose Automatic Data Processing Equipment (Including Firmware), Software, Supplies and Support Equipment
    • N23: Ground Effect Vehicles, Motor Vehicles, Trailers and Cycles
    • D3: Information Processing and Related Telecommunication Services
    • N74: Office Machines, Text Processing Systems and Visible Record Equipment
    • N75: Office Supplies and Devices
    • R: Professional, Administrative and Management Support Services

      Sub-categories:

      1. RO: Professional Services
      2. R1: Administrative and Management Support Services
      3. R2 : Personnel Recruitment
  3. These mandatory standing offer and supply arrangements apply to all departments, as defined in Section 2 of the Financial Administration Act, including the Canadian Forces, and to Crown procurement contracts subject to the Government Contracts Regulationsand the Treasury Board Contracting Policy.
  4. Client departments and agencies continue to be able to acquire goods and services as they have in the past. However, they must first verify whether a mandatory standing offer or supply arrangement exists that meets their requirements. If one does, clients must use it.
  5. On receipt of a requisition for any goods or services within these identified commodity groups, contracting officers must determine if an existing standing offer or supply arrangement can meet the requirement. If so, that standing offer or supply arrangement must be utilized.
  6. The goods or services should not duplicate those already provided under an existing standing offer or supply arrangement at the national or regional level. If the required goods or services are similar, or identical, in nature to goods or services available under existing standing offers or supply arrangements, a full rationale must be provided to justify using another procurement instrument or method of supply. For the process on creating a new standing offer or supply arrangement, see 3.205 Review Process for Creation, Renewal and Extension of Standing Offers and Supply Arrangements.
  7. It should be pointed out to clients that when they use a mandatory standing offer or supply arrangement (with the exception of Departmental Individual Standing Offers), they can receive the goods or services faster and with less administrative cost than by sending a requisition to PWGSC. The value of the acquisition will be limited to their Treasury Board Secretariat delegated purchasing authorities.
  8. Mandatory procurement instruments, such as standing offers and supply arrangements, must be used by client departments acting on their own behalf, or by PWGSC handling a requisition, unless one of the following applies:
    1. The good or service available through the mandatory standing offer or supply arrangement does not meet justifiable operational requirements, including specifications or delivery dates.
    2. The value of the requirement exceeds the call-up limitation of the standing offer or the scope of the supply arrangement.
    3. An existing contract is in place, which guarantees the work to another supplier.
    4. The requirement is subject to contracting obligations under Comprehensive Land Claims Agreement(s) (CLCA), and no mandatory standing offer/supply arrangement exists which addresses the contracting obligations of the applicable CLCA(s);
    5. The requirement will be set aside under the Procurement Strategy for Aboriginal Business (PSAB), and no mandatory procurement instrument exists for PSAB set-asides;
  9. If PWGSC is handling a requisition, and the contracting officer informs the client that a mandatory standing offer or supply arrangement exists for the client's requirement, and the client disputes the opinion, the contracting officer will seek a decision from the appropriate manager or director responsible for that standing offer or supply arrangement. If the client believes that the decision rendered is not appropriate, the client may refer the issue to their respective Acquisitions Account Executive in the Client Engagement Sector. Although, the Account Executives do not make the final decision, they will carefully assess the issue with the director responsible for that standing offer or supply arrangement, in order to have a clear and timely resolution.
  10. If a client department is handling its own procurement, and does not want to use a mandatory standing offer or supply arrangement, it must contact the contracting officer responsible for the appropriate standing offer or supply arrangement (the one that the client department does not want to use), and explain the reason(s).
    1. If the reason(s) are disputed by the contracting offer, the contracting officer will discuss the issue with his manager and director, as required for a decision. If the client considers that the decision rendered is not appropriate, the client may refer the issue with their respective Acquisitions Account Executive in the Client Engagement Sector. Although, the Account Executives do not make the final decision, they will carefully assess the issue with the director responsible for that standing offer or supply arrangement, in order to arrive at a clear and timely resolution.
  11. The contracting officer should record all procurements where an applicable mandatory standing offer or supply arrangement was not used, and the associated reason(s).

    Note 1: Departments can not put their own standing offers or supply arrangements in place, so as to avoid having to use PWGSC standing offers or supply arrangements, as this would defeat the long term benefits and savings of the PWGSC government wide approach.

    Note 2: If a lower price is available for an equivalent good or service, by means other than the mandatory standing offer or supply arrangement, the client department is requested to inform the PWGSC contracting officer responsible for the appropriate standing offer or supply arrangement (the one that the client department does not want to use).

3.10 Competitive Contracting Process

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  1. The Government Contracts Regulations (GCRs) require the solicitation of bids before any contract is entered into, though the GCRs do provide for exceptions to soliciting of bids.

  2. Whenever possible, contractors must be selected using a competitive process. The flexibility to depart from this approach depends on the procurement framework being followed. The type of competitive solicitation that may be used will also depend on the procurement framework.

  3. It is the contracting officer's responsibility to select the most effective process for notifying suppliers of an opportunity by taking into consideration the requirements of the trade agreements and the policies set out in the Supply Manual.

  4. For procedures relative to public advertisement and for publication of a Notice of Proposed Procurement and posting solicitation documents, see 4.75.10 Public Advertisement to 4.75.25 Procedures for Posting Solicitation Documents on GETS. For procurements not publicly advertised, see 4.75.45 Use of Source Lists. For more information on trade agreements, see 3.50 Procurements Subject to Trade Agreements.

3.15 Non-competitive Contracting Process

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  1. In all instances where bids are not solicited, the legal authority to use an exception to soliciting bids must be fully justified by the client department with a reference to the applicable exception to competitive bidding which may apply under the Government Contracts Regulations (GCRs) of the Financial Administration Act (FAA), and the limited tendering provisions of Canada's national and international trade agreements. Contracting officers are also reminded to take into account the procurement provisions under the Comprehensive Land Claims Agreements (CLCAs).

  2. The GCRs require the solicitation of bids before any contract is entered into. However, contracts may be entered into without soliciting bids when:

    1. The need is one of pressing emergency in which delay would be injurious to the public interest (GCRs 6.(a));
      Note: A pressing emergency may be an actual or imminent life-threatening situation, a disaster which endangers the quality of life or has resulted in the loss of life, or one that may result in significant loss or damage to Crown property. See 3.22 Emergency Requirements (Public Works and Government Services Canada as Contracting Authority) for further instructions on Emergency Requirements.

    2. The estimated expenditure does not exceed,

      1. $25,000;

      2. $100,000 where the contract is for the acquisition of architectural, engineering and other services required in respect of the planning, design, preparation or supervision of the construction, repair, renovation or restoration of a work;

      3. $100,000 where the contract is to be entered into by the member of the Queen's Privy Council for Canada responsible for the Canadian International Development Agency and is for the acquisition of architectural, engineering or other services required in respect of the planning, design, preparation or supervision of an international development assistance program or project; GCRs 6.(b))

    3. the nature of the work is such that it would not be in the public interest to solicit bids; or GCRs 6.(c));

    4. only one person is capable of performing the contract GCRs 6.(d)).

    The exception should only be invoked where patents, copyright requirements, or technical compatibility factors and technological expertise suggest that only one contractor exists.

  3. 6.(b)(i) of the GCRs states that where the estimated expenditure does not exceed $25,000, contracts can be awarded without soliciting bids. However, contracting officers are expected to solicit bids whenever it is cost effective to do so.

  4. There is a need to provide more rigor when invoking exception 6.(d) of the Government Contracts Regulations (GCRs) where only one person is capable of performing the contract. When invoking exception 6.(d) for procurements above $25K, the questions found in Annex 3.1 Treasury Board Questions for Sole Source must be answered by the contracting officer with the assistance of the client department. The answers to these questions must be appended to the approval documents and placed on the procurement file (see 6.5.5.1 CPAA Instructions and Annex 6.2 Contract Request Instructions.

  5. With respect to the trade agreements, contracting officers may award a contract without soliciting bids, only if one or more of the limited tendering reasons stated in each applicable trade agreement can be applied. The relevant articles are as follows:

    1. North American Free Trade Agreement (NAFTA) Article 1016: Limited Tendering Procedures;

    2. World Trade Organization Agreement on Government Procurement (WTO-AGP) Article XV: Limited Tendering;

    3. Agreement on Internal Trade (AIT) Article 506: Procedures for Procurement, paragraphs 11 and 12.

    Note 1: A copy of these limited tendering reasons are provided in Annex 3.2 Limited Tendering Reasons contained in the Trade Agreements.

    Note 2: In general, the Supply Manual refers only to NAFTA and the WTO–AGP, as the procedural requirements of the other international trade agreements will be fulfilled following compliance to the procedural requirements of NAFTA and the WTO–AGP. See 1.25.16 Bilateral Free Trade Agreements.

3.15.1 Justification of Non-competitive Process

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  1. While the client department must provide the rationale for any exception to soliciting bids, it is the responsibility of the contracting officers to make sure that the rationale can be adequately supported. Contracting officers are also reminded to take into account the procurement provisions under the Comprehensive Land Claims Agreements.

  2. If there is inadequate or no substantiation, the contracting officer should advise the client of alternative products or sources, if known, and attempt to reach agreement with the client on the most appropriate procurement strategy. When agreement cannot be reached by the contracting officer, the next level of management should be consulted.

  3. Use of any of the GCRs exceptions must be fully justified by the contracting officer with appropriate documentation that sets out the procurement strategy as well as the rationale for the exception used, placed on the procurement file (see 3.15 Non-competitive Contracting Process and 6.5.1 Procurement Plan). The trade agreements also contain provisions to document on file the reasons for the use of limited tendering and the appropriate article must be provided as justification, where applicable. (See 3.15 Non-competitive Contracting Process, paragraph d. and 3.25 Trade Agreements Tendering Approaches, paragraph b.).

3.15.2 Code of Conduct (Sole Source of Supply)

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The content of this section was reviewed and incorporated in sections 3.51 Integrity Overview and 4.21 Integrity Provisions. For reference purposes, section 3.15.2 is available in the Archived Supply Manual: Version 2013-7.

3.15.5 Advance Contract Award Notice

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  1. An Advance Contract Award Notice (ACAN) is a public notice indicating to the supplier community that a department or agency intends to award a good, service or construction contract to a pre-identified supplier, believed to be the only one capable of performing the work, thereby allowing other suppliers to signal their interest in bidding by submitting a statement of capabilities. If no other supplier submits a statement of capabilities that meets the requirements set out in the ACAN, the contracting officer may then proceed with awarding the contract to the pre-identified supplier. It is important to note that an ACAN is not a "competitive" process. Also of note is that an ACAN process, even if conducted in accordance with the Policy, does not constitute a "competitive" process for the purposes of the trade agreements and any Canadian International Trade Tribunal (CITT) challenge. For the purposes of contract approval authorities only, a contract awarded after posting an ACAN for which no valid statement of capabilities is submitted within the notice period is a competitive (electronic) contract.

  2. The objectives of the ACAN process are to:

    1. provide a procurement process that is efficient and cost effective while being fair, open and transparent;

    2. provide potential suppliers with the opportunity to demonstrate, by way of a statement of capabilities, that they are capable of satisfying the requirements set out in the ACAN; and

    3. respect the principles of government contracting by enhancing fairness, access and transparency.

  3. To provide transparency to the procurement process, an ACAN can be used only when there is sufficient justification for not soliciting bids in accordance with the exceptions of the Government Contracts Regulations (GCRs) and, if applicable, in accordance with the limited tendering reasons set out in the applicable trade agreements. (See 3.15 Non-competitive Contracting Process and 3.15.1 Justification of Non-competitive Process)

  4. The ACAN notice must be published on the Government Electronic Tendering Service (GETS) provided through the Buyandsell.gc.ca Tenders minisite. However, before initiating the ACAN, contracting officers must ensure that:

    1. the requirement is sufficiently defined so that industry can understand the government's high level requirements;

    2. a justification is on file to demonstrate compliance with one of the exceptions of the GCRs and, if applicable, one of the exclusions or limited tendering reasons of the applicable trade agreements;

    3. a procurement plan or Contract Plan and Advance Approval (CPAA), as applicable, is placed on the procurement file before an ACAN is posted;

    4. the pre-identified supplier meets the same criteria to be used for assessment of other suppliers who submit statements of capabilities; and

    5. the procedures provided in 3.15 Non-competitive Contracting Process to 3.15.5.20 Documenting the Procurement File are followed.

  5. Contracting officers must ensure that Canada is in a position to accept a statement of capabilities before publishing an ACAN. For more information on the process relative to the statement of capabilities, see 3.15.5.10 Statement of Capabilities (Challenge Process). In circumstances where there is no possibility of another supplier submitting a statement of capabilities or where Canada cannot, for program or policy reasons, accept a statement of capabilities from another supplier, an ACAN must not be published. Accordingly, the use of an ACAN for non-competitive requirements is not mandatory and there is no requirement to seek approval not to publish an ACAN for a requirement. In such cases where the ACAN process is not used, the non-competitive approval authorities apply to the procurement strategy and contract award notices will be issued after contract award. (See 3.15.5.15 Advance Contract Award Notice Exceptions for ACAN exceptions and 7.30 Procurement Reporting and Posting of Award Notices for contract award notices).

  6. ACANs are not to be used to circumvent electronic bidding or other bidding procedures when it is clear that more than one supplier exists that can perform the work.

  7. ACANs are not to be structured in ways that discourage submissions of statements of capabilities. For example, the notice should not say: "This is not a competitive solicitation", or "This is a non-competitive requirement".

3.15.5.1 Advance Contract Award Notice Time Limit

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  1. Although ACANs are posted for a minimum of 15 calendar days on GETS, the contracting officer should consider a longer posting period based on the individual circumstances for each procurement. In determining the ACAN time limit, contracting officers must consider the complexity associated with the procurement.

  2. Furthermore, while for reasons of timeliness and efficiency, contracting officers may enter into negotiations with the pre-identified supplier before the closing of the ACAN posting period, care should be exercised to ensure that any such negotiations do not put the pre-identified supplier at an advantage should a successful challenge take place before contract award. In addition, the pre-identified supplier must be cautioned not to commence any work or incur any costs before contract award.

3.15.5.5 Procedures for Posting an Advance Contract Award Notice

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  1. Contracting officers are responsible for preparing an ACAN for publication on GETS.

  2. The ACAN notice must follow the model provided in Annex 3.3 Model Advance Contract Award Notice and include the following information:

    1. An explanation of the purpose of the ACAN;

    2. A description of the requirement that is sufficiently defined so that industry can understand the government's high level requirements;

    3. The criteria against which all suppliers will be evaluated. Statements of capabilities submitted by potential suppliers will be assessed against these criteria. Information provided must be sufficient to allow other suppliers to determine if they possess the capabilities required to satisfy the requirement. The pre-identified supplier must also meet these criteria;

      Note: In general, the Supply Manual refers only to NAFTA and the WTO–AGP, as the procedural requirements of the other international trade agreements will be fulfilled following compliance to the procedural requirements of NAFTA and the WTO–AGP. See 1.25.16 Bilateral Free Trade Agreements.

    4. The applicability of one or more trade agreements to the procurement for which the ACAN will be issued;

    5. A statement indicating if the procurement is set-aside under the Procurement Strategy for Aboriginal Business;

    6. A statement indicating if the procurement is subject to one or more of the Comprehensive Land Claims Agreement;

    7. A justification for the pre-identified supplier;

    8. A statement indicating that the proposed procurement meets one or more exceptions to soliciting bids under the Government Contracts Regulations (GCRs). (see 3.15 b.);

    9. A statement indicating the exclusion(s) or the limited tendering reason(s) being invoked under the applicable trade agreement(s). Such exceptions must be fully and clearly justified in writing on the procurement file;

    10. A statement regarding ownership of intellectual property, if applicable;

    11. The period of the proposed contract or the delivery date(s), as applicable;

    12. A cost estimate of the proposed contract, where appropriate, provided that it will not prejudice negotiations with the pre-identified supplier, or compromise the supplier's competitive position if a decision is made to proceed with a competitive bidding process;

    13. The name and address of the pre-identified supplier;

    14. An explanation of how suppliers may proceed in responding to an ACAN;

    15. The closing date and time for a submission of a statement of capabilities; and

    16. The name and address of contact for inquiries and submission of statements of capabilities.

  3. When significant information not specifically set out in the ACAN becomes available or a significant clarification is required, it must be provided equally to all interested parties to ensure fairness, openness and transparency. Such information should be provided in an amended ACAN with an extension to the closing date or a new ACAN should be issued, as applicable.

3.15.5.10 Statement of Capabilities (Challenge Process)

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  1. The ACAN process provides suppliers with an opportunity to submit a statement of capabilities regarding work identified in an ACAN.

  2. Statements of capabilities submitted by suppliers:

    1. should be provided in writing within the specified timeframe indicated on the ACAN; and

    2. include documentation demonstrating that the supplier meets the requirements and the criteria as set out in the ACAN.

  3. Despite the timeframe indicated in the ACAN, there may be circumstances when a contracting officer could consider a statement of capabilities received after the specified date but before the award of the contract. Contracting officers should discuss this with their management and Legal Services.

  4. Following receipt of a statement of capabilities, the process is as follows:

    1. All statements of capabilities received by the timeframe indicated in the ACAN are reviewed by the contracting officer in accordance with the criteria provided in the ACAN. The pre-identified supplier indicated in the ACAN is also assessed against those same criteria. The assessment must be kept on file.

    2. When a supplier's statement of capabilities provides sufficient information to indicate that it meets the requirements set out in the ACAN, the supplier is notified of the decision to compete the requirement before proceeding to a full bidding process.

    3. If a statement of capabilities is rejected, a separate review of the rejection is conducted. For Complex procurements, this review would be made at one level higher than the original approval authority, but not lower than that of Manager and not higher than the Assistant Deputy Minister. For Basic procurements the review is performed by the Manager and for Standard procurements this review is performed by the Director.

    4. With respect to statements of capabilities that are rejected, suppliers should be advised in writing of the decision to reject a statement of capabilities before a contract is awarded.

    5. The reasons for the decision to reject a statement of capabilities are included in the file.

    6. Suppliers that have submitted a statement of capabilities are given the reasons why their statement of capabilities was rejected.

    7. The request from a supplier to withdraw/cancel its statement of capabilities is documented on file, and should be provided in writing by the supplier.

  5. If the procurement is being set aside under the Procurement Strategy for Aboriginal Business, statements of capabilities must only be considered from Aboriginal suppliers.

  6. If the requirement subject to an ACAN is cancelled, suppliers that submitted statements of capabilities should be notified in a timely manner.

  7. Contracting officers may request additional information from suppliers or third parties, as appropriate, to ensure that the interested supplier has the capability to meet the requirements set out in the ACAN.

3.15.5.15 Advance Contract Award Notice Exceptions

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  1. Contracting officers must ensure that Canada is in a position to accept a statement of capabilities before publishing an ACAN. In circumstances where there is no possibility of another supplier submitting a statement of capabilities or where Canada cannot, for program or policy reasons, accept a statement of capabilities from another supplier, then the contract should be awarded on a non-competitive basis with transparency achieved through a contract award notice. Examples of situations where an ACAN is not to be published include:

    1. when, for reasons of security or public interest, the information contained in an ACAN cannot be provided to the public;

    2. confirming orders;

    3. Corps of commissionaires, if right of first refusal applies;

    4. government direction, such as Munitions Supply Program;

    5. works of art;

    6. where, for reasons of extreme urgency brought about by events unforeseeable by the entity, the goods or services could not be obtained in time by means of open or selective tendering procedures;

    7. tobacco products purchased for inmates by Correctional Service Canada;

    8. regulatory body determined non-competitive service contracts (e.g. National Transportation Agency, Canadian Radio-Television and Telecommunications Commission);

    9. consolidated announcements that advertise a program consisting of several non-competitive standing offers/contracts (pharmaceutical and medical supplies are the only products currently eligible for this exclusion); and

    10. when an entity needs to procure consulting services regarding matters of a confidential nature, the disclosure of which could reasonably be expected to compromise government confidences, cause economic disruption or similarly be contrary to the public interest.

  2. In such cases, the rationale underlying the decision not to publish an ACAN should be well documented on the procurement file.

3.15.5.20 Documenting the Procurement File

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When the decision is made to proceed with an ACAN, contracting officers are required to document the procurement file with the actions taken in each phase of the ACAN process. Procurement files must include documentation of the following justifications, reasons and associated steps, as a minimum:

  1. The rationale for the pre-identified supplier including the relevant exception to soliciting bids under the GCRs and, as applicable, the limited tendering reasons under the trade agreements (see 3.15 Non-competitive Contracting Process to 3.15.5 Advance Contract Award Notice).

  2. The actions taken to determine if other suppliers may have been capable of performing the work. When an industry analysis is conducted to identify the possible companies that could perform the work and one company is identified but there is a doubt (or uncertainty) that there may be additional suppliers for this requirement, then an ACAN would be published. Justification of the only known supplier based on the industry analysis along with an approved procurement strategy must be put on the procurement file before an ACAN is posted; e.g. the identified supplier is the only known source based on the industry analysis. If an exhaustive industry analysis has been completed and there is no doubt that there is only one provider capable of performing this work, then a non-competitive process would be more appropriate and an ACAN would not be posted.

  3. When invoking exception 6(d) of the GCRs for procurements above $25K, the responses to the questions contained in Annex 3.1 Treasury Board Questions for Sole Source must also accompany the approval document and be on file (see 3.15 d.).

  4. The assessment criteria and the assessment of the pre-identified supplier.

  5. An approved procurement strategy (see 6.5.1 Procurement Plan).

  6. The ACAN notice(s) posted on the Government Electronic Tendering Service (GETS) and, if applicable, the amended notice.

  7. The process followed in either accepting or rejecting a statement of capabilities from another supplier or suppliers, including the independent review, if required, and the final assessment of the suppliers (see 3.15.5.10 d.).

  8. Evidence that all suppliers that submitted a statement of capabilities were notified and were given the reasons why their statement of capabilities was rejected, if requested (see 3.15.5.10 Statement of Capabilities (Challenge Process).

  9. Details of any resulting competitive process, if conducted.

3.20 Procurement Schedule

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  1. Early in the process, contracting officers should develop a procurement schedule for the entire procurement cycle in consultation with the client. The following, as applicable, must be taken into consideration:
    1. review and analysis of the client's requirements;
    2. time for Request for Information process;
    3. the Procurement Review Committee process;
    4. assessment/approval for the use of a fairness monitor;
    5. approval of the Procurement Plan or the Contract Planning and Advance Approval;
    6. solicitation documents preparation;
    7. translation requirements;
    8. the time required for the preparation of and the receipt of bids, offers or arrangements, including site visits and bidders conference, if applicable;
    9. bidding period, and extensions;
    10. technical evaluation period;
    11. financial evaluation;
    12. benchmarking or other pre-award testing;
    13. recommendations from legal and financial reviews;
    14. the evaluation process;
    15. the requirement for negotiation;
    16. the obtaining of security clearances;
    17. the level of approval required;
    18. approval document preparation;
    19. any other item that might contribute to the time to complete the procurement.
  2. In the normal course of events, final draft submissions must be received by the Treasury Board Secretariat (TBS) seven weeks before being scheduled on a Treasury Board (TB) agenda.
  3. Overall, the contracting officer should expect at least 16 weeks process time for a qualified bid, offer or arrangement to obtain TB approval. The overall procurement process may take as much as six months to effect a major procurement for the client, assuming there are no challenges during the process. When it is reasonable to expect that a TB approval will be required, the validity period must be sufficient to ensure that bids, offers or arrangements are still valid when the TB approval is received.

3.21 Managing Urgent Acquisitions

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  1. An urgent requirement (acquisition) is one that calls for immediate action and conveys a sense of urgency. The contracting officer will decide, in consultation with the client and PWGSC management as required, if the requirement is to be treated as an urgent acquisition. Defining an acquisition as urgent will depend on the current client department's priorities as well as government priorities as a whole. For example, an urgent requirement may be defined as those acquisitions where an undue delay could have a significant economic impact, an effect on health and safety programs, or a risk of not meeting an important project/program milestone.
  2. In most cases, it is important that PWGSC be engaged early in the process, respecting roles and responsibilities, to ensure that a comprehensive procurement strategy is developed to meet the client's operational objectives.
  3. When the requirement has been identified as urgent, the following strategies may be utilized:
    1. PWGSC and the client should use an integrated team approach with dedicated personnel working closely with the client's project team. Where there are multiple urgent requirements, consideration should be given to having a single point of contact in each department to coordinate all of the acquisitions.
    2. early development of sound communication channels is crucial, involving all stakeholders. Urgent requirements will be given priority attention, and concurrent review processes should be established and used whenever possible.
    3. contracting officers should provide information to the industry as early as possible in the process, using such pre-solicitation tools as Request for Information (RFI), Solicitation of Interest and Qualification (SOIQ), and Price and Availability Enquiries (P&A), where appropriate. For more information on the use of these tools, see 4.5.
    4. in cases where Treasury Board project approval is required but has not yet been obtained by the client, consideration must be given to developing a joint TB submission signed by both ministers that will seek (advance) contract approval at the same time. The TBS program sector analyst should always be contacted during the development of the TB submission for advice and guidance in regards to the content and on the approval process.

3.22 Emergency Requirements (Public Works and Government Services Canada as Contracting Authority)

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  1. A pressing emergency is defined in accordance with the Treasury Board notice CPN 2007-4 - Non-Competitive Contracting and includes:
    1. an actual/imminent life-threatening situation;
    2. a disaster endangering quality of life or safety of Canadians;
    3. a disaster resulting in the loss of life; or
    4. a disaster resulting in significant loss/damage to Crown Property.
  2. Part III Emergency Contracting Limits of the Treasury Board Contracts Directive allows that any department or agency may enter into and amend a contract up to a total value of $1 million (including amendments and all applicable taxes including GST or HST) in response to a pressing emergency requirement. The most senior official available should approve such contracts. It is important to verify each department’s internal delegation and implementation policies before applying these instructions.
  3. Additionally, Part III of the Treasury Board Contracts Directive contains an exceptional emergency contracting authority, which allows that the Minister of Public Works and Government Services Canada (as a contracting authority) may enter into a non-competitive contract up to a total value of $15 million without Treasury Board approval in response to pressing emergencies by departments where there is significant human and/or financial risks. Note: The Minister of Public Works and Government Services Canada (PWGSC) has delegated this authority to the Assistant Deputy Minister, Acquisitions Branch and the Associate Assistant Deputy Minister, Acquisitions Branch.
  4. PWGSC’s Acquisitions Branch emergency contracting authority for client departments can be used only if all of the following criteria are met:
    1. the National Security Exception or extreme urgency provision of each applicable trade agreement has been invoked;
    2. the requirement cannot be satisfied by normal contracting procedures due to the urgency of the situation; and
    3. the applicable client department provides their Minister’s approval of the initiation of the emergency requirement by PWGSC to the Minister of PWGSC.
  5. Contracts for emergency requirements must be approved by the most senior official available. PWGSC contracting officers must provide a procurement plan or a briefing note describing the reasons for requesting the emergency requirement, and identifying the extreme urgency provision of the applicable trade agreements being invoked and the proposed procurement strategy.
  6. In some emergency cases, Canada may have to consider limiting a contractor’s liability or may have to provide indemnification. It is the obligation of the client department to get their Chief Financial Officer’s (CFO) approval for Limitation of Liability, even when PWGSC is acting as the contracting authority. Section 8.5 of the TB Policy on Decision Making in Limiting Contractor Liability in Crown Procurement Contracts states the following:

    When an emergency arises where a limitation of liability or indemnification of the contractor is justified, and where a delay to seek approval of the limitation or indemnification would be injurious to the public interest, the contracting authority is to obtain, at a minimum, a preliminary approval from its departmental senior financial officer, or his or her delegate, before entering into the contract. Departments are to include the financial assessment as well as all the limitation or indemnification details in the report that is sent to the Treasury Board of Canada Secretariat (TBS) within 60 days of the authorization or beginning of the work. The departmental senior financial officer or his or her delegate is to approve this report.

  7. Contracting officers must report on the details of the use of the emergency contracting authority to the TB Secretariat within 60 calendar days of the use of the authorization or beginning of the work. The Treasury Board Contracts Directive requires that the report should contain as a minimum the following:
    1. detailed information about the circumstances of the emergency situation;
    2. the type and total value of the awarded contract;
    3. the reason(s) why the bidding requirements were not practical or permissible;
    4. the department or agency’s delegated contracting authority level at which the emergency contract entry was approved.
  8. Ratification of emergency contracts

    Treasury Board approval is required for any emergency contract over $15 million. If an emergency contract exceeding $15 million is entered into, ratification of the contract must be sought from the Treasury Board as soon as possible. If a contracting authority uses the emergency contracting authority in error, ratification would also be required when the contract value exceeds the departmental basic or exceptional limits. The Treasury Board submission for ratification is to be submitted in addition to the report detailing the emergency contract.

  9. For emergency procurements subject to Comprehensive Land Claims Agreements (CLCAs), contracting officers should contact the Acquisition Policy and Process Directorate (APPD) by email at RCNAPPRERTGSAEA.NCRACQBCLCAPSAB@tpsgc-pwgsc.gc.ca for assistance with determining how a CLCA may affect the overall procurement strategy. See section 9.35 Comprehensive Land Claims Agreements for additional information.

3.22.5 Exceptions to Processes when an Emergency

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  1. With respect to the Vendor Performance Corrective Measure Policy (VPCMP), an exception may be made in accordance with section 8.180.25 Exceptions.
  2. With respect to the Integrity Provisions (see section 3.51 Integrity Overview), contracting officers must first verify with the Special Investigations Directorate (SID) that the supplier is compliant. Where the emergency is occurring after hours, and SID is not available, the verification process should be completed the following day.

3.22.10 Emergency Requirements (Government Departments and Agencies)

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  1. Part III of the Treasury Board Contracts Directive allows that any department or agency may enter into and amend a contract up to a total value of $1 million (including amendments and all applicable taxes including GST or HST) in response to a pressing emergency requirement. The most senior official available should approve such contracts. It is important to verify each department’s internal delegation and implementation policies before applying these instructions.
  2. The Treasury Board Contracts Directive also contains the following exceptional emergency contracting authorities:
    1. the Minister responsible for the Canadian International Development Agency (CIDA) - $4 million for an international assistance program or project;
    2. the Minister of the Department of National Defence (DND) - $5 million for fuel, food, water and transportation services during urgent deployments of Canadian Forces units, under authorized operational orders, in situations where there will be significant human and/or financial risk; and
    3. the Minister of the Department of Foreign Affairs and International Trade Canada (DFAIT) - $15 million for services contracts related to Chanceries in response to a pressing emergency and/or national security related to threats to Canadian missions abroad and where there is significant human and/or financial risk.
    4. the Minister of Fisheries and Oceans - $10 million in response to pressing emergencies caused by oil spills, in situations where there will be significant human and/or financial risk.
  3. The emergency contracting authority listed under paragraphs b. ii., iii., and vi. can be used only if all of the following criteria are met:
    1. the national security exception or extreme urgency provision of each applicable trade agreement has been invoked;
    2. the requirement cannot be satisfied by normal contracting procedures due to the urgency of the situation; and
    3. the Minister of the applicable department approves the use of the special authorities.
  4. If the requirement is covered under a Standing Offer (SO) the client may issue a call-up only in accordance with call-up limitations specified in the SO. If the requirement exceeds the call-up limitations, the client should contact PWGSC to handle the call-up on its behalf.
  5. If the requirement is not covered under an SO, then the procurement may be handled by the client department if it is within their emergency contracting authority. For a procurement that falls outside of the client's emergency contracting authority, the client should immediately contact PWGSC and then send a requisition to PWGSC for the procurement. The client must clearly specify the technical requirement and should provide, as soon as possible, the sourcing and availability information if they know it, and substantiation for the emergency requirement as per subsection 3.22 e.
  6. Details of the use of emergency contracting authority must be reported by the client departments to the TB Secretatriat within 60 calendar days of the use of the authorization or beginning of the work, as per instructions found at subsection 3.22 g. This applies to all client departments issuing contracts under their emergency delegated authority and all PWGSC Branches that issue contracts under the PWGSC Minister’s $1 million emergency delegation.
  7. For ratification of contracts see subsection 3.22 h.
  8. For emergency procurements subject to Comprehensive Land Claims Agreements (CLCAs), see subsection 3.22 i.

3.22.15 Additional Considerations on Managing Emergency Requirements

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It is important to understand that one should not be too restrictive during an emergency and should let the requirement and timeline dictate the process to some degree. The following should be considered by contracting officers before an emergency occurs to help mitigate risk and loss during what may be a very stressful time, and to facilitate procurement when it is critical to be quick, calm and flexible.

  1. Remain calm and focused on the issue. Refer to any departmental procedures established to facilitate emergency contracting.
  2. Create a dedicated team for emergency contracting requirements, either on an "as needed" basis or on a more permanent scale.
  3. To facilitate a speedy response, assign a liaison officer who will be the point of contact for assisting and coordinating an organization’s resources.
  4. Ensure that your team is equipped to handle an emergency by ensuring that they have the tools in place to facilitate their duties.
  5. Be available and ensure that all the key players are at all critical meetings and briefings.
  6. Engage PWGSC early in the process (client departments).
  7. Maintain an open line of communication with all stakeholders.
  8. Immediately identify the most senior official available to approve a contract when using the department’s own $1 million emergency authority (client departments).
  9. Brief senior management often and document any decisions and deviations to the process.
  10. Identify specialists within your department who may be useful such as legal services, policy advisors, financial analysts, risk management advisors, commodity experts, etc.
  11. Establish and collaborate with contacts in other government departments and other levels of government such as provincial and territorial.
  12. Establish a process for quick buys including fast tracking approvals.
  13. Consider new and innovative solutions.
  14. Reduce the risk and be prepared.

3.25 Trade Agreements Tendering Approaches

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  1. The government achieves competitive contracting through two sourcing methodologies, which include: electronic bidding through an open bidding process, and traditional bidding using suppliers lists.
  2. The three tendering approaches under the trade agreements are:
    1. Open Tendering:Where a Notice of Proposed Procurement (NPP) is advertised and, any supplier may submit a bid;

      Open Tendering is the preferred approach.

    2. Selective Tendering:
      1. involving the use of a one-time list of qualifed suppliers:

        This is a two stage procurement where potential suppliers express an interest in participating and meet predetermined qualifications for participation publicized in the NPP at the first stage. Tender documentation is issued to those suppliers meeting the qualifications at the second stage. For the North American Free Trade Agreement (NAFTA) and the World Trade Organization Agreement on Government Procurement (WTO-AGP), an NPP must be published at both stages of the procurement (it is also acceptable to amend the original NPP once the tender closing date has been determined). Any supplier who wishes to bid at the second stage may do so, as long as there is sufficient time to carry out the qualification process;

      2. involving the use of a permanent list of qualified suppliers *:

        This is where a source list is developed and maintained and qualified suppliers for the product or service in question are issued the bid documentation. Any other potential supplier who requests bid documentation must be considered. For NAFTA, WTO-AGP and the Agreement on Internal Trade (AIT), an annual notice of the existence of the source list must be published (use the NPP form). For AIT, when using a source list, all qualified suppliers in a given category on a source list must be invited to bid for all procurement in that category.

    3. Limited Tendering: A process that allows for deviations from the above procurement practices. In situations, where a specific limited tendering justification can be applied, limiting the number of suppliers, to one or more suppliers, is allowed. While limited tendering is often used for sole source procurements, it can also be used in competitive procurements.

    *A permanent list of qualified suppliers is also known as a source list.

  3. For the procedure for publication on GETS, see 4.75.20 Procedure for Publication of Notice of Proposed Procurement on GETS. In addition to the above, specific government enterprises (Crown corporations) subject to NAFTA, Annex 1001.1a-2 Government Enterprises, may use a notice of planned procurement to advertise potential procurements. This notice is normally published at the start of a fiscal year and lists potential procurements for the enterprise in the upcoming fiscal year.

    A response from potential suppliers to a notice of planned procurement is not required.

    The notice of planned procurement may also be used as a notice regarding a qualification system. When used in this manner, a response from suppliers would be required. Tender documentation is issued to those suppliers meeting the qualifications.

3.30 Methods of Supply

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  1. Public Works and Government Services Canada ( PWGSC) uses a variety of approaches to meet procurement requirements. This spectrum ranges from specific contracts which precisely define the deliverables to be provided to a specific client by a specific date, to various procurement instruments for use by a single or many departments and agencies, for needs which are sometimes less well defined at the outset.
  2. There are essentially three methods of supply for procuring goods and services, which are:
    1. contracts (including contracts with task authorizations);
    2. standing offers, and
    3. supply arrangements.
  3. The contracting officer, in consultation with the client, chooses the method of supply that best satisfies the client's requirements.
  4. For additional information on when to use a contract (including contracts with task authorizations), a standing offer or a supply arrangement, see 3.35 Contracts, 3.40 Standing Offers and 3.45 Supply Arrangements. Contracting officers should also consult the comparison table in Annex 3.8: Comparaison of Different methods of Supply to assist them in determining which method of supply should be used when the precise nature, quantity and/or timing of the need cannot be set out in advance.

3.35 Contracts

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  1. Contracts for goods, services and construction are generally used to meet unique, well defined requirements for a single client but they may also be used to meet the requirements of more than one client. They are used where a standing offer or supply arrangement is not warranted.
  2. For more information on the required content of a contract, see Chapter 4 - Solicitation Process.

3.35.1 Contracts with Task Authorizations

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3.35.1.1 Definition

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  1. A contract with Task Authorizations ( TAs) is a method of supply for services under which all of the work or a portion of the work will be performed on an "as and when requested basis" through predetermined conditions including an administrative process involving task authorizations. Contracts with TAs are used in service contracting situations when there is a defined need by a client to rapidly have access to one or more categories of service(s) that are expected to be needed on a repetitive basis during the period of the contract. Under contracts with TAs, the work to be carried out can be defined but the exact nature and timeframes of the required services, activities and deliverables will only be known as and when the service(s) will be required during the period of the contract. The contract with TAs must stipulate the conditions for issuing TAs. A TA is a structured administrative tool enabling PWGSC or a client to authorize work by a contractor on an "as and when requested" basis in accordance with the conditions of the contract. TAs are not individual contracts.

3.35.1.5 Application

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  1. Contracts with TAs may be used for service requirements such as:
    1. Professional Services;
    2. Informatics Professional Services;
    3. Technical Investigation and Engineering Studies;
    4. some types of Repair and Overhaul (R&O) services where work authorizations issued are considered task authorizations, i.e. Additional Work Requirements (AWR); Mobile Repair Party (MRP); Special Investigations and Technical Studies (SITS); Project Work Order (PWO).
  2. Contracts with TAs are not to be used for shipbuilding or ship refits. Nor are they to be used for those R&O work authorizations that are not considered task authorizations, i.e. Selection Notice and Priority Summary (SNAPS); Repairable Materiel Request (RMR); Quartermaster Transfer Orders (QTO); and Vehicle Movement Orders (VMO).
  3. Although TAs are used for service requirements, they may be used to purchase incidental goods that are related to a specific service requirement when these goods will later become the property of the government. When this incidental acquisition of goods will be necessary, the Contract Planning and Advance Approval (CPAA) form or procurement plan (see 3.35.1.15) and the solicitation and resulting contract must address the conditions for this incidental acquisition of goods, with appropriate limitations defined. TAs must not be used to have the contractor acquire goods on behalf of the client that are outside the scope of the work in order to circumvent the normal procurement process. For instance, a contract with TAs for engineering services cannot be used to purchase software unless this requirement was part of the original solicitation and the related payment provisions of the contract.
  4. Directors may approve or prohibit classes of procurement in which TAs may be used.

3.35.1.10 Conditions of Use

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  1. (a) Contracts with task authorizations that are improperly used can lead to major problems between the government and its suppliers, between PWGSC and its clients, and for the government in the eyes of the public. When a contract with TAs is being considered as a method of supply for a particular procurement, before seeking approval for the procurement strategy, the contracting officer must follow all the applicable procedures detailed in 3.35.1 Contracts with Task Authorizations. In instances when the TAs are issued only by PWGSC, some of these procedures may not apply (i.e. roles and responsibilities, setting client limits for issuing TAs, the guide for PWGSC's clients, the Record of Agreement, some reporting requirements).
  2. As conditions of use of contracts with TAs, the contracting officer must:
    1. ensure the contract with TAs is the appropriate method of supply for these services. (Refer to 3.35.1.5 Application and Annex 3.8: Comparaison of Different methods of Supply attached, and other sections relative to methods of supply included in the Supply Manual).
    2. decide whether to allow the client to issue TAs, and determine the financial limits for issuing TAs by clients. These decisions should be made by PWGSC in consultation with the client in accordance with 3.35.1.30 Setting financial limits on Individual Task Authorizations.
    3. provide the client the Guide for Preparing and Administering Task Authorizations – for PWGSC's Clients ( Annex 3.4.1: A Guide to Preparing and Administering Task Authorization for PWGSC Clients) with an explanation of its purpose and discuss as required.
    4. reach an agreement with the client regarding the roles and responsibilities of both organizations, including responsibilities for reporting. In this regard, the use of the Record of Agreement template pertaining to the use of Task Authorizations ( Annex 3.4.2: Record of Agreement Template – for PWGSC Clients) is strongly encouraged. The agreement must include the provision for timely receipt of documentation such as:
      1. copies of all TAs with their attachments;
      2. copies of all revisions to TAs with their attachments;
      3. copies of all claims/invoices, supported by reports.
    5. follow the procedures detailed in 3.35.1.15 Approval Documents for Contracts with Task Authorizations to 3.35.1.60 Reporting.
    6. discuss, as required, the use of contracts with TAs with the client, in particular the administrative process for authorizing and issuing TAs.

3.35.1.15 Approval Documents for Contracts with Task Authorizations

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  1. For contracts with TAs, the Contract Planning and Advance Approval (CPAA) form or procurement plan for a contract with TAs must address the following, as applicable:
    1. the reasons why the services are deemed suitable for this method of supply.
    2. the justification for the proposed financial limits for issuing TAs by clients.
    3. a statement confirming that the Guide for Preparing and Administering Task Authorizations – for PWGSC's Clients was provided, and discussed with the client, as required.
    4. a statement confirming that an agreement was reached with the client regarding roles and responsibilities of both organizations or a statement confirming the client's commitment to reaching such an agreement before issuance of the bid solicitation.
    5. a statement confirming that discussions took place with the client on the use of contracts with TAs, before the client authorizes the first task.
    6. a description of the contract monitoring process and activities to be implemented or carried out.
  2. See Chapter 6 for additional instructions on the use and preparation of the CPAA form or procurement plan.
  3. The approval authority for contracts with TAs, and for amendments which will amend the provisions of a contract with TAs, is in accordance with the approvals and authorities for contracts detailed in Chapter 6.

3.35.1.20 Bid Solicitations and Resulting Contract Documents

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  1. (a) Contracting officers must ensure that the bid solicitation and resulting contract document(s) that they issue and use to establish the subsequent contract with task authorizations follow the standard approach for issuing solicitations (see Chapters 3 and 4). For any portion of work to be performed on an "as and when requested" basis, the bid solicitation and the resulting contract document must include the following:
    1. a clear Statement of Work (SOW) describing, in broad terms, the scope of work that will be performed pursuant to issued TAs.
    2. a description of the administrative process for authorizing and issuing TAs and all applicable SACC Manual clauses relative to TAs. In the case of multiple contracts with TAs, the evaluation portion of the solicitation must include the contractors' order of ranking process (generally as part of the basis of selection clause) and, the resulting contract portion must include the contractors' order of ranking and the work allocation process (to be completed at the time of contract award). The following SACC Manual clauses relative to TAs must be used for all clients, as applicable: B9030C, B9031C, B9051C, B9053C, B9054C, B9056C, C9010C and C9011C.
    3. the task authorization limits for authorizing and issuing TAs by the client in accordance with the guidance in 3.35.1.30.
    4. the applicable form for authorizing and issuing TAs. See 3.35.1.25 Forms for further guidance
    5. the payment provisions applicable to the TA such as basis or bases of payment (for example, SACC Manual clauses C0204C and C0209C) and method(s) of payment.
    6. Canada's obligation and Canada's total liability:
      1. when all the work under a contract will be performed through TAs:
        1. the SACC Manual clause B9030C must be used to limit Canada's obligation for TAs and to provide a minimum work guarantee to the Contractor; and,
        2. the SACC Manual clause C9010C must be used when the contract with TAs is subject to a Limitation of Expenditure to limit Canada's total liability under the contract for all approved TAs. The "Total estimated cost" shown on the cover page of the contract document must equal the total of the limitation of expenditure stipulated under the clause.
      2. when only a portion of the Work will be performed through task authorizations:
        1. the SACC Manual clause B9031C must be used to limit Canada's obligation under the task authorizations; and,
        2. the SACC Manual clause C6001C must be used when the contract with TAs is subject to a Limitation of Expenditure to limit Canada's total liability under the contact. The "Total estimated cost" shown on the cover page of the contract document must equal the total of the limitation of expenditure stipulated under the clause.
  2. As contracting officers are responsible for monitoring the use of TAs, they must also consider including a provision for reporting of usage of TAs by the contractor (i.e. SACC Manual clause B9056C). Also see 8.70.20(b) for details on administration of contracts with task authorizations.

3.35.1.25 Forms

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The contracting officer should use the form PWGSC- TPSGC 572 (PDF Version 489 KB)This information is only accessible to federal government employees. - (Help on File Formats) Task Authorization, for the authorization of tasks by both PWGSC and clients other than the Department of National Defence (DND). This form is available through the PWGSC Forms Catalogue Web site. Alternatively, any locally developed and approved task authorization forms may be used for non-DND contracts. The form DND 626 Task Authorization must be used in contracts for DND . Forms PWGSC- TPSGC 942 (PDF Version 130 KB)This information is only accessible to federal government employees. - (Help on File Formats) (Call-up against a Standing Offer), PWGSC-TPSGC 1379 (PDF Version 56 KB)This information is only accessible to federal government employees. - (Help on File Formats) (Work Arising or New Work), and GC 111 (PDF Version 142 KB)This information is only accessible to federal government employees. - (Help on File Formats) (Purchase Order) must not be used as a task authorization form in a contract with TAs. (Note: Only government employees have access to the above mentioned forms.)

3.35.1.30 Setting financial limits on Individual Task Authorizations

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  1. Task authorizations may be authorized and issued by the client and/or PWGSC. PWGSC contracting officers who have been delegated services contract approval and signing authority have no maximum limit on the dollar amount for authorizing individual TAs up to the total approved contract value, unless directed otherwise by their management. The decision to allow TAs to be issued by a client is made by PWGSC in consultation with the client. When the client will be allowed to authorize TAs, the PWGSC contracting officers must establish a maximum limit on the dollar amount of a TA (including Goods and Services Tax (GST) or Harmonized Sales Tax (HST)) authorized by the client. In establishing such limits for individual TAs and any revisions to those TAs, contracting officers should seek to achieve a balance between operational effectiveness and contract risk management, and should consider the following when setting the client's TA limit:
    1. whether an agreement has been reached between the client and PWGSC on the conditions of use of TAs. (See 3.35.1.10 Conditions of Use).
    2. the client and the industry's past performance history relative to the effective use of contracts with TAs, as experienced by the contracting officer and PWGSC colleagues/managers.
    3. the procurement/contract management expertise that exists in the client department:
      1. Whether training is available/required.
      2. Whether the client department policies and procedures are in place and whether these are enforced. For example, the internal procedure for the administration of TAs for the Department of National Defence (DND) is contained in article 3.3.2 of DND's Procurement Administration Manual (PAM).
    4. operational requirements, e.g. time sensitivity of tasks.
    5. contract scope and risk associated with individual tasks:
      1. The clarity and level of detail in the contract statement of work.
      2. Anticipated complexity and duration of individual tasks.
      3. Whether tasks can be easily priced.
      4. The average value of TAs, the frequency of tasks and the number of tasks anticipated during the period of the contract.
    6. as applicable, the total estimated value of work that will be carried out through the portion of the work that is not performed through TAs in relation to the total estimated value of work that will be performed through TAs.
    7. the frequency of reporting on task authorizations.
  2. Furthermore, in setting the value at which PWGSC must authorize individual TAs, contracting officers must ensure that this PWGSC involvement will add value to the task authorization process while at the same time ensuring that PWGSC maintains adequate control over the TA process. Added value can be in several forms, such as financial oversight or comparisons with similar contracts for other clients to ensure value for money. Setting the client's TA limit should be subject to a department's experience in administering TAs and contracting officers may want to consider setting a limit such that PWGSC authorizes a representative amount of TAs.

3.35.1.35 Separation of Duties

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The Treasury Board Directive on Delegation of Financial Authorities for Disbursements requires that the authority to enter into contract or amendment must be separate from the certification authority required under section 34 of the Financial Administration Act. In Chapter 3 of the 2008 December Report of the Auditor General of Canada, the Office of the Auditor General raised the issue of separation of duties with respect to task authorizations and stated that combining procurement and certification functions under the responsibility of one individual was not in keeping with the Treasury Board Policy on Delegation of Authorities. As a result, although task authorizations are not individual contracts, PWGSC applies the principle of separation of duties to task authorizations issued for PWGSC's own needs; i.e. the PWGSC individual who signs the task authorization must not also certify the associated invoices. In its Guide to Preparing and Administering Task Authorizations - for PWGSC's Clients, PWGSC recommends this practice to all its clients. However, as specified in the above-mentioned TB Directive, where the client's current processes in place or other circumstances do not allow such separation of duties, alternate control measures may be implemented by the client. The client is responsible to ensure that its current processes or alternate control measures can withstand scrutiny under audit.

3.35.1.40 Authorizing and Issuing Task Authorizations

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  1. The client organization authorized to issue tasks to the contractor is responsible for authorizing and issuing TAs in accordance with the process detailed in the contract. As a minimum, the client organization is responsible for:
    1. ensuring the work requirement of the TA including the deliverables and the schedule, as applicable, is in accordance with the scope of the contract.
    2. providing the contractor with the task description, the payment provisions and obtaining the level of effort, as applicable.

      Setting dates or timeframes for completing tasks must take into consideration the expiry date of the contract. A task must be completed on or before the expiry date of the contract, however, if a task cannot be completed by such date, a contract amendment to extend the contract period to the task completion date must be issued by the contracting officer before the TA can be issued.
    3. finalizing the task authorization, including the total value of the TA (GST/HST extra), in accordance with the contract.
    4. obtaining all applicable signatures (client, or PWGSC, or both, as applicable; and contractor), and the date of these signatures on the TA.
  2. Integrity Provisions
    1. Once initial verification is completed as per section 5.16 Integrity Compliance, contracting officers should regularly verify in Vendor Information Management (VIM) system that the supplier remains free and clear of any convictions, charges, investigations or discharges.
    2. During the contract period, where a supplier has been identified as committing certain acts or offences (see 5.16 Integrity Compliance), the Assistant Deputy Minister, Acquisitions Branch (ADM/AB) must approve the continued use of such a contract.

3.35.1.45 Administration of the Task Authorizations by Public Works and Government Services Canada's Clients

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For details, see the Guide to Preparing and Administering Task Authorizations - for PWGSC's Clients in Annex: A Guide to Preparing and Administering Task Authorization for PWGSC Clients

3.35.1.50 Revision of a Task Authorization by the Client

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  1. The client may revise a TA that it originally authorized subject to the work being within the scope and value of the contract as well as within the client authority limit set in the contract. Any revision to the TA is subject to concurrence by the contractor. A TA revision, which will bring the TA value above the client TA limit, must be referred to the contracting officer.
  2. An authorized TA may be revised to either reduce an activity (or activities) or to cancel the task in its entirety, however a TA cannot be revised to terminate a task. In situations when the contractor is in default or for the convenience of Canada, the termination provisions of the applicable general conditions will apply and the contract may be terminated either entirely or in part for default or for convenience. Such matters must be referred to the PWGSC contracting officer.

3.35.1.55 Monitoring and Oversight

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  1. Contracting officers must monitor issued TAs to ensure they comply with the contract conditions. They must also review progress reports to ensure the work is being performed in accordance with the contract and the issued TAs and to monitor the amount expended against the contract value.
  2. If the monitoring of the authorized and issued TAs demonstrates that the TA process is not in accordance with the contract or the agreement with the client, the specific corrective measures must be implemented. This is addressed in the Record of Agreement template in Annex 3.4.2, paragraph 5. The contracting officer must notify the contractor when the limit of the client's authority specified in the contract is reduced or revoked. Furthermore, invoking penalty or termination provisions should not be undertaken without consultation with Legal services.

3.35.1.60 Reporting of Contracts with Task Authorizations

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Contracting officers must report on contracts with Task Authorizations (TAs), or amendments thereto. See 7.70.35 Contracts with Task Authorizations - Coding for details.

3.40 Standing Offers

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  1. A standing offer (SO) is an offer from a supplier to Canada that allows Canada to purchase goods and/or services, or a combination of goods and services, as and when requested, during a specific period of time, through the use of a call-up process which incorporates the conditions and pricing of the standing offer.
  2. A standing offer itself is not a contract. A separate contract is formed each time a call-up for the provision of goods and/or services is made against a standing offer. When a call-up is made, it constitutes an unconditional acceptance by Canada of the supplier's offer for the provision, to the extent specified, of the goods and/or services described in the standing offer. Canada's liability is limited to the actual value of the call-ups made by the identified user(s) within the period the standing offer is valid.
  3. This method of supply is used to satisfy the requirements of departments and agencies for a specified period, when precise details on expected quantities for the period are not known in advance. Standing offers may authorize one or more clients to issue call-ups for goods or services directly to offerors up to the maximum call-up limits indicated in the standing offer. If so stated in the standing offer, PWGSC may issue call-ups above the client call-up limit.
  4. For a description of the five types of standing offers that may be authorized, see 7.10.1 Standing Offers.
  5. A standing offer may be valid for one or more years. The selection of the appropriate time period is a process that varies significantly by individual commodity.
  6. The quantity of goods and/or level of services specified in the Request for Standing Offers (RFSO) and the resulting standing offer(s) are only an approximation of the requirements given in good faith by Canada to the offerors.
  7. All government policies, regulations and procedures related to contracting, including those required under the trade agreements, apply to the standing offer method of supply.
  8. The total estimated expenditure of the requirement (the anticipated total value of all accumulated call-ups) proposed to be satisfied by the standing offer method of supply, Goods and Services Tax/Harmonized Sales Tax (GST/HST) included, must be used to determine the applicability of any procedures required by any trade agreement to which the Government of Canada is signatory. If it is intended to issue more than one standing offer against the RFSO, the sum of the total estimated value, GST/HST included, of all resulting standing offers must be used to obtain approval.
  9. Contacting officers should consider using a standing offer where appropriate considering the advantages and disadvantages of the approach:
    1. Advantages of a standing offer method of supply may include:
      1. improved client service (with a standing offer in place, clients can place orders quickly);
      2. reducing the risk of overestimating the need.
    2. Disadvantages of a standing offer approach may include:
      1. supply that is not guaranteed at that price since the offeror may withdraw;
      2. prices that may be less competitive.
  10. Standing offers may be either competitive (see Standard Acquisition Clauses and ConditionsManual standard instructions 2006) or non-competitive (see standard instructions 2007) in nature.
  11. For more information on the competitive solicitation process for RFSOs, see Chapter 4 - Solicitation Process.
  12. A standing offer may be directed on a non-competitive basis to one offeror for its full range of catalogue goods or services. The non-competitive approval authorities would then apply.
  13. The standing offer is usually considered for goods and services when:
    1. One or more clients repetitively order(s) the same range of goods, services, or both, and the actual demand (for example, quantity, delivery date, delivery point) is not known in advance;
    2. Some of the following conditions are present:
      1. the goods, services, or both are well defined;
      2. pre-arranged prices or a prearranged pricing basis can be established at the outset, usually through competition, and there is no need nor any intention to negotiate them at the time of the call-up;
      3. the goods and services, or both are readily available and are to be ordered (requested through a call-up), if and when the requirements arise, and
      4. at the time of the call-up, there is no need, nor any intention to further negotiate contractual terms and conditions.
  14. The standing offer method of supply cannot be used when:
    1. prices, pricing basis or conditions are not stated, or are subject to change at any time at the discretion of the supplier;
    2. the identified users of the standing offers intend to negotiate further the prearranged prices, pricing basis, or conditions of the standing offer, or
    3. it is intended to solicit bids each time goods or services are required. In these cases, another method of supply such as a supply arrangement should be considered.
  15. Departments and agencies are authorized by PWGSC to make call-ups against each standing offer, as defined in the standing offer. See paragraph (a) under subsection 4.10.20.1 Standing Offer Procedures.
  16. When procedural requirements of any trade agreement apply to a standing offer method of supply, the complete procurement process, including all standing offers authorized for use and the resulting call-ups, fall within the purview of the Canadian International Trade Tribunal.
  17. If the Request for Standing Offer (RFSO) and resulting contract involving the goods or services being offered include a security requirement, contracting officers should consider how security requirements will be managed, (i.e. what are the base security requirements and how different security requirements such as Information Technology (IT), Production and/or COMSEC are managed). The contracting officer must ensure that a contract resulting from an Standing Offer contains the proper security requirements and that the client is aware of its responsibility in the confirmation of the actual security status of the organization/personnel prior to issuing the call-up.

    IMPORTANT: When security clearances such as IT, Productions and/or COMSEC are required, seek assurance of these specific security types from the Canadian Industrial Security Directorate (CISD) as they are contract specific and not blanket clearances held by the organizations.

  18. For information related to approval authorities when using a Standing Offer, refer to 4.10.20.5 Ranking and Methodology for Standing Offers

3.45 Supply Arrangements

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  1. A supply arrangement (SA) is a non-binding arrangement between Canada and a pre-qualified supplier that allows departments and agencies to award contracts and solicit bids from a pool of pre-qualified suppliers for specific requirements within the scope of the SA.
  2. An SA is not a contract for the provision of the goods and services described in it and neither party is legally bound, as a result of signing a supply arrangement alone. The intent of a supply arrangement is to establish a framework to permit expeditious processing of individual bid solicitations, which result in legally binding contracts for the goods and services described in those bid solicitations.
  3. An SA may be used when:
    1. the overall requirement cannot be clearly defined at the outset and it is proposed to establish a pool of screened suppliers from which clients and PWGSC solicit bids for individual requirements;
    2. a commodity is procured on a regular basis (goods or services);
    3. a standing offer is not suitable, due to variables in resulting call-ups (e.g. varying methods/basis of payment, or the statement of work or commodity cannot be adequately defined in advance);
    4. a simplified solicitation, undertaken by users/clients, can be used to obtain competitive bids from the pre-qualified suppliers;
    5. selection will be based on best value, as described in the SA and the subsequent solicitation; and
    6. it is more efficient for PWGSC to operate as the provider of the framework on behalf of other users/clients and not as the contracting authority.
  4. Supply arrangements are generally issued following a Request for Supply Arrangement process. For more information on the solicitation process, see Chapter 4 - Solicitation Process. When developing the procurement strategy, contacting officers should consider the following:
    1. if national and international trade agreements apply to the solicitation (see 3.50 Procurements Subject to Trade Agreements);
    2. whether or not ceiling prices will be included in the SAs;
    3. how security requirements will be managed (i.e. what are the base security requirements and how are different security requirements managed.). The contracting officer must ensure that a contract resulting from an SA contains the proper security requirements and that the client is aware of its responsibility in the confirmation of the actual security status of the organization/personnel prior to issuing the contract;

      IMPORTANT: When security clearances such as IT, Production and/or COMSEC are required, seek assurance of these specific security types from the Canadian Industrial Security Directorate (CISD) as they are contract specific and not blanket clearances held by the organizations.

    4. how the use of the SA will be monitored and reported.
  5. Each SA should contain clear instructions on how to use the SA and identify which departments and agencies can use them.
  6. A requirement that would normally be covered by the trade agreement is still covered when solicited or contracted through the use of a supply arrangement method of supply.
    1. The use of this method of supply is considered selective tendering under the North American Free Trade Agreement and the World Trade Organization Agreement on Government Procurement. Therefore, a Notice of Proposed Procurement (NPP) must be posted for each separate procurement under an SA that is over the relevant trade agreement threshold and to provide the time periods required by the agreements. For more information, see 4.10.25.5 International Trade Agreements and Use of Supply Arrangements and 4.10.25.10 Ongoing Qualification Process.
    2. The use of this method of supply is considered to be the use of a source list under the Agreement on Internal Trade (AIT). The AIT does allow the use of source lists without publication of a separate NPP for each requirement, provided that all suppliers on the source list are invited to bid and that suppliers be able to get on the list at any time.

3.50 Procurements Subject to Trade Agreements

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3.50.1 General Procurement

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  1. For procurements subject to the North American Free Trade Agreement (NAFTA), the World Trade Organization Agreement on Government Procurement (WTO-AGP) or the Agreement on Internal Trade (AIT), or a combination of these, public advertisement/notification provisions specified within these trade agreements must be followed. This includes any mini-tenders for procurements made against a supply arrangement. The procedures to be followed are generally consistent for all of the agreements. When there are inconsistencies, the contracting officer must select the provisions that demonstrate the highest example of openness, for example, the longer of two solicitation periods.
  2. The provisions for public advertisement/notification are described in each of the following trade agreements:
    1. North American Free Trade Agreement, Article 1010: Invitation to Participate;
    2. World Trade Organization - Agreement on Government Procurement, Article IX: Invitation to Participate Regarding Intended Procurement  ;
    3. Agreement on Internal Trade, Article 506: Procedures for Procurement, paragraph 2. (referred to as a "call for tenders")
  3. For more information on determining when the trade agreements ( NAFTA, WTO-AGP, AIT) apply, see Chapter 1 - Public Procurement.
  4. With certain exceptions, competitive procurements subject to NAFTA, WTO-AGP or AIT must be advertised on the Government Electronic Tendering Service (GETS). In appropriate circumstances, potential suppliers may be contacted directly after the notice has been posted, in accordance with the procedures outlined in 4.75.35 Contacting Suppliers Directly During the Solicitation Period.

3.50.5 Applicability of Trade Agreements to Standing Offers and Supply Arrangements

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  1. Contracting officers must determine whether any or all of the trade agreements apply to each procurement.
  2. The applicability of the trade agreements ( NAFTA, WTO-AGP or AIT) to standing offers and supply arrangements depends on three factors:
    1. if the department for which the standing offer/supply arrangement is intended is subject to the agreements;
    2. if the good or service is subject to the agreements; and,
    3. if the total estimated value of all the call-ups (contracts) against a standing offer or all contracts under a supply arrangement (which determines the total estimated value of the offer or arrangement) is above the NAFTA, WTO-AGP or AIT thresholds.
  3. The total estimated value is determined before tendering, at which time it is identified whether or not any of the trade agreements apply. If they do apply, SO s and SA s are solicited in accordance with the agreements.
  4. Subsequent individual call-ups/contracts cannotbe made under the standing offer/supply arrangement without considering trade agreement applicability, and may be subject to a challenge directed to CITT by suppliers.
  5. For more information on trade agreements and the use of supply arrangements, see 4.10.25.5 International Trade Agreements and Use of Supply Arrangements to 4.10.25.20 Ongoing Qualification Process.

3.51 Integrity Overview

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  1. To strengthen the integrity of procurement and real property transactions, Public Works and Government Services Canada (PWGSC) has established the Integrity Framework containing policies, procedures and governance measures, covering all branches of PWGSC. This Framework has established a list of criminal convictions or acts that will render companies and individuals ineligible to bid on PWGSC solicitations or be awarded a contract within the time period specified for these convictions. Contractors must also remain free of such convictions or acts during the contract period or the contract may be terminated.
  2. Exemptions
    1. For governments, as well as entities controlled by a government, including Crown corporations, the Integrity Provisions are reduced to complying with article 750 of the Criminal Code, the Government Contract Regulations and the Code of Conduct for Procurement.
    2. Procurement transactions carried out by PWGSC Koblenz Office, Foreign Military Sales (FMS) program, Seized Property Management Directorate (SPMD) and Crown Assets Distribution (CAD) from the Commercial Acquisitions and Supply Management Sector are exempt from the Integrity Provisions.
    3. Integrity Provisions do not apply to Acquisition Card transactions.
  3. Exceptions

    Canada may, within the limits of the law, enter into contract with a supplier who has been convicted of or has received a conditional or an absolute discharge for an offence specified in the Integrity Provisions, when required to do so by law or legal proceedings, or when Canada considers it necessary to the public interest for reasons which include, but are not limited to:

    1. No one else is capable of performing the contract;
    2. Emergency;
    3. National security;
    4. Health and safety;
    5. Economic harm.

    For approval of such cases, see section 1.1 Exceptions to Internal Approval Authorities of Annex 6.4.1 Approval Authorities and Additional Signing Authorities in Support of Clients' Programs Only - Other than for Canadian Commercial Corporation.

  4. Details on the integrity process are described in sections 4.21 Integrity Provisions, 4.45 Certifications, 5.16 Integrity Compliance, Annex 6.4.1 Approval Authorities and Additional Signing Authorities in Support of Clients' Programs Only - Other than for Canadian Commercial Corporation, and in sections 8.70.2 Compliance with the Integrity Provisions, 8.70.5 Amending Contracts and 8.90 Assignment of Contracts.

3.55 Industrial Security Requirements (Personnel or Organization)

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Contracting officers should take into account any industrial security requirement when developing the procurement strategy and also when determining the procurement schedule. Procurement strategy and approval documents should identify the existence of any security requirements.

3.55.1 Security and Timelines

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  1. Procurement schedules must take into account that the organization, personnel and physical security screening processes may take a considerable length of time. The contracting officer must provide as much lead time as possible to Canadian Industrial Security Directorate (CISD) to process organization or personnel security screenings, as well as to give time to bidders to implement security recommendations before contract award.
  2. To be pro-active with security requirements and to avoid delays in the security screening process, contracting officers or client departments can sponsor possible bidders, if known, that are not registered with CISD, recommend that they complete the Request for Private Sector Organization Screening (PSOS) form and provide it to CISD ahead of time. As CISD is now under a cost recovery regime, costs will be associated with all requests for sponsored screening. For more information on PSOS, visit the CISD Website. Information on how to obtain the PSOS form can be found in section 4.30.10 Industrial Security in Contracts.

    Note: If foreign-based suppliers are identified by the client when issuing the requisition, the client has to contact CISD for applicable clauses. PWGSC contracting officers will also need to contact CISD prior to contract award for verification of security. If security clearances are required for foreign-based suppliers, the timeframes required to provide them could have a significant impact on the procurement schedule.

  3. Personnel Security Screening

    The approximate timeframes for completing a personnel security screening are as follows:

    1. Simple Reliability Status: 2 working days;
    2. Complex Reliability Status: 52 days (100 days if out of country check is required);
    3. Confidential/Secret Clearance: 62 days (an additional 100 days if out of country check is required);
    4. Top Secret Clearance: 100 days (an additional 100 days if out of country check is required), and
    5. NATO Clearance: 100 - 200 days (non-Canadian citizen).

    Note:Reliability checks may be more complex and take additional time to process. This occurs when a request for fingerprints is made in order for Canada to uniquely identify the individual applying for a reliability clearance.

  4. Organization Security Screening

    The approximate timeframes for an organization security screening are as follows:

    1. Designated Organizational Screening (DOS): two months (faster if the supplier responds in a timely manner), and
    2. Facility Security Clearance (FSC): up to one year depending on the complexity of the supplier's organization. All key senior officials need to be cleared as well as those performing the work of the contract.

3.60 Low Dollar Value Procurements

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  1. Requirements below $25,000, including all applicable taxes, are considered to be low dollar value (LDV) procurements.
  2. All LDV procurements will be conducted in accordance with the provisions of the Directive on the Processing of Low Dollar Value Procurement (available on GCpedia - Acquisitions Program Policy SuiteThis information is only accessible to federal government employees.).

3.60.1 Requirements

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  1. When proceeding with a Low Dollar Value (LDV) requirement, contracting officers:
    1. must not split or artificially divide requirements to meet the LDV threshold (see 6.1 General);
    2. must use the most efficient and cost effective approach to select a contractor, either by soliciting bids or by directing the requirement to a sole supplier when it is not cost effective to solicit bids;
    3. must determine the most appropriate procurement strategy for each LDV requirement in order to obtain best value and ensure the timeliness and cost effectiveness of each contract, while respecting Public Works and Government Services Canada's guiding principles, which include client service, competition, accountability and equal treatment (see 1.10.5 Guiding Principles);
    4. must complete a risk assessment (see 3.1.5 Procurement Risk Assessments for Basic and Standard Requirements), if within the Basic or Standard stream;
    5. must document the procurement file with the rationale to support the procurement strategy, and the basis on which the estimated value of the contract, that is, below $25,000, was established.
  2. Electronic tools are available for the identification and selection of a supplier on a competitive or a directed basis. Examples of such tools include:
    1. Supplier Registration Information (SRI) service;
    2. Automated Vendor Rotation System (AVRS);
    3. SELECT;
    4. Government Electronic Tendering Service (GETS);
    5. telephone and online trade directories.

3.60.5 Geographic Factors and Low Dollar Value

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This section of the Supply Manual (SM) has been removed. For reference purposes, the deleted section is available in the Archived: 2013-3 version of the SM.

3.65 Green Procurement Strategy

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  1. Successful implementation of the Policy on Green Procurement requires the identification and implementation of environmental performance opportunities at both the strategic and operational levels, taking into consideration specific departmental buying patterns, sustainable development targets and other Government of Canada priorities.
  2. In developing the procurement strategy, departments must consider opportunities to advance the protection of the environment and support sustainable development. Contracting officers must document the environmental considerations and decisions taken in relation to the integration of environmental requirements.
  3. For commodities under the commodity management framework, contracting officers must develop a green procurement plan and procurements must be done in accordance with this plan. The completed plan serves as an example of green procurement best practices.
  4. Contracting officers can refer to Annex 2.2: Green Procurement: Environmental Factors and Evaluation Indicators to identify those factors which need to be addressed in the procurement strategy.
  5. For more information on environmental issues and mitigating actions to support the Policy on Green Procurement, go to the Environmental Awareness Tool Kit under Developing Green Procurement Specifications, and the section 3.2, Selection According to Technical Capacity, of the Guideline for Integration of Environmental Performance Considerations in Federal Government Procurement. The various environmental performance considerations listed in the Green Procurement Checklist must also be considered.

3.70 Industrial and Regional Benefits (IRB) Program

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  1. The government has determined that its procurement actions should be consistent with and supportive of such national objectives as industrial and regional development, and other national objectives such as aboriginal economic development, the environment and other approved socio-economic objectives.
  2. The objective of the Treasury Board Procurement Review Policy is to enhance the use of procurement in support of national socio-economic objectives in a manner that is fully consistent with the government's other objectives, e.g., the pre-eminence of operational requirements, competition, fairness and accessibility, all within Canada's international trade obligations.
  3. The procurement strategy for goods and services over $2,000,000 must be considered for potential socio-economic benefits to ensure that maximum benefit to Canada is achieved. The primary mechanism for selection for the review for socio-economic benefits is inclusion in the department's annual short range acquisition plan.
  4. The review process is carried out by the interdepartmental Procurement Review Committee (PRC), which is responsible for providing linkages between the government's national objectives and individual procurements. Contracting officers should refer to Annex 3.5: Procurement Review Committee Requirements and Approval Process for details on the process to be followed.
  5. The PRC consists of a number of federal departments: PWGSC(the chair), the client department, Industry Canada, the regional agencies/departments, Indian and Northern Affairs Canada, Environment Canada, Human Resources and Skills Development Canada, National Research Council, Finance Canada and the Treasury Board Secretariat.
  6. Industry Canada and the regional economic agencies/departments review procurements for potential industrial and regional benefits. For more information on the Industrial and Regional Benefits Program, see 9.45. The other departments, such as Indian and Northern Affairs Canada, review the procurements for opportunities to achieve other national objectives, such as Aboriginal economic development.
  7. The PRC makes recommendations to the operating and contracting departments regarding appropriate procurement strategies and other initiatives that would support government objectives in individual acquisitions.
  8. Mandatory procurement review does not apply in the following situations:
    1. foreign aid by or on behalf of the Canadian International Development Agency;
    2. procurements by the Canadian Commercial Corporation on behalf of entities not subject to this policy, for example, foreign governments;
    3. the acquisition, modification and routine maintenance of real property, and
    4. security requirements by or on behalf of the Communications Security Establishment of the Department of National Defence; the Canadian Security Intelligence Service; and the Royal Canadian Mounted Police for the purpose of pursuing criminal investigations.

    Note:Notwithstanding this exemption, the above organizations must apply the principles of the Policy where appropriate, consistent with the security requirements of their procurement.

  9. In cases of a pressing emergency, as defined in the Treasury Board (TB) Contracting Policy, departments may enter into contract without submitting the strategy for procurement review pursuant to TB Procurement Review Policy. Such action should be noted in any subsequent submission or report to TB or TB Secretariat (if such a submission or report is required), and should also be reported to the PRC Secretariat within 60 calendar days.
  10. The PRC divides procurements into the following categories:
    1. those covered by international trade agreements, and
    2. all others, including requirements subject to the Agreement on Internal Trade (AIT), with the following exceptions:
      1. Foreign Military Sales;
      2. security services;
      3. temporary help services;
      4. procurements under the Munitions Supply Program;
      5. requirements subject to the Shipbuilding Policy.

    Note:Procurement covered by international trade agreements is not reviewed for socio-economic benefits, except for set-aide for minority business.

  11. The Advisory Council on Repair and Overhaul (ACRO) will carry out the socio-economic benefits review for military repair and overhaul requirements, under the strategic direction of the Procurement Review Committee (PRC).
  12. For Major Crown Projects (MCPs), or those requirements exceeding $100 million, a Senior Project Advisory Committee (SPAC) will normally be set up and the SPAC will, in accordance with the TB Policy on Management of MCPs and will carry out procurement review function. If a SPAC is not set up, then the PRC will review the procurement. For more information on MCPs, see  9.5 Major Crown Projects.
  13. For proposed procurements between $2 million and $100 million, the contracting officer must complete a "Detail Document" to be forwarded to the PRC Secretariat, once it has undergone the respective sector approval processes. It must be kept on the contract file.
  14. Copies of the Detail Document and the Record of Decision must be retained on the procurement file.

3.75 Small and Medium Enterprise

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3.75.1 Office of Small and Medium Enterprises Role and Initiatives

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  1. The Office of Small and Medium Enterprises (OSME), as part of the government of Canada, supports the government agenda to provide value for Canadians by:
    1. encouraging and assisting small and medium enterprises (SMEs) to participate in the federal government procurement process;
    2. improving the links between supply and demand and influencing change within government acquisitions, and
    3. conducting economic analysis of Government of Canada procurement and the private sector.

    For more information, visit the Office of Small and Medium Enterprises Web site.

  2. The Office performs six activities in support of smaller suppliers, as follows:
    1. provides information and advisory services to SME s that want to do business with the government;
    2. helps reduce competition barriers and simplify the government contracting process;
    3. identifies and pursues opportunities that encourage the introduction of innovative new goods and services;
    4. collaborates to improve procurement policies and best practices;
    5. works closely with the SME community to ensure their concerns and views are brought forward and heard; and
    6. engages with SME s to interest them in federal government opportunities.

3.75.5 Public Works and Government Services Canada On-Line Tools/Services and Office of Small and Medium Enterprises Role

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The Office of Small and Medium Enterprises and Strategic Engagement (OSME-SE) offers the following demonstrations of on-line tools to individuals and groups:

  1. Supplier Registration Information (SRI) service: Directory of suppliers who want to do business with the federal government. This database is accessible to all federal government buyers and administrative authorities. It is important that suppliers register with SRI as this database is the start of the contracting process.
  2. Procurement Allocations Directory is a list of key purchasing contacts in PWGSC offices.
  3. Government Electronic Tendering Service: The Government Electronic Tendering Service (GETS) is where the Government of Canada posts procurement opportunities and allows suppliers to search for them on-line. Buyandsell.gc.ca/tenders is the official site for Canada to meet its trade agreement obligations and the authoritative and first source for Government of Canada tenders. For more information about GETS, visit the Buyandsell.gc.ca Tenders or contact the InfoLine at 1-800-811-1148.

3.80 Comprehensive Land Claims Agreements

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Contracting officers who receive a requisition that may be subject to Comprehensive Land Claims Agreements (CLCAs) must consult 9.35 Comprehensive Land Claims Agreements for information on the CLCA obligations that have to be addressed during the procurement process.

3.85 Procurement Strategy for Aboriginal Business

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All federal government departments are encouraged to set-aside some procurements for competition by Aboriginal suppliers provided operational requirements are fully met. For more information on the Procurement Strategy for Aboriginal Business, see 9.40 Procurement Strategy for Aboriginal Business.

3.90 Former Public Servants

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  1. Contracts with former public servants in receipt of a pension or of a lump sum payment must bear the closest public scrutiny, and reflect fairness in the spending of public funds. (See 16.8 Former public servants in receipt of a pension or a lump sum payment of the Treasury Board Contracting Policy.)
  2. A former public servant is any former member of a department as defined in the Financial Administration Act, a former member of the Canadian Armed Forces or a former member of the Royal Canadian Mounted Police. A former public servant may be:
    1. an individual;
    2. an individual who has incorporated;
    3. a partnership made of Former Public Servants, or
    4. a sole proprietorship or entity where the affected individual has a controlling or major interest in the entity.
  3. Retirement Waiting Period

    When contracting with a former public servant or a former public officer holder, the provisions of the Conflict of Interest Act, the Post-Employment Measures contained in the Values and Ethics Code for the Public Service, and the Conflict of Interest and Post-Employment Code for Public Office Holders apply. These codes provide information on the applicability of the retirement waiting period. The retirement waiting period does not apply to former members of the Canadian Forces or the Royal Canadian Mounted Police (RCMP)
  4. Approval Authority

    Treasury Board approval may be required for a service contract with a former public servant, depending on the value or the situation. For more information, see Annex 6.4.1: Approval Authorities and Additional Signing Authorities in Support of Clients' Programs Only - Other than for Canadian Commercial Corporation, section 1.1.1.
  5. Fee Abatement
    1. For non-competitive service contracts with former public servants in receipt of a pension, the fee abatement formula below applies in the determination of the maximum fee payable during the one-year fee abatement period.
    2. In accordance with the Workforce Adjustment Directive, for non-competitive service contracts with former public servants in receipt of a pension and a lump sum payment, the application of the fee abatement formula is postponed to have it begin at the conclusion of the lump sum payment period. See subsection f. below.
    3. Fee Abatement Formula

      D= ((M+F)/260) - (P/260)

      where formula variables correspond to:

      D
      maximum payable per diem rate;
      M
      maximum salary of the former public servant, updated to the current level, or the estimated salary cost of having the work done by a qualified public servant;
      F
      cost of usual fringe benefits, 30 percent;
      P
      total annual pension in pay.

      Example:

      Maximum salary = $60,000; benefits are 30 percent of salary;
      Pension after 35 years of service = $42,000 ($60,000 x 0.7);

      Per Diem= (60,000 + 18,000)/260 - 42,000/260 = $138.46

      Note: A "pension" means a pension or annual allowance paid under the Public Service Superannuation Act (PSSA) and any increases paid pursuant to the Supplementary Retirement Benefits Act, as it affects the PSSA. It does not include pensions payable pursuant to the Canadian Forces Superannuation Act, the Defence Services Pension Continuation Act, the Royal Canadian Mounted Police Pension Continuation Act and the Royal Canadian Mounted Police Superannuation Act, the Members of Parliament Retiring Allowances Act and that portion of pension payable to the Canada Pension Plan Act.

    4. No exceptions to the application of the formula or to the maximum rate allowed must be permitted without prior TB approval.
  6. Workforce Adjustment Directive
    1. In addition to the requirements of the contract fee abatement policy for former public servants in receipt of a pension, the amount payable for professional fees to former public servants, whether they are in receipt of a pension or not, members of the Canadian Forces, and members of the RCMP, who have received a lump sum payment for employment termination under a workforce reduction program or adjustment initiative, has been limited during the lump sum payment period.
    2. The contract fee limit policy does not apply if the contract is not specifically for the services of a former public servant.
    3. For purposes of this policy, the "lump sum payment period" is defined as the period measured in weeks of salary, for which payment has been made to facilitate the transition to retirement or to other employment as a result of the implementation of various programs to reduce the size of the Public Service. The lump sum payment period does not include the period of severance pay, which is measured in a like manner.
    4. For competitive or non-competitive service contracts awarded to a former public servant during the lump sum payment period, the total amount of fees that may be paid is $5,000, including applicable taxes. The contract fee limit policy applies to all former public servants, including former members of the Canadian Forces and the Royal Canadian Mounted Police, in receipt of a lump sum payment.
    5. Reasonable overhead costs, such as travel expenses, are excluded from the $5,000 limit. However, due to the sensitivity of these contracts, these costs should be strictly controlled. Departments and agencies must obtain Treasury Board approval for all contract situations where former public servants could receive fees totaling more than $5,000 during the lump sum payment period.
    6. When a former public servant works as a salaried employee of, or a subcontractor to, an established supplier contracting with Canada, the contract fee limit policy does not apply.
  7. Proactive Disclosure

    After January 1, 2013, departments will be required to include information on service contracts and contract amendments over $10 000 awarded to a former public servant in receipt of a Public Service Superannuation Act (PSSA) pension on the Disclosure of Contracts departmental websites. For further information, consult the Guidelines on the Proactive Disclosure of Contracts on the Treasury Board of Canada Secretariat website.

3.95 Intellectual Property

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  1. Before issuing a solicitation or awarding a contract, the contracting officer must identify what intellectual property (IP) is already existing before contract award and, conversely, what IP will be generated as a result of the contract. In addition to reducing future costs, disputes can be avoided by being clear upfront.
  2. Intellectual property is anything resulting from a contract that can be copyrighted, trademarked, patented, licensed, etc. Potentially, any contract can have IP. The likelihood for IP is much greater where the goal of the contract is something new, or might incorporate new processes. IP considerations are most relevant to research and development contracts, software development, or where the production of new written material occurs. A definition of "Intellectual Property" and Intellectual Property Rights" can be found in Standard Acquisition Clauses and ConditionsManual general conditions 2040.
  3. Contracting officers can find complete details on the IP policy as per following Treasury Board policies:
    1. Policy on Title to Intellectual Property Arising Under Crown Procurement Contracts;
    2. Implementation Guide for the Policy: Title to Intellectual Property Arising Under Crown Procurement Contracts;
    3. TBS Contracting Policy Notice 2000-2: Revised Policy on Ownership of Intellectual Property Arising Under Crown Procurement Contracts.
  4. The default position of the government policy is to allow contractors to retain the rights to IP generated under government contracts. This is designed to promote the commercialization of new ideas, under the premise that the private sector has a greater capacity in this regard. Exceptions are described in the Policy references above.
  5. The contracting officer must therefore determine at the planning stage, how IP will be handled, what IP is anticipated and how the IP will be identified and secured for the use of the client and Canada. Once again, this process can have very long timeframes and can have extremely complex processes. The greatest pitfall with IP is in not identifying what is the foreground information and the background information upfront and if left to the end of the contract, Canada is at a severe disadvantage.
  6. The client department must decide to what extent IP rights are to be retained by Canada. However, the contracting officer should discuss with the client department their needs in order to ensure that the client department is aware of the extent to which PWGSC can obtain for them the rights they need to use the IP created under their contract, whether Canada or the contractor owns the IP. For instance, subject to industry practice, Canada may not be able to obtain IP ownership, even when desired. In such cases, Public Works and Government Services Canada ( PWGSC) contract clauses are designed with the goal of ensuring that even where the contractor owns the IP, this does not affect the client department's ability to use the IP, except that such use would not extend to commercialization of the IP by Canada.
  7. A summary of PWGSC's contractual options is shown in the table below.
    Table 1: Contractual Options for Ownership of Intellectual Property
    Contractual OptionsResearch and Development (R&D)Goods with Associated R&DGoods with no R&D ExpectedServices with no R&D Expected
    Intellectual Property OptionsDefaultContractor to Own IPContractor to Own IP Canada to Own CopyrightCanada to Own Copyright
    OptionsCanada to Own IPCanada to Own IP Contractor to Own IP, including CopyrightContractor to Own IP, including Copyright
    No IP Terms in the ContractNo IP Terms in the Contract

3.100 Vendor Performance Corrective Measures

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

3.105 National Security Exceptions

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3.105.1 Trade Agreements and Invoking a National Security Exception

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The national security exception (NSE) provided for in the North America Free Trade Agreement (NAFTA), the World Trade Organization Agreement on Government Procurement (WTO-AGP), the Canada-Chile Free Trade Agreement (CCFTA) and the Agreement on Internal Trade (AIT) allow Canada to exclude a procurement from some or all of the obligations of the relevant trade agreement(s), where Canada considers it necessary to do so in order to protect its national security interests specified in the text of the NSE. The purpose of the NSE must ensure that parties to the agreements are not required in any way to compromise these interests through application of the obligations of the trade agreements.

3.105.5 Texts of the National Security Exceptions

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  1. The relevant text for each trade agreement can be found as follows:
    1. for NAFTA, Article 1018: Exceptions;
    2. for WTO-AGP, Article XXIII: Exceptions to the Agreement ;
    3. for the CCFTA, Article Kbis-16: Exceptions;
    4. for the AIT, Article 1804: National Security.
  2. The Canadian International Trade Tribunal (CITT), in its decision PR-98-005, has found that "the most senior level of substantive policy formulation and advice to the department on all Acquisition Branch activities…" has the authority to invoke the use of the National Security Exception, to exclude a procurement from the NAFTA, WTO-AGP, CCFTA and the AIT. For Public Works and Government Services Canada ( PWGSC), that authority is the Assistant Deputy Minister of the Acquisitions Branch (ADM/AB).
  3. Furthermore, on the basis of the authority given to the Minister under section 6 of the Department of Public Works and Government Services Act, in conjunction with paragraph 24(2)( d) of the Interpretation Act, PWGSC has decided that this specific authority will not be delegated to a lower official level because of the nature of the exception. PWGSC has further decided that a NSE will not be invoked by anyone other than the ADM/AB, where PWGSC/AB is the contracting officer. See the procedures for invoking an NSE below.
  4. Invoking an NSE under the trade agreements does not affect the obligation to comply with the Government Contracts Regulations in respect of such matters as sole source justifications, other sourcing strategy issues and contracting officer limits. Procurements for which an NSE is invoked remain subject to other relevant regulations and governmental and departmental policies, which may include posting a Notice of Proposed Procurement or an Advanced Contract Award Notice on the Government Electronic Tendering Service where appropriate, though the security requirements may, in some cases, preclude such actions.
  5. If the NSE has been invoked, the contracting officers must insert the following statement to that effect in all notifications to suppliers and in all tender documents:

    "This procurement is subject to national security exception and is, therefore, excluded from all of the obligations of the trade agreements."

3.105.10 Procedures for Invoking a National Security Exception

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  1. All requests to invoke an NSE to exclude a procurement from the WTO-AGP, NAFTA, CCFTA or the AIT, or any combination of the agreements, will normally be submitted by the client department to the ADM/AB for approval, regardless of dollar value, where PWGSC/AB is the contracting officer.
  2. A request must be in the form of a letter from the responsible ADM, or equivalent to the ADM level, at the client department. The letter must explain the nature of the proposed procurement and, depending upon which trade agreement(s) applies, how it relates to:
    1. Canada's "national security interests" or, pursuant to Canada's international obligations, "the maintenance of international peace and security". ( AIT: Article 1804); and/or
    2. Canada's "essential security interests relating to the procurement of arms, ammunition or war materials, or to procurement indispensable for national security or for national defence purposes". ( NAFTA: Article 1018 (1) / WTO-AGP: Article XXIII (1) / CCFTA: Article Kbis-16 (1) ).
  3. In reviewing requests to invoke the NSE, the ADM/AB will be considering only the issue of whether or not to invoke the NSE and will not be considering, at that time, other matters such as procurement methods, procurement plans or authority to enter into the contract. Client departments should work with the contracting officer in determining which method of procurement to be used, in parallel with any request for approval of an NSE. In situations where the NSE is invoked, it remains government policy to compete the requirement, subject to the exceptions to competitive contracting provided in the Government Contracts Regulations(GCRs).
  4. Requests for an NSE are reviewed by the Acquisition Program Integrity Secretariat (APIS) who makes recommendations to the ADM/AB. Once the ADM/AB has made a decision whether or not to invoke an NSE, the ADM/AB will advise the client department in writing of the decision. For the approval process for NSE, see section 1.1.4 of Annex 6.4.1: Approval Authorities and Additional Signing Authorities in Support of Clients' Programs Only - Other than for Canadian Commercial Corporation.

    Note: Contracting officers seeking advice to aid client departments in properly framing and requesting an NSE should contact APIS at 819-934-1382. It is strongly recommended that a draft of the NSE request letter be forwarded to APIS for review before having it signed by the responsible ADM at the client department. For a template of the NSE request letter, see Annex 3.7: National Security Exception Request Letter – Template.

  5. The utilization of the NSE must be documented. In documents used to seek authority to enter into contract, and on the file, the contracting officer must explain clearly that the NSE is being invoked, specifying each of the trade agreements from which the procurement is being excluded, and include a copy of the NSE approval on the file.

3.110 Legal Services

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  1. All Legal Services lawyers are officers of the Department of Justice. The role of the PWGSC Legal Services is to provide legal services to PWGSC. Legal services relating to procurement must be sought only from the PWGSC Legal Services or from a regional office of Justice Canada, when the latter has agreed along with PWGSC Legal Services to provide counsel to a particular region. Legal Services involvement in the review of proposed contractual documents is intended to:
    1. ensure that contracts are legally binding and enforceable and precisely reflect the intended relationship between Canada and the contractor;
    2. ensure that the respective obligations of the parties are expressed clearly and that the interest of Canada are protected;
    3. identify the consequences of any changes to standard general conditions in terms of the additional risk and liability being assumed by Canada.
  2. Whenever legal involvement is required, contracting officers must provide the legal counsel involved with access to all required documents and files. Legal counsels should be given the opportunity to review procurement documents at an early stage in the procurement process to facilitate the making of informed business decisions and incorporation of any required changes. For the procurement of goods and services, this means before the issuance of bid solicitations and requests for standing offers or for supply arrangements. For anything related to the administration of the contract, standing offer or supply arrangement, Legal Services must be consulted before any binding action is taken by contracting officers.
  3. Contracting officers must seek legal advice:
    1. For Complex procurements only, when Senior Director, Regional Director, Director General, Assistant Deputy Minister, Deputy Minister, Minister or Treasury Board approval is required to enter into or amend a contract, or to issue or revise a standing offer or supply arrangement (see Chapter 6 Approvals and Authorities);
    2. for contracts containing special conditions or deviations from PWGSC or Canadian Commercial Corporation general and supplemental conditions;
    3. in all situations where the work has been completed pursuant to a verbal request from a representative of a client and a confirming order has to be prepared;
    4. in all situations where a security must be obtained to ensure repayment of a debt or satisfaction of an obligation to Canada, particularly for all contracts under which payment is secured by means of a letter of credit;
    5. for all letters of comfort, letters of intent and go-ahead letters;
    6. for all contracts where questions may arise regarding conflict of interest issues or the post-employment code for former public servants;
    7. for all letters of credit;
    8. for any proposed assignment of a contract to a third party;
    9. for any case of receivership, insolvency or bankruptcy of a contractor;
    10. for all terminations for default, convenience and mutual consent;
    11. for all defence contracts where the provisions of section 20 of the Defence Production Act respecting title to any government issue or building may be applicable;
    12. for all memorandum of understanding and drafting of orders in council;
    13. for all conditional amendments (see 8.180 Vendor Performance Corrective Measure Policy).
  4. Legal Services can also be contacted about any matter in respect of which a contracting officer believes legal advice would be appropriate or helpful. Some of these situations are identified below:
    1. any proposed contract for services involving the possible development of an employee-employer relationship;
    2. any proposed contract where a clause providing for liquidated damages must be included to cover late delivery or unsatisfactory performance of the work;
    3. disputes arising after the contract has been awarded;
    4. for discussions or communications with outside lawyers.
  5. Solicitor-Client Privilege
    1. Communications between a client and its lawyer are protected by the solicitor-client privilege and exempt from disclosure under the Access to Information Act. The solicitor-client privilege allows clients to disclose all relevant information to their legal counsel knowing that such information will remain confidential. There are however three conditions for the privilege to apply:
      1. the communication must be with a practicing lawyer occupying a legal counsel position within government (it would also include a non-government lawyer hired by the Department of Justice to provide legal services in certain circumstances);
      2. the communication must be for the purpose of giving or receiving legal advice, as opposed to policy advice or non legal matters advice;
      3. the request for legal advice and any advice given must have been intended to be confidential. A notice "protected by solicitor-client privilege" may not be sufficient to prove that the parties intended that the communication be privileged. The proof will really be found from the actions of the client who must disclose the communication only to those persons who have a direct need to know depending on the circumstances of each case. Contracting officers must be particularly careful with e-mails containing legal advice and not forward them to persons who don't have a direct need to know.
    2. All three conditions must be met for the privilege to apply. If any one of those conditions is not met, all communications between the lawyer and the client relating to the subject matter will lose their privilege status.
    3. The solicitor-client privilege is the privilege of the client, who alone can waive it either intentionally or unintentionally. Intentional waiver occurs when a client, after consultation with its legal counsel, decides to disclose the privileged communications knowing the consequences of this action. Unintentional waiver occurs when, despite the fact that the parties still intend to keep the communication confidential, it is disclosed to a third party who does not have the need to know. Once the communication is revealed to a third party who does not have a need to know, the privilege is waived. This means that the legal advice is not protected anymore and is subject to disclosure under the Access to Information Act, if no other exception applies. This also means that all other communications between the legal counsel and the client relating to the same subject may loose their privilege and protection.
    4. Communications subject to solicitor-client privilege can be subject to mandatory statutory disclosure. For example, the Auditor General Act authorizes the Auditor General to review legal advice on matters relevant to her/his auditing function. The Auditor General however cannot disclose the legal advice. The disclosure to the Auditor General does not constitute a waiver of the privilege and the information remains confidential and is still protected by the privilege.
    5. Legal advice should not be disclosed without the knowledge and recommendation of legal counsel. All questions regarding solicitor-client privilege should be brought to the attention of Legal Services.

3.115 Bidders' Conferences and Site Visits

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  1. A bidders' conference is used to provide information to suppliers, and to ensure that all suppliers receive the same information. A conference must be held only when such a meeting is required for suppliers to fully understand the proposed procurement. Supplier attendance is optional. (See Chapter 4 - Solicitation Process).
  2. Attendance at site visits may be optional or mandatory. Mandatory site visits apply to all suppliers, even those who contend they are already familiar with the site in question. (See Chapter 4 - Solicitation Process).
  3. The need for a mandatory site visit should be carefully examined and documented on the file as part of the procurement planning. Consideration should be given to the cost and relative hardship imposed on suppliers not in the immediate vicinity of the site when deciding if a site visit will be mandatory.

3.120 Roles and Memorandum of Understanding

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Contracting officers should consider client department memorandums of understanding (MOUs) when determining roles and responsibilities in the planning and management of procurements. Contracting officers shoud consult Annex 1.1: Matrix of Responsibilities between PWGSC and Client Departments for the Procurement of Goods and Services (Generic)and Annex: Specific Division of Responsibilities Agreements relative to the division of responsibilities between PWGSC and the client department, as well as 9.5.15 Memorandum of Understanding with Client Department relative to Major Crown Projects.

3.125 Canadian Commercial Corporation

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For information on procurements on behalf of the Canadian Commercial Corporation (CCC), the roles and responsibilities of CCC and PWGSC as well as the pertinent MOU, see 9.55 Canadian Commercial Corporation.

3.130 Canadian Content

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  1. The Canadian Content Policy encourages industrial development in Canada by limiting, in specific circumstances, competition for government procurement opportunities to suppliers of Canadian goods and services.
  2. For more information on the complete Canadian Content Policy and the procedures for its application, see Annex 3.6: Canadian Content Policy.

3.135 Fairness Monitors

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For all procurements requiring the Minister's approval or above, contracting officers must formally assess the merits, at the procurement strategy phase, of using a fairness monitor.

  1. Contracting officers may optionally consider, at the procurement strategy phase, using a fairness monitor where an enhanced assurance of fairness is desired (e.g. at the request of the client, complex procurement).
  2. Contracting officers must complete the Fairness Monitoring Coverage Assessment and Recommendation Form PWGSC-TPSGC 587 (PDF Version 28 KB)This information is only accessible to federal government employees. - (Help on File Formats) (accessible to federal government employees only) for both mandatory and optional fairness monitor use and submit to the Assistant Deputy Minister, Acquisitions Branch (ADM/AB), for signature.
  3. The signed form is then forwarded to the ADM, Departmental Oversight Branch (DOB). In the event that the ADM/AB does not recommend the use of a fairness monitor in an optional situation (see (b) above) above, the signed form is not forwarded to the ADM/DOB but must be kept on the procurement file.
  4. The ADM/DOB reviews the request for fairness monitor coverage of the procurement process on behalf of the Business Operations Committee (BOC) and forwards the recommendation to BOC who renders a decision on whether use of a fairness monitor is appropriate and desirable.
  5. For more information, see the Policy on Fairness MonitoringThis information is only accessible to federal government employees.. (See also 1.50 Fairness Monitors and 5.25 Use of Fairness Monitors.)

3.140 Life Cycle Costing

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Life cycle costing pertains to all four stages of the procurement process, from planning and acquisition to use and disposal. Currently, the Policy on Green Procurement applies to all federal government procurement activities. The Policy requires that environmental performance considerations be embedded into the procurement decision-making process in the same manner as price, performance, quality and availability. For more information and tools on the life cycle costing, see  2.20 Green Procurement and Defining the Requirement.

3.140.1 General Requirements

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  1. The Policy on Green Procurement is aligned with the Treasury Board (TB) policies on assets and acquired services and reinforces the requirement to take into account both environmental performance and costs that occur throughout the life cycle of assets and acquired services, including planning, acquisition, use and disposal. Some cost elements related to environmental factors that could be taken into account in assessing value for money in the evaluation of bids, offers or arrangements include:
    1. operation costs, such as energy or water consumed by the product over its life;
    2. indirect costs (less energy efficient information technology equipment will produce more heat causing the building's air conditioning system to work harder, and increase electricity costs);
    3. administrative costs, such as complying to Workplace Hazardous Materials Information System (WHMIS);
    4. investing up front to save costs later, such as specifying higher levels of insulation where the extra expenditure can be recovered from lower energy costs;
    5. cost of disposal arrangements;
  2. The application of total life cycle costing has traditionally meant the sum of the Product, Resource, Operating, and Contingent (PROC) costs relating to procurement. The PROC technique is essential for evaluating bids, offers or arrangements. Through the Policy on Green Procurement, Canada has strengthened environmental performance considerations into the procurement process. In this context, value for money includes the consideration of many factors such as cost, performance, availability, quality and environmental performance.
  3. The PROC technique should be used for Major Crown Projects and in procurement in which operating costs are a major part of the total cost of the product, for example, major construction projects or motor vehicle purchases. (See Chapter 9 - Special Procurements.)

3.145 Cost and Profit

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  1. For a contract to be awarded on a non-competitive basis, or when, following a competitive process, price negotiations with the successful bidder are required, the anticipated cost and profit becomes part of the strategy and forms part of the determination of the type of contract contemplated to be put in place.
  2. The contracting officer must estimate the cost for the procurement planning phase. Conceptual cost estimating is derived from a mix of industry standards and historical data for similar procurement. The total project budget and estimate should be considered using an optimistic and pessimistic price to determine a cost range. It is important to consider fixed costs, external influences, such as exchange rates and supply and demand. Also, consideration should be given to the build of a contingency fund and a management reserve fund. It would be beneficial to include a description of the scope of work, and the basis for the estimate. Assumptions made must be documented and an outline provided relative to the range of possible cost.
  3. In general contract negotiations, profit is a representation of the risk a bidder is taking in delivering the contract. If Canada is assuming the majority of the risk then the profit applied should be low. If the bidder is assuming the risk then the profit allowable should be higher. Although not all contracts demand the application of the profit policy and all its components, the profit policy does represent the factors to be considered when negotiating the applicable profit. Consideration should be given to the factors detailed in the Policy even though detailed analysis and calculations may not be performed.
  4. For more information on cost and profit, see Chapter 10 Cost and Profit.

3.150 Standards and Quality Assurance

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3.150.1 Standards, Specifications and Purchase Descriptions

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  1. Recognized Canadian standards or specifications must be used in the procurement of goods and services, except when not warranted by the volume or specific nature of the procurement.
  2. When Canadian national standards are not available, Canadian specifications produced by a recognized standards-writing organization must be used wherever possible. Where no such specification is available, directly relevant United States ( U.S.)/foreign or international standards or specifications should be used when suitable.
  3. In determining the suitability of U.S./foreign or international standards or specifications, the contracting officer should consult with the client, and may call on the assistance of the Canadian General Standards Board (CGSB). The determination to use such standards should also reflect the extent to which:
    1. Canadian views have been reflected in the standard or specification;
    2. products available in Canada are likely to conform to the standard or specification;
    3. the standard or specification is likely to discriminate against products.
  4. Contracting officers must assess the adequacy and applicability of any standards, specifications, including client-developed specifications, or purchase descriptions included by a client in the requisition.
  5. When a requisition does not include an existing standard, specification or purchase description, which the contracting officer considers appropriate, the contracting officer should recommend to the client that the requisition be amended to include it.
  6. Contracting officers are also responsible for identifying the need for a new standard, specification or purchase description, if a suitable one is not available for a particular product or service.
  7. Clients are responsible for stating their requirement for Government Quality Assurance (GQA), which includes quality assurance and quality control on their requisition or attached technical documentation.
  8. The client statement should clearly and completely describe the technical requirements and the requirement for GQA, and must designate the inspection authority and the point of inspection.
  9. The extent of GQA required will vary, depending on contract technical requirements and bidder performance history.
  10. The GQA requirement may be specified in terms of:
    1. the quality standard against which verification will be conducted such as ISO 9001-2000, ISO 9001-2000 plus AQAP-2110, or equivalent;
    2. the requirement for the supplier to establish and maintain systems to assure quality;
    3. the requirement for the supplier to demonstrate conformance;
    4. what quality verification activity will be done by the government;
    5. consignee inspection;
    6. the requirement for the supplier to provide proof of compliance in accordance with an acceptable quality assurance standard or specification;
    7. the requirement for the supplier to submit samples for approval, such as pre-award samples, first-off units, pre-production, qualification or sealed samples;
    8. the requirement for the supplier to submit an inspection plan;
    9. the requirement for the inspection authority to verify that the product supplied:
      1. is equal in all respects to the product qualified during the Qualified Products List/Qualification Program List (QPL) or Certification Program List (CPL) process;
      2. is manufactured under the same conditions as the product qualified during the QPL/ CPL process;
      3. the details of acceptance inspection, tests and trials.
  11. As an alternative to items above, the supplier may be required to be listed in an acceptable qualifying program, such as ISO 9001-2000, ISO 9001-2000 plus AQAP-2110, or equivalent that provides for adequate audit and controls.
  12. When the alternative above is specified, supplier surveillance must be undertaken, to assess the supplier's compliance with the specified standard. The contracting officer must inform clients of the availability of CGSB or other listing programs that, if used for procurement, would reduce the need for GQA. For example, CGSB Certification and Qualification Programs and the Qualified Products Lists are operated on a cost recovery basis with no direct expense or use of resources to the client.
  13. If a requisition does not specify a GQA requirement, or includes an insufficient level, given the nature of the procurement, the contracting officer must work with the client to develop an appropriate GQA framework, and advise the client of the financial and operational implications of appropriate GQA, for the client, the supplier and PWGSC.
  14. If a requisition does not specify a supplier quality system, the client should be requested to consider specifying such a stipulation if:
    1. non-conformance would produce significant effects relating to product safety, reliability or operational consequence; for example, arctic clothing, fire extinguishers and security equipment or services;
    2. the requirement is for a newly designed product being produced to government-generated specifications;
    3. the requirement is for a product or service where current bidders have a history of not conforming to specifications and/or previous similar requirements have resulted in chronic client complaints;
    4. the requirement is for a product of high technical complexity; a product that has stringent interchangeability requirement; or a "critical" product whose non-conformance would result in the failure of a system of which that product is a component;
    5. the requirement is for a product or service, which is being purchased for the first time and no history of performance is available; or
    6. at least one potential supplier has a weak quality system.

    Note 1: This is required to provide adequate protection for both the client and PWGSC.

    Note 2: The contracting officer may also consider a supplier quality system if a requirement has significant dollar value. However, issues relating to the nature of the requirement are usually more important than the dollar value.

3.150.5 Government Quality Assurance at Source

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  1. Government Quality Assurance (GQA) at source should be used when any of the following conditions apply:
    1. the requisitioning authority has designated an inspection authority other than the consignee;
    2. the costs of performing inspection at source are justified by the benefits received;
    3. conformance cannot be adequately determined on receipt because:
      1. the product contains critical characteristics not visible in the end item;
      2. the product has special safety or security characteristics;
      3. special packing and packaging would be destroyed;
      4. delivery is to multiple destinations; or
      5. conditions or capabilities are not adequate at destination.
    4. the bidder has a record of marginal performance or unsatisfactory quality history and conditions preclude procurement from other sources.
  2. The GQA at source may be performed by a client-designated inspection authority or by an inspection authority commissioned by PWGSC on behalf of the client. As part of the inspection, supplier performance data respecting quality must be documented and copies of all inspection reports provided to the sector/region.
  3. PWGSC has the authority to provide additional quality tasking for civilian marine services; for example, inspection and arranging for technical support. This authority is provided through TB Document No. 749386, May 5, 1977, Section VI, Recommendation 2.

3.150.10 Listing Programs

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  1. Listing programs are designed to expedite procurement by establishing, in advance and independent of any specific purchase, a listing of those products or services that comply with recognized performance standards or specifications. Listing/Qualification Programs are normally established in situations where:
    1. test requirements would adversely affect delivery;
    2. costs of acceptance inspection would be excessive;
    3. prior assurance of product conformance and/or supplier capability is necessary;
    4. complex test equipment and procedures are required; or
    5. for products purchased on a regular basis and in large quantities.

    Note: Before contracting, contracting officers should verify with the standards (listing) organization, which product or service offered has been approved. (See  3.150.10 (d).)

  2. The inclusion of a product or service on a list implies only that the product or service complies with recognized performance standards or specifications. Listing does not relieve the supplier of contractual obligations to deliver items or services meeting all specified requirements, nor does it guarantee acceptance under a contract.
  3. The CGSB and the Department of National Defence (DND) both develop and maintain lists. The responsible qualifying authority may discontinue the qualification and delete the product from an existing listing under the following conditions:
    1. Formula change. A change in the supplier's formulation of the product that impairs product quality.
    2. Process change. A change in the supplier's production process that impairs product quality.
    3. Field failure. Authenticated field failure in use, which is attributable to non-conformance of the product to the relevant standard or specification. Authentication of field failure generally requires extensive investigation and supporting laboratory tests. Perceived field failures should be reported by users to the qualifying authority.
    4. Verification failure. Failure to meet requirements in a verification test of the product and/or system, or failure to submit samples for testing, where requested, or to submit data for qualification maintenance when requested.
    5. Withdrawal for cause. Supplier has ceased operation, changed location, or has consistently failed to respond to requests for quotation.
    6. Changes to standard or specification. Listings may be cancelled by the responsible qualifying authority when the governing standards or specifications are cancelled, superseded or amended in such a manner as to affect existing qualification.
    7. Appeals. Discontinuance may be appealed by the supplier in accordance with appeal procedures established by the qualifying authority.

    Note:When there are indications of non-conformance, and if PWGSC and a client determine that a qualified bidder does not conform to the applicable standard, the contracting officer must notify the qualifying authority.

  4. When a listing program is used for a procurement, contracting officers must state in the Notice of Proposed Procurement (NPP), bid solicitation and contract documents that the supplier and its product must be listed in the following appropriate listing:
    1. Qualification Program List (QPL):
      1. underlay;
      2. security guards;
      3. remanufactured toner cartridges;
      4. protective clothing;
      5. polyethelene vapour barrier;
      6. paints;
      7. office furniture;
      8. medical gloves;
      9. Laboratory Acceptance Program;
      10. Dockside Monitoring Company;
      11. capets;
      12. Canadian Non-Destructive Testing Personnel Certification Program;
      13. Canadian Air Transport Security Authority screening contractors;
      14. breather type sheathing membrane.
    2. Certification Program List (CPL):
      1. polyethylene vapour barrier;
      2. surgical and patient examination rubber gloves;
      3. breather type sheathing membrane;
      4. firefighter's protective clothing, protecting against heat and flame;
      5. fireline workwear for forest firefighters;
      6. Laboratory Acceptance Program.
    3. Registered Quality Systems List ISO 9001 (ISO 9000 Quality Management Systems):

      This is a list of companies that are compliant with ISO 9001: 2000 models for quality systems.

      Note: ISO 9001: 2000 has replaced ISO 9001, 9002 or 9003.
      ISO 9001: 2000 is currently being transitioned to the latest standard version; ISO 9001:9008.

    4. Registered Environmental Management Systems List:

      This is a list of companies that are compliant with the ISO 14001:2004 standard for environmental management systems.

    5. Certified Occupational Health and Safety Standards (OHSAS) List

      This is a list of companies that are compliant with the OHSAS 18001:1999 specification for health and safety management systems.

    6. Certified Food Safety Management Systems (Alberta and Ontario Hazard Analysis and Critical Control Point [HACCP] Advantage) List:
      1. The Alberta HACCP Advantage (AHA!) Certification Program is the formalized process whereby a food safety management system is assessed against the AHA! standard of the Alberta Ministry of Agriculture and Rural Development.
      2. The Ontario HACCP Advantage Certification Program is the formalized process whereby a food safety management system is assessed against the Advantage HACCP standard of the Ontario Ministry of Agriculture, Food and Rural Affairs.
    7. Certified Drinking Water Quality Systems (Ministry of Ontario) List:

      The purpose of the Registration Program is to recognize operating authorities of municipal residential drinking water systems that demonstrate, through accreditation by an independent third party, that their quality management systems meet the requirements of the Ontario Drinking Water Quality Standard, and to recognize operating authorities that are managing their drinking water systems in a planned and systematic manner.

3.150.15 Department of National Defence Qualified Products Lists

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  1. batteries;
  2. decals, for military identification;
  3. electronic components, active: electron tubes, electronic modules, discrete;
  4. semiconductors, filters, microcircuits, piezoelectric crystals and oscillators;
  5. electronic components, passive: capacitors, connectors, relays and resistors;
  6. fire fighting agents and chemicals;
  7. flux, liquid soldering, rosin base;
  8. gaskets;
  9. hose fittings;
  10. hydraulics;
  11. insulation and packing materials;
  12. marine and industrial coatings and related products;
  13. mechanical hardware;
  14. panels, information, integrally illuminated;
  15. petroleum products;
  16. plastic sheet, laminated, metal-clad;
  17. printed-wiring boards;
  18. rubber hoses, tires and tubes;
  19. solder, for electronic use;
  20. wire and cable.

3.150.20 Canadian General Standard Board

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3.150.20.1 Canadian General Standard Board

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  1. The contracting officer must be aware of the Canadian General Standard Board (CGSB) and its responsibilities. The CGSB is a federal government organization that offers client-centred, comprehensive standards development and conformity assessment services in support of the economic, regulatory, procurement, health, safety and environmental interests of our stakeholders - government, industry and consumers. In the procurement planning stages, the contractor may be required to meet the standards or specifications of the CGSB for certain requirements and provide a reference in the solicitation and contract documents.
  2. CGSB is accredited by the Standards Council of Canada as a standards-development, product/service/personnel certification and quality and environmental management systems registration organization. It is PWGSC's independent, third party qualifying authority.

    Note:There are other accredited standards organizations in Canada, and contracting officer should contact CGSB for further information.

  3. CGSB manages the development and maintenance of consensus standards and specifications, and develops and maintains qualification, certification and quality and environmental management systems registration, listing programs to support procurement, good business practice and trade.
  4. CGSB also provides expertise and information on standardization, both nationally and internationally; the assessment of the suitability of standards and specifications; quality and environmental management systems registration; and qualification/certification of personnel and listing programs for products and services.
  5. The CGSB Catalogue contains: a listing of over 350 standards and specifications in approximately 80 subject areas, in French and English, for products and services; listing programs for a selected number of these products and services; and other services offered by CGSB.
  6. The Personnel Certification Division of CGSB has been selected by the Treasury Board Secretariat as the certifying body for the Procurement, Material Management and Real Property Certification Program.
  7. Government organizations, suppliers and the general public can obtain CGSB publications, information on the listing programs or documentation required to apply for a listing by contacting:
    Canadian General Standards Board
    Place du Portage III, 6B1
    11 Laurier Street
    Gatineau, Quebec K1A 1G6

    Telephone: 819-956-0425
    E-mail: ONGC.CGSB@tpsgc-pwgsc.gc.ca

    OR

    By visiting the Canadian General Standards Board Web site.

3.150.20.5 New Standards, Specifications or Listings

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  1. When the need for a new standard, specification or listing program is identified, and no suitable document or listing is under development, the contracting officer should contact CGSB, or, since clients are responsible for defining technical requirements, suggest that the client do so.
  2. In cases of an urgent need for a new standard or specification, CGSB may be requested to develop a CGSB standard, as opposed to a Canadian national standard.
  3. If the need for a standard is limited to a single client or sector/region, a client/sector/region qualification program may be instituted. Procedures, which do not limit competition and equity of opportunity for all suppliers, should be established by the client/sector/region concerned, and distribution of listings should be restricted if criteria other than technical performance are applied. Where client/sector/region lists are distributed, the qualification criteria should be stated.

3.150.25 Electrical Equipment

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  1. The client is responsible for determining whether or not a requirement is subject to the Canadian Electrical Code, Part l, and for identifying circumstances where certification or approval in accordance with the Code is required.
  2. Suppliers are responsible for complying with applicable building codes and standards, including the Canadian Electrical Code, Part 1.
  3. If the required electrical equipment must be either certified or approved, bid solicitation documents must contain the appropriate clause specifying the applicable organization accredited by the Standards Council of Canada. The clauses are listed in the Standard Acquisition Clauses and Conditions Manual, subsection 5-B.
  4. The equipment may be specially inspected by an organization acceptable to Chief Electrical Inspector in the province, territory or city where the electrical equipment is to be installed and operated.

3.155 Acquisition Cards

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3.155.1 Acquisition Cards In Contracting

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  1. Contracting officers must be aware of the use and application of "acquisition cards". The Policy on Acquisition Cards came into effect on January 1, 1998. The intent of acquisition cards is to provide a convenient and less burdensome method of procuring and paying for goods and services, while ensuring effective financial control. It is government policy to use acquisition cards for departmental procurement and payment of goods and services (within the levels of procurement authority delegated to departments) where it is efficient, economical and operationally feasible to do so. This policy applies to all organizations considered to be departments within the meaning of section 2 of the Financial Administration Act.
  2. Contracting officers are invited to consult the Treasury Board (TB) Policy on Acquisition Cards and the Acquisition Cards Program - Management Guide. The purpose of the guide is to provide information that will help federal departments administer and control the acquisition card program. The guide will assist responsibility centre managers, individuals doing purchases on their behalf, procurement managers and financial managers by providing them with control standards to achieve a higher and more consistent standard of control. This guide is complementary to the Acquisition Card Policy issued by Treasury Board and should be used along with the Policy.

3.155.5 Acquisition Card Management

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  1. The acquisition card has been in the forefront of most procurement and payment process improvements in client departments. The increasing use of acquisition cards has had an impact on the traditional paper based control framework. The Office of the Auditor General conducted a government-wide review of acquisition card usage, and the report stressed the need for better controls and better monitoring by departments.
  2. "Corporate Acquisition Cards" are designed to help eliminate paper in the procurement process. These cards allow an employee to charge purchases for which full payment is made by the department to the applicable card provider. There is no fee for the cards and conditional discounts can be obtained in exchange for faster and/or electronic settlement.
  3. Like a personal credit card:
    1. the cardholder receives a monthly statement listing purchases;
    2. each cardholder is assigned a credit limit; and
    3. suppliers receive 97 to 98.5 percent of the purchase price within two days of purchase.
  4. Unlike a personal credit card:
    1. the department is obligated to pay either individual invoices for each card or one "consolidated" bill summarizing monthly purchases made by all cardholders;
    2. there is a defined maximum liability of $50 to the department in the event of fraudulent use;
    3. there is special application of financial authorities; and
    4. a department can obtain access to all card transactions.
  5. The card is issued in the name of the employee designated to do the purchasing; however, the liability rests with the sponsoring department. Most important, the dollar amount of purchases and monthly limits associated with acquisition cards are controlled by the card-using organization.
  6. The use of acquisition cards within federal government departments and agencies offers very significant opportunities for savings in the procurement through payment process. Client departments can reduce and simplify the procurement process of goods and services using acquisition cards. Local purchase orders and petty cash are eliminated and a single payment is made for multiple purchases. The ease and flexibility of using the cards provide an incentive to purchase only as the need arises rather than buying in bulk. By using an acquisition card to make the purchase and then settling these purchases electronically, departments can realize significant savings. Taken across government, this approach allows for major cost avoidance in the procurement process.

3.160 Royalty Payments and License Agreements

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  1. If royalty payments, technical assistance agreements or manufacturing licenses are required or anticipated as being required, the contracting officer must plan for these events within the procurement strategy submitted for approval. Establishing these types of agreements can have very long timeframe and can be a very complex process.
  2. In order to carry out certain contracts, primarily for defence, contractors may have to obtain technical assistance and/or manufacturing licenses from third parties.
  3. The usual commercial practice is for the contractor to enter into a technical assistance and/or license agreement. However, there are cases where it may be more advantageous for Canada to enter, in its own name, into the license agreement with respect to inventions, patents, copyrights, trade secrets, trademarks, technical data, know-how and industrial designs.
  4. In order to avoid paying for rights that the government already has, contracting officers should check that no license agreement in Canada's name exists, which could remove the need for royalty payments.
  5. Contracting officers should minimize the use of patented products, by calling up performance specifications rather than product specifications. When there is no alternative, market-based processes for the supply of patented products through licensed production arrangements, royalties, etc., must be exhausted before using section 19 of the Patent Act or section 22 of the Defence Production Act.
  6. Royalty payments of 5 percent or less of the selling price of the patented item require the Director approval. A royalty that exceeds 5 percent requires the Deputy Minister approval, before entry into a contract.
  7. If there is an increase in the amount of the royalty to be paid, or if further items become subject to royalty payments during the life of a contract, the same guidelines for approval apply.
  8. To obtain the approval of the Deputy Minister for royalties exceeding 5 percent, the following information must be provided on Part 2 of the Contract Request:
    1. details of the royalties;
    2. a forecast of anticipated future purchases beyond the requirement in the present submission;
    3. the comments of Legal Services.
  9. In consultation with Legal Services, the contracting officer must consider the advantages and disadvantages before deciding that a license should be obtained in the name of Canada or the contractor. These advantages and disadvantages are to be considered in relation to the nature of the supplies to be manufactured, the expenditure by Canada, potential purchases by Canada and the relationship between the potential contractor and the licensor; for example, the contractor may be a subsidiary of the licensor.
  10. Advantages- if the license agreement is in the name of Canada, Canada can:
    1. negotiate terms and ensure that no restrictions are placed on the use, sale, lease or exchange of supplies. Such restrictions, if imposed, might interfere with Canada's obligations under international defence arrangements;
    2. gave unrestricted choice of contractors; and
    3. control the manner in which required technical assistance must be furnished and used.
  11. Disadvantages- if the license agreement is in the name of Canada, Canada may:
    1. become involved in contractual negotiations apart from the contract it is presently interested in;
    2. have to assume onerous burdens dealing with secrecy, non-disclosure and informing the licensor of improvements and developments;
    3. be bound by all terms of the agreement and be required to pay royalties at a set rate and assume other burdens for a long period.
  12. Royalties required to be paid by contractors and their subcontractors to third parties, in the performance of a defence contract, will be paid if they are valid costs in the bid, and the amounts being charged are acceptable to Canada.
  13. Where the license agreement must be in the name of the contractor, approval to enter into such an agreement may be obtained as part of the authority for the purchase of the goods and/or services.
  14. Where the license must be in the name of Canada, the contracting officer, when negotiating the license agreement and the amount of the royalty payment, should take into consideration the following:
    1. manufacturing rights, including use of licensor's patents and designs;
    2. technical assistance, including:
      1. supply of plans, drawings, specifications, etc.;
      2. engineering person-days provided by the licensor both at its own plant and the plant of the manufacturer selected by Canada;
      3. travel and living expenses of the licensor's representatives;
    3. obtaining for Canada the right to modify or have modified the plans, drawings, etc., and, if required, the right to build or have built or to repair or have repaired the articles in question by a party other than the licensor.
  15. Approval of the Assistant Deputy Minister is required before entry into any contractual agreement that exercises the rights of Canada under section 22 of the Defence Production Act or section 19 of the Patent Act. Exercising the rights granted to Canada under these acts must only be carried out in exceptional circumstances as warranted by consideration of the public interest, and after market-based processes have been exhausted.

    Note:Examples of these circumstances would include refusal by a patent holder to produce or license others to produce a product vital to the defence of Canada, or where monopoly power conferred by the patent is being abused to impose unconsciously high prices upon Canada. It would be very unusual to find these rights exercised for other than defence supplies.

3.165 Controlled Goods

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  1. As of April 30, 2001, no new controlled goods can be provided unless persons are registered, exempt or excluded by the Canadian Industrial Security Directorate. Bill S-25 amended the Defence Production Act and established a new regime for regulating access to certain controlled military and military related goods, technical data and technology, referred to as controlled goods.
  2. Even if there are no controlled goods in a bid solicitation, there may be situations where proposals submitted by bidders could contain controlled goods. Controlled goods cannot be released to persons that are not registered, exempt or excluded under the Controlled Goods Program.

3.170 Shipbuilding, Repair, Refit and Modernization

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The PWGSC procedures for sourcing suppliers to work on Canadian government vessels derive from the government's Shipbuilding, Repair, Refit and Modernization Policy. The objective of the Policy is to encourage competition amongst Canadian shipyards. For all competitive shipbuilding requirements, as defined in the above-mentioned Policy, subject to the Agreement on Internal Trade , contracting officers must ensure that the details of the restrictions or practices are highlighted in the Notice of Proposed Procurement and the bid solicitation.

3.170.1 Information to be included in Notice of Proposed Procurement and Contact Award Notice

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The NPP or bid solicitation must contain the following statement:

“The sourcing strategy relating to this procurement will be limited to suppliers in the Province or Territory or Origin (as applicable) or the Area of Origin (as applicable) in accordance with the Shipbuilding, Repair Refit and Modernization Policy.”

For procurements below $2 million subject to the Shipbuilding, Repair Refit and Modernization Policy, the Contract Award Notice must also contain these details.

3.170.5 Shipbuilding Procurement

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Note: The following procedures apply only when the procurement is not subject to NAFTA and WTO-AGP. NAFTA, Chapter 10, Annex 1001.2b paragraph 1.(a) and WTO-AGP Annex 4 Services (Word Format 55.5 KB) (Help on File Formats), exempts "shipbuilding and repair".

  1. Terms specific to the sourcing strategy of shipbuilding, ship repair, refit and mid-life modernization procurements are as follows:
    1. Origin of the vessel - the operational home port of the vessel.
    2. Area of Origin - the following Areas of Origin are recognized: Eastern Canada: Atlantic Canada (Newfoundland and Labrador, Prince Edward Island, Nova Scotia and New Brunswick), Quebec and Ontario. Western Canada: All shipyards west of Ontario and those in the Yukon, Nunavut and Northwest Territories.
    3. Province or Territory of Origin - All Provinces or Territories of Origin are recognized.
  2. For procurements $25,000 and below, competitions may be limited to the Province or Territory of Origin of the vessel.
  3. For new construction requirements over $25,000, competitions are to be conducted on a nation-wide basis when the following conditions are present:
    1. The statement of requirement is sufficiently defined to permit assessment of competing bids by common standards.
    2. Available shipyards, both in Eastern Canada and in Western Canada, have the technical capability to perform the work.
    3. The vessel being procured is of a type that can be transferred and for which contingency costs (see 3.170.10 (c)) are not unrealistic in relation to the total price.
  4. For new construction requirements over $25,000, competitions are to be conducted within the Area of Origin when all conditions, except c.iii. above, are present.

3.170.10 Ship repair, refit and modernization

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  1. For ship repair, refit and mid-life modernization requirements over $25,000, competitions are to be conducted within the Region of Origin of the vessel, provided adequate competition exists.
  2. If adequate competition (two or more bidders) does not exist, the requirement may still remain in the Area of Origin provided a satisfactory contractual agreement can be reached with the one available capable shipyard. If a satisfactory contractual agreement cannot be reached, the competition is to be extended on a nation-wide basis.
  3. Contingency costs for ship repair, refit and modernization requirements shall be only those costs which are directly related with the transfer of the vessel as defined below:
    1. For vessels that can be transported unmanned:Solicitation documents will specify the pick-up point and the delivery point. Bidders will be required to provide a cost to transport the vessel from the pick-up point and once the work is completed, a cost to transport the vessel to the delivery point. In cases where the Government will retain responsibility for delivery of the vessel to and from the shipyard/ship repair facility and the vessel's home port, using commercial towing, railway, highway transportation or other suitable means, solicitation documents will identify the cost of such transportation as the vessel transfer cost that will be added to the evaluation price. (See SACC Manual clause A0240T)
    2. For vessels that are manned for transport:Solicitation documents will identify the contingency cost that will be added to the evaluation price for the transfer of the vessel and its minimum delivery crew based on the geographical distance to and from the vessel's home port location and the shipyard/ship repair facility where the work will be undertaken, and:
      1. The fuel cost based on the current market price for fuel and the vessel's fuel consumption at its most economical speed.
      2. For unmanned refits, transportation costs for the minimum delivery crew base on the latest Treasury Board directives. (See SACC Manual clause A0240T)
      3. For manned refits, contingency costs shall only include the fuel costs for transferring the vessel and shall not include any costs for transporting the crew. (See SACC Manual clause A0240T)
  4. Procurements by direct allocation of contracts to specific shipyards are to be made only in cases where the conditions permitting nation-wide, area and Province or Territory competitions are not present. Such cases will arise when one or more of the following conditions exist:
    1. Only one shipyard is capable of performing the work.
    2. Performance of the work necessitates access to particular facilities that are adjacent to one shipyard.
    3. The statement of requirement is not sufficiently defined to permit assessment of competitive bids by common standards.
    4. Emergency requirements necessitate use of the nearest yard capable of performing the work.
    5. Special operational considerations of the client limit movement of the vessel beyond a specified location.

3.175 United States Defense Related Procurement

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  1. Procurements by Canada for military goods and services are often related and technically integrated for the same or similar goods and services as United States ( U.S.) military procurements. As a result, Canada and U.S. have agreed to share or permit access to technical data and material that may not be readily accessible for the advancement of a procurement.
  2. The contracting officer must be aware that in the procurement planning and strategy development that agreements and processes exist between Canada and U.S. to facilitate access to technical data and material. For more information, see Chapter 9 - Special Procurements.
  3. There are three areas of concern to the contracting officer in procurement planning as it applies to military procurements as part of the Canada/ U.S. joint procurement efforts:
    1. Joint Certification Program;
    2. Foreign Military Sales; and
    3. U.S. Defense Priorities and Allocations System.

3.180 Joint Certification Program

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A Memorandum of Understanding (MOU) between the Minister of National Defence and the U.S. Secretary of Defense established a Joint Certification Program, which allows certified contractors of each country access, on an equally favourable basis, to unclassified technical data of both countries. It also ensures that effective and appropriate controls and enforcement mechanisms are in place in each country to protect such technical data. The Technical Data Control Regulationsare the authority for implementing this program.

3.185 Foreign Military Sales

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  1. The Foreign Military Sales (FMS) program is a mutually beneficial government-to-government method for selling U.S. defence equipment, services, and training. FMS must be considered as a method of procurement when the goods or services required related to military equipment of U.S. origin and when, on the basis of the information available at the time, those goods and services are available or can be made available from the U.S. Department of Defense (DoD).
  2. When Public Works and Government Services Canada Headquarters ( PWGSC [H]) determines that a requirement will be sole sourced through the U.S. FMS Program, the requisition must be reallocated to PWGSC Washington. Decisions by PWGSC (H) to sole source requirements through the U.S. FMS Program must be adequately documented.
  3. For more information, see 9.15 United States Foreign Military Sales.

3.190 U.S. Defense Priorities and Allocations System

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  1. The U.S. Defence Priorities and Allocations System (DPAS) is intended to assure the timely availability of industrial resources to meet current national defence and emergency preparedness program requirements and provide an operating system to support rapid industrial response in a national emergency. Priority ratings are intended to support approved defence programs with some exceptions.
  2. Contracting officers should seek assistance from the Central Allocations and Defence Priorities Officer, Office of Small and Medium Enterprises and Strategic Engagement to determine whether the system may be utilized for U.S. procurements when dealing with a contract with a defence requirement. Before contract award, and with consideration of the foregoing, contracting officers must insert the appropriate Standard Acquisition Clauses and Conditions Manual clause in all Canadian defence contracts placed with U.S.-based suppliers and in all Canadian defence contracts placed with Canadian-based suppliers.
  3. For a variety of reasons, U.S.-based suppliers may be unable to deliver material to Canadian-based contractors, within the timeframes specified, despite the prompt application for and the timely issuance of a priority rating.

3.195 Risk Management

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3.195.1 Treasury Board Secretariat Risk Management Policy

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  1. The Treasury Board (TB) Risk Management Policy provides the framework for managing risks within the Government of Canada.
  2. The objective of the Policy is to safeguard the government's property and interests, and the interests of its employees as they do government work. TB is responsible for monitoring the effectiveness of the Policy in assisting department's risk management programs.
  3. The Policy mandates that it is the responsibility of each department to effectively manage its own risks. Departments are responsible for adequate and timely compensation, restoration, and recovery of losses in the event of harmful or damaging incidents arising within their department. Departments must comply with the following TB policies: Policy on Legal Assistance and Indemnification; and Policy on Claims and Ex Gratia Payments. For more information on claims for extra payment, see 8.55 Claims for Extra Payment.
  4. Public Works and Government Services Canada ( PWGSC) manages risks linked to the procurement process by applying sound procurement plans and contract structure that reduce Canada's loss exposure. PWGSC works with client departments during the contracting process to facilitate clients' understanding of the risk management process relating to their responsibilities.

3.195.5 Risk Management Process for Limiting a Contractor's Liability

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3.195.5.1 General

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The risk management process, simply put, is a management process that applies to risk and it involves the following steps:

  1. risk identification and analysis;
  2. examination of the risk management techniques;
  3. selection of the appropriate technique(s);
  4. implementation of the selected technique(s); and
  5. monitoring of the results.

3.195.5.5 Risk Assessment

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  1. Risk assessment is the process whereby risks and their potential outcomes are identified and measured according to their probability of occurrence and degree of severity. The outcome of the risk assessment is a report on the quantified value of the risks and it is used to guide decision-making in the contracting process. The risk assessment is an important tool because it forms the basis of risk-based decision-making.
  2. Risk assessments are conducted by client organizations, as the requisitioning authorities, and they can vary in depth and complexity. Risk assessments can be performed by contracted firms under a standing offer or directly by a client organization. The decision as to who conducts the risk assessment will take into account technical capacity, resources and funding.
  3. Each risk assessment will examine and measure the sources of potential loss (exposures) over which a contractor has control. The risk assessment can also identify and segregate the exposures over which the client department has control. Examples of general exposures include property, assets, legal liability, personnel and reputation.
  4. The risk assessment will draw on the various risks that the client organization identifies. Information on risks can come from a variety of sources, such as records and data; questionnaires; surveys and exploratory testing; and process maps.

3.195.5.10 Risk Control

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Risk control comprises risk treatment that requires taking action to avoid, prevent, reduce or transfer losses. Risk control can occur before, or after, a loss event. The various methods of loss control usually require on organization to develop, implement and maintain various processes and procedures to ensure the effectiveness and success of the risk control program.

  1. Loss avoidanceis the technique by which an organization will refrain from various activities because of the severe nature of the risk. For example, a contractor can exit a certain line of business because losses incurred by that business threaten the viability of the firm. For example, a food services firm may sell off its tobacco business line due to the potential for costly class action lawsuits.
  2. Loss preventionis the technique used to prevent losses from occurring, or to reduce their likelihood of occurrence. Loss prevention measures are often found in engineered or automated processes, such as intrusion detection and access control. In their simpler form, loss prevention measures can include elements such as wide-angle mirrors on vehicles to prevent collisions while reversing.
  3. Loss reductionis the technique used to reduce the impact of a loss once it has occurred. Loss reduction measures can include engineered systems, such as automatic fire suppression systems (e.g. sprinklers). They can be found in business applications process, such as business continuity plans or crisis management programs.
  4. Contractual transfer for risk controlis a risk control measure that uses contract conditions to transfer the risk of loss and/or the obligation to control loss to a contractor. The most notable form is the contractual requirement for indemnification, which requires the contractor to make good losses it causes. In addition to indemnification, a contract may contain other conditions, such as liability for loss, which can be specifically targeted to certain types of loss and the amount of financial obligation. In addition, the contractor may be required to manage and monitor losses it incurs in the delivery of the contract and report to the clients.

3.195.5.15 Risk Financing

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  1. Risk financing is the technique through which organizations provide funding for potential losses. Although the most commonly known form of risk financing is insurance, there are other methods that are frequently used. Canada uses the "self-underwriting" option in the management risks to which it is exposed and over which it has control.
  2. Canada uses the self-underwriting option as a default approach for its own risk financing because it has the legislative authority and capacity as a sovereign entity to raise funds directly to pay for losses.
  3. Contractors are responsible for financing the risks under their control. Contractors will most often use commercial insurance to finance their risks, although other risk financing options are available. Contractors use the commercial insurance market to obtain insurance and within the marketplace, insurance policies are underwritten and financed by insurers, with insurance brokers fulfilling the roles of marketing and distribution.
  4. Contractors can manage risk financing on a variety of models:
    1. Insurance transfer, where the contractor purchases commercial insurance with standard deductibles, transferring most of the financial risk to the insurer in exchange for premium.
    2. Self Insured retention, where the contractor assumes financial responsibility to a certain level and transfers risk above that level to insurers. This differs from a deductible because the contractor will manage the retained risk through risk control and self-funding measures.
    3. Alternative risk financing,which involves other forms of risk financing sources, such as capital and bond markets and "captive" insurance.
  5. Canada can exercise the following risk financing options in contracting to ensure an appropriate level of financial protection from contractors:
    1. contractor controlled insurance, wherein Canada self-underwrites its own risks and relies upon the judgement of the contractor to determine its own insurance requirements;
    2. g overnment specified insurance, where Canada self-underwrites its own risks and specifies the types and minimum coverage limits of insurance that the contractor must maintain;
    3. g overnment controlled insurance, where Canada purchases and controls the insurance as a way of obtaining economies of scale in project involving multiple parties.

3.200 Contractor Liability

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3.200.1 General

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  1. The Treasury Board (TB) Secretariat Policy on Decision Making in Limiting Contractor Liability in Crown Procurement Contracts governs the process for limiting contractor liability. Contracting officers are required to understand the application of the Policy in order to ensure compliance and to protect the interests of the Government of Canada. The Policy applies to all Canadian procurements subject to the Government Contracts Regulationsand the TB Contracting Policy for risks under the control of the contractor.
  2. The Policy forms the framework for risk-based decision-making, enabling the appropriate application and apportionment of liability risk in contracts. The Policy details the steps and necessary approvals that must be followed, when limiting contractor liability, in order to ensure effective program management and service delivery for the benefit of Canadians. A key element of risk-based decision-making is the requirement for risk assessments to be performed by client departments.
  3. The Policy identifies four procurement models that prescribe the extent to which a contractor's liability may be limited and the level of approval required:
    1. Model 1represents the most common type of procurement contracts and accounts for about 90 percent of all Canada procurement contracts. Under this model, only the contractor's liability to Canada (first party liability) may be limited. Commodity groupings have been established for commonly purchased commodities over which a general risk assessment has been conducted. Under this model, limiting third party liability and indemnification of the contractor requires TB approval.
    2. Model 2includes complex procurements that have a high degree of uncertainty or risk because of the untested nature of the technology or the unproven, unique or developmental nature of the deliverable. Under this model, PWGSC has the authority to limit first party liability. Limiting third party liability or indemnification of the contractor requires TB approval.
    3. Model 3includes contracts where there is limited scope for negotiating liability provisions, such as government-to-government agreements, or where no other viable alternative to serve a program requirement exists. Under this model, PWGSC can limit third party liability. Indemnification of the contractor requires TB approval.
    4. Model 4pertains to highly specialized services contracts in support of ensuring the health, safety and the economic well being of Canadians. Under this model, PWGSC can limit first party liability. Limiting third party liability or indemnification of the contractor requires TB approval.

3.200.5 Indemnification

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Indemnification is the requirement for one party to a contract to make the other whole when the latter has suffered a loss. The current default position of Canada on indemnification in procurement contracts is to remain silent. This enables both the parties to rely on their respective rights at law in the event of a loss. Exceptions to this position are where:

  1. It may not be in Canada's financial interest to rely on Common Law or the Civil Code.
  2. The terms of a commodity grouping include the specific indemnification of Canada by the contractor.
  3. Canada agrees to indemnify the contractor due to exceptional circumstances or where the procurement falls under the terms of a Foreign Military Sale. Under this condition, the client department must assume financial responsibility for the substantive transfer of risk to Canada, as determined by a risk assessment. Substantive transfer occurs where the assessed risk value exceeds the limitation of the limitation of the contractor's liability.

3.205 Review Process for Creation, Renewal and Extension of Standing Offers and Supply Arrangements

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In order to reduce duplication and increase the effectiveness, efficiency and level of quality of Standing Offers and Supply Arrangements, the following review process must be followed.

3.205.1 Review Process

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  1. The creation, renewal and extension of all standing offers (SO) and supply arrangements (SA) requires advance approval by either the designated Commodity Team (CT) Leader identified for those goods or services, or if such a team does not exist, by a Regional Reviewer (RR), who is designated for each region. A list of CT Leaders and Regional Reviewers is available and regularly updated on the Standing Offer IndexThis information is only accessible to federal government employees. (accessible to federal government employees only) Web site. If there is no CT Leader or RR, a designate in the Performance, Spend and Commodity Management Directorate (PSCMD), Acquisitions Branch will perform the review.
  2. The goal of the review process is to:
    1. reduce SO/ SA duplication;
    2. actively promote the consolidation of similar client departments requirements into common SO/ SA;
    3. increase the effectiveness and level of quality of SO/ SA, and
    4. support the commodity management function by providing the "Request for Endorsement" form to PSCMD.
  3. The "Request for Reviewer Endorsement" form will be available in the very near future on the Standing Offer Index - User Manual (PDF Version 293 KB)This information is only accessible to federal government employees. - (Help on File Formats) (accessible to federal government employees only) Web site. The information provided will be used to analyze trends and measure the performance of the commodity management function.
  4. Contracting officers are encouraged to contact the CT Leader or Regional Reviewer early in the SO/ SA planning process to obtain their general agreement on the planned approach, particularly in cases where the proposed new procurement instrument will include goods or services already covered in an existing instrument.

3.205.5 Reviewer Evaluation

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  1. The reviewer will either:
    1. endorse without comments/recommendations;
    2. endorse with comments/recommendations/conditions, or
    3. decline endorsement with supporting rationale.
  2. The comments, recommendations, or endorsement of the reviewer provided on the Request for Reviewer Endorsement form must be included in the Contract Planning and Advance Approval (CPAA) or Procurement Plan. Approval authorities must ensure that the approval documents include reviewer comments, recommendations, or the endorsement, as applicable.
  3. The approval document (e.g. CPAA, Procurement Plan) is approved in accordance with the normal process.

3.205.10 Publishing Information on the Standing Offer Index

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Contracting officers must ensure:

  1. that all Standing Offers (SOs) and Supply Arrangements (SAs) are posted according to the Standing Offer IndexThis information is only accessible to federal government employees. (SOI). PDF copies of the SOs and SAs must be sent by email to the Standing Offer Coordination Office (SOCO) at RCN.BCOC-NCR.SOCO@tpsgc-pwgsc.gc.ca within five business days of creation.
  2. that the information presented to the client departments is accurate and includes the original SO/ SA document, the sequence of amendments and tombstone documentation, such as contracting officer name and phone number.

3.205.15 Duplication of Coverage in Standing Offers and Supply Arrangements

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  1. Reviewers will not normally endorse the creation of a duplicate SO/ SA in that the product category is already available in an existing instrument. For example, a request for a Regional Individual Standing Offer or a Regional Master Standing Offer (RISO or RMSO) will not normally be endorsed should a National Master Standing Offer (NMSO) already exist for the same product category.
  2. In the event that the contracting officer believes that the creation of a duplication SO/ SA is in Canada's best interest, the contracting officer must:
    1. clearly indicate on the "Request for Reviewer Endorsement" form that a similar SO/ SA exists;
    2. provide the duplicate SO/ SA number;
    3. clearly identify the need for the duplication, and
    4. include the resulting reviewer comments in the CPAA or Procurement Plan submission.

Annex 3.1: Treasury Board Questions for Sole Source

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Provide responses, as applicable, to the questions contained in the template below in order to explain and justify why exception 6.(d) of the Government Contracts Regulations (GCRs) has been invoked to allow a sole source goods or services contract. All of the questions must be considered and answered by the contracting officer with the assistance of the client department, including confirmation, where appropriate, that the question is not applicable to the contract or standing offer under review. Some guidance is also provided for assistance in responding to the questions.

Note: In the case of a services contracts or standing offers, contracting officers should satisfy themselves that the contract in question is the right instrument, as opposed to such instruments as, but not limited to: a grant; a contribution; or, an employment contract i.e. a term, casual or ministerial appointment.

Treasury Board questions for client answers for sole source procurements.
NO. QUESTION CLIENT'S ANSWER
1

Is the proposed sole source contract linked to a previous procurement and strategy for obtaining additional quantities and/or in-service support? If yes, what was the approved strategy?

If answer is "yes", identify what was the previous procurement strategy that was conducted with PWGSC. Identify the PWGSC file number for the previous contract (i.e. original procurement was posted "competitively" and it was identified that additional equipment would be purchased in the future with the successful vendor).

Notwithstanding the approved strategy, is it feasible and/or affordable to compete the requirement?

If the answer was "yes" to question %1, can this requirement be issued as a competitive requirement?

If the answer is "no", then answer the additional question below.

If not, provide the related rationale in terms of cost, schedule, etc.

Explain why this requirement cannot be issued as a "competitive" requirement.

2

Does the Vendor or its approved distributors have exclusive ownership of, and rights to use, the intellectual property (IP) for the goods or services in question? If yes, provide details. What rights, if any, does the Crown have to use the IP?

If answer is "yes", you would indicate the vendor details and state whether they are: the Original Equipment Manufacturer (OEM) or the sole authorizer value-added reseller.

Clearly indicate why we are going directly to this company, for ex.:

  1. We are dealing directly with the OEM, ABC Ltd, as they are the owners, developers of the equipment and owners of the IP. They do not authorize value-added resellers or distributors for their equipment.
  2. We are dealing with XYZ Distribution Inc. as they are the sole distributor and only approved value-added reseller authorized to sell and support in Canada the equipment built by the OEM, ABC Ltd.
3

Are there legal and/or regulatory considerations precluding open competition for this good or service? If yes, provide details.

Is there any provincial and federal legislation that directs client to only purchase the described requirement.

4

Are there alternative sources of supply for the same or equivalent materiel/support? If no, explain.

If you are using Government Contracts Regulations, exception 6 d), then you would indicate there are no alternate sources of supply that can meet the mandatory performance specifications identified by you the client. You would reference the attached sole source justification.

If yes, what other options were considered and why were they not recommended?

If the answer is "Yes", and there are alternate sources of supply, then we should be going out to competition.

If research has been done, to confirm there is only a manufacture than can meet the mandatory performance specifications, then we should indicate what has been done.

Note: To have different manufacturers "pre-tested" or "benchmarked" thru an evaluation process is not acceptable, unless it was done thru a competitive process with PWGSC. Also, simply because the manufacturer is the "best" or the "lowest price" is not acceptable, without a competitive process thru PWGSC.

5

Is the proposal related to commonality/compatibility with existing equipment? If yes, what are the operational costs/implications of managing multiple versions?

Must the equipment required be compatible with existing equipment?… existing software? Or existing equipment at other facilities in Canada, North America, and the World?

If the answer is "Yes", at a minimum, we need to:

  1. Clearly identify which equipment and or software the client (or other research centers) has that must be compatible with current requirement.
  2. Identify what "compatible" means to client. Do the machines communicate with one another from facility-to-facility? Are samples cross-examined and compared from facility to facility? We need to be specific.
  3. Identify what the operational costs and the implications of managing multiple versions. (multiple manufacturers, multiple software programs). What would be the price of non-conformance for client? Cost to retrain? Cost to revise protocols, procedures, processes? Is there a cost to delaying this program any further?
6

Explain why the price is fair and reasonable; describe how price support was obtained; and summarize negotiations.

Client can provide any preliminary information received from the vendor. (financial quote). Also, PWGSC, as the contracting officer will be responsible for negotiating a fair and reasonable price and ensuring the prices are fair and reasonable to Canada.

7

Are there any other factors that have led to a recommendation for a non-competitive process? If yes, provide details and rationale.

(a) What is the likelihood of an amendment or follow-on contract to the same person?

Is there the possibility of additional equipment, additional warranty services? Then we should be implementing "options-to-purchase" within the contract.

Describe the efforts taken to identify a variety of suppliers and explain any impact the Trade Agreement thresholds or TB Contracts Directive contract entry/amendment limits will have on the proposed procurement strategy.

Have there been any efforts made by client to identify potential suppliers and determine what is available within the vendor community?

PWGSC will advise which trade agreements would be applicable.

" PWGSC Supply Specialist consulted with the client in regards to future requirements and the client has confirmed that no follow-on equipment will be required"… OR… " PWGSC Supply Specialist consulted with Client in regards to future requirements and the client has confirmed that there could be the potential for follow-on equipment, therefore options to purchase additional equipment will be incorporated within the contract."

PWGSC will post a ACAN on the Government Electronic Tendering Service (GETS) to ensure there are no suppliers that can actually meet this requirement.

This requirement is subject to the following trade agreements: AIT, NAFTA, WTO-AGP.

(b) Given the nature of your organization's mandate, describe any efforts taken to put in place long-term procurement arrangements to address similar requirements/activities in future (e.g., establish standing offer).

Client to identify any long-term procurement strategies to address future needs:

Client to investigate potential consolidation of opportunities with other departments.

Client to encourage PWGSC to include an additional range of equipment in any future standing offers whenever possible.

PWGSC will also identify the National Commodity Team Lead and discuss the possibility of including this requirement with any future standing offers.


Annex 3.2: Limited Tendering Reasons contained in the Trade Agreements

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Note that the Contract Award Process (CAP) codes for each award type are included for reference.

  1. The limited tendering reasons for the North American Free Trade Agreement (NAFTA) are included below.

    Article 1016: Limited Tendering Procedures

    1. An entity of a Party may, in the circumstances and subject to the conditions set out in paragraph 2, use limited tendering procedures and thus derogate from Articles 1008 through 1015, provided that such limited tendering procedures are not used with a view to avoiding maximum possible competition or in a manner that would constitute a means of discrimination between suppliers of the other Parties or protection of domestic suppliers.
    2. An entity may use limited tendering procedures in the following circumstances and subject to the following conditions, as applicable:
      1. in the absence of tenders in response to an open or selective call for tenders, or where the tenders submitted either have resulted from collusion or do not conform to the essential requirements of the tender documentation, or where the tenders submitted come from suppliers that do not comply with the conditions for participation provided for in accordance with this Chapter, on condition that the requirements of the initial procurement are not substantially modified in the contract as awarded; (CAP Code 05)
      2. where, for works of art, or for reasons connected with the protection of patents, copyrights or other exclusive rights, or proprietary information or where there is an absence of competition for technical reasons, the goods or services can be supplied only by a particular supplier and no reasonable alternative or substitute exists; (CAP Code 71)
      3. in so far as is strictly necessary where, for reasons of extreme urgency brought about by events unforeseeable by the entity, the goods or services could not be obtained in time by means of open or selective tendering procedures; (CAP Code 81)
      4. for additional deliveries by the original supplier that are intended either as replacement parts or continuing services for existing supplies, services or installations, or as the extension of existing supplies, services or installations, where a change of supplier would compel the entity to procure equipment or services not meeting requirements of interchangeability with already existing equipment or services, including software to the extent that the initial procurement of the software was covered by this Chapter; (CAP Code 74)
      5. where an entity procures a prototype or a first good or service that is developed at its request in the course of and for a particular contract for research, experiment, study or original development. Where such contracts have been fulfilled, subsequent procurement of goods or services shall be subject to Articles 1008 through 1015. Original development of a first good may include limited production in order to incorporate the results of field testing and to demonstrate that the good is suitable for production in quantity to acceptable quality standards, but does not include quantity production to establish commercial viability or to recover research and development costs; (CAP Code 72)
      6. for goods purchased on a commodity market; (CAP code 20)
      7. for purchases made under exceptionally advantageous conditions that only arise in the very short term, such as unusual disposals by enterprises that are not normally suppliers or disposal of assets of businesses in liquidation or receivership, but not routine purchases from regular suppliers; (CAP code 21)
      8. for a contract to be awarded to the winner of an architectural design contest (CAP code 22), on condition that the contest is:
        1. organized in a manner consistent with the principles of this Chapter, including regarding publication of an invitation to suitably qualified suppliers to participate in the contest,
        2. organized with a view to awarding the design contract to the winner, and
        3. to be judged by an independent jury; and
      9. where an entity needs to procure consulting services regarding matters of a confidential nature, the disclosure of which could reasonably be expected to compromise government confidences, cause economic disruption or similarly be contrary to the public interest.
    3. An entity shall prepare a report in writing on each contract awarded by it under paragraph 2. Each report shall contain the name of the procuring entity, indicate the value and kind of goods or services procured, the name of the country of origin, and a statement indicating the circumstances and conditions described in paragraph 2 that justified the use of limited tendering. The entity shall retain each report. They shall remain at the disposal of the competent authorities of the Party for use, if required, under Article 1017, Article 1019 or Chapter Twenty (Institutional Arrangements and Dispute Settlement Procedures)
  2. The limited tendering reasons for the World Trade Organization – Agreement on Government Procurement(WTO-AGP) are included below.

    Article XV: Limited Tendering Procedure

    1. The provisions of Articles VII through XIV governing open and selective tendering procedures need not apply in the following conditions, provided that limited tendering is not used with a view to avoiding maximum possible competition or in a manner which would constitute a means of discrimination among suppliers of other Parties or protection to domestic producers or suppliers:
      1. in the absence of tenders in response to an open or selective tender, or when the tenders submitted have been collusive, or not in conformity with the essential requirements in the tender, or from suppliers who do not comply with the conditions for participation provided for in accordance with this Agreement, on condition, however, that the requirements of the initial tender are not substantially modified in the contract as awarded; (CAP code 05)
      2. when, for works of art or for reasons connected with protection of exclusive rights, such as patents or copyrights, or in the absence of competition for technical reasons, the products or services can be supplied only by a particular supplier and no reasonable alternative or substitute exists; (CAP code 71)
      3. in so far as is strictly necessary when, for reasons of extreme urgency brought about by events unforeseeable by the entity, the products or services could not be obtained in time by means of open or selective tendering procedures; (CAP code 81)
      4. for additional deliveries by the original supplier which are intended either as parts replacement for existing supplies, or installations, or as the extension of existing supplies, services, or installations where a change of supplier would compel the entity to procure equipment or services not meeting requirements of interchangeability with already existing equipment or services 5; (CAP code 74)
      5. when an entity procures prototypes or a first product or service which are developed at its request in the course of, and for, a particular contract for research, experiment, study or original development. When such contracts have been fulfilled, subsequent procurements of products or services shall be subject to Articles VII through XIV 6. (CAP code 72)
      6. when additional construction services which were not included in the initial contract but which were within the objectives of the original tender documentation have, through unforeseeable circumstances, become necessary to complete the construction services described therein, and the entity needs to award contracts for the additional construction services to the contractor carrying out the construction services concerned since the separation of the additional construction services from the initial contract would be difficult for technical or economic reasons and cause significant inconvenience to the entity. However, the total value of contracts awarded for the additional construction services may not exceed 50 per cent of the amount of the main contract;
      7. for new construction services consisting of the repetition of similar construction services which conform to a basic project for which an initial contract was awarded in accordance with Articles VII through XIV and for which the entity has indicated in the notice of intended procurement concerning the initial construction service, that limited tendering procedures might be used in awarding contracts for such new construction services;
      8. for products purchased on a commodity market; (CAP code 21)
      9. for purchases made under exceptionally advantageous conditions which only arise in the very short term. This provision is intended to cover unusual disposals by firms, which are not normally suppliers, or disposal of assets of businesses in liquidation or receivership. It is not intended to cover routine purchases from regular suppliers; (CAP code 21)
      10. in the case of contracts awarded to the winner of a design contest provided that the contest has been organized in a manner which is consistent with the principles of this Agreement, notably as regards the publication, in the sense of Article IX, of an invitation to suitably qualified suppliers, to participate in such a contest which shall be judged by an independent jury with a view to design contracts being awarded to the winners. (CAP code 22)
    2. Entities shall prepare a report in writing on each contract awarded under the provisions of paragraph 1. Each report shall contain the name of the procuring entity, value and kind of goods or services procured, country of origin, and a statement of the conditions in this Article, which prevailed. This report shall remain with the entities concerned at the disposal of the government authorities responsible for the entity in order that it may be used if required under the procedures of Articles XVIII, XIX, XX and XXII.

      "Notes:

      5.It is the understanding that "existing equipment" includes software to the extent that the initial procurement of the software was covered by the Agreement.

      6.Original development of a first product or service may include limited production or supply in order to incorporate the results of field testing and to demonstrate that the product or service is suitable for production or supply in quantity to acceptable quality standards. It does not extend to quantity production or supply to establish commercial viability or to recover research and development costs."

    3. The limited tendering reasons for the Agreement on Internal Trade (AIT), as stated in paragraphs 11 and 12 of article 506 are included below.

      "11. An entity of a Party may use procurement procedures that are different from those described in paragraphs 1 hrough 10 in the following circumstances, provided that it does not do so for the purpose of avoiding competition between suppliers or in order to discriminate against suppliers of any other Party:

      1. where an unforeseeable situation of urgency exists and the goods, services or construction cannot be obtained in time by means of open procurement procedures; (CAP code 81)
      2. where goods or consulting services regarding matters of a confidential or privileged nature are to be purchased and the disclosure of those matters through an open tendering process could reasonably be expected to compromise government confidentiality, cause economic disruption or otherwise be contrary to the public interest;
      3. where a contract is to be awarded under a cooperation agreement that is financed, in whole or in part, by an international cooperation organization, only to the extent that the agreement between the Party and the organization includes rules for awarding contracts that differ from the obligations set out in this Chapter;
      4. where construction materials are to be purchased and it can be demonstrated that transportation costs and technical considerations impose geographic limits on the available supply base, specifically in the case of sand, stone, gravel, asphalt, compound and pre-mixed concrete for use in the construction or repair of roads;
      5. where compliance with the open tendering provisions set out in this Chapter would interfere with a Party's ability to maintain security or order or to protect human, animal or plant life or health; and
      6. in the absence of a receipt of any bids in response to a call for tenders made in accordance with the procedures set out in this Chapter. (CAP Code 05)"

      12. Where only one supplier is able to meet the requirements of a procurement, an entity may use procurement procedures that are different from those described in paragraphs 1 through 10 in the following circumstances:

      1. to ensure compatibility with existing products, to recognize exclusive rights, such as exclusive licences, copyright and patent rights, or to maintain specialized products that must be maintained by the manufacturer or its representative;
      2. where there is an absence of competition for technical reasons and the goods or services can be supplied only by a particular supplier and no alternative or substitute exists; (CAP code 71)
      3. or the procurement of goods or services the supply of which is controlled by a supplier that is a statutory monopoly; (CAP code 86)
      4. the purchase of goods on a commodity market; (CAP code 20)
      5. or work to be performed on or about a leased building or portions thereof that may be performed only for work to be performed on property by a contractor according to provisions of a warranty or guarantee held in respect of the property or the original work;
      6. for work to be performed on property by a contractor according to provisions of a warranty or guarantee held in respect of the property or the original work;
      7. for a contract to be awarded to the winner of a design contest;
      8. for the procurement of a prototype or a first good or service to be developed in the course of and for a particular contract for research, experiment, study or original development, but not for any subsequent purchases; (CAP code 72)
      9. for the purchase of goods under exceptionally advantageous circumstances such as bankruptcy or receivership, but not for routine purchases; (CAP code 21)
      10. for the procurement of original works of art;
      11. for the procurement of subscriptions to newspapers, magazines or other periodicals (CAP code 87); and
      12. for the procurement of real property. (CAP code 87)

Annex 3.3: Model Content of an Advance Contract Award Notice

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An Advanced Contract Award Notice (ACAN) must be prepared in both official languages. Below is a model that must be used by contracting officers for the preparation of an ACAN. The blocks include guidance for its use as well as examples for some of the items listed.

  1. Advance Contract Award Notice (ACAN)

    Begin with an explanation of what an ACAN is by including the statement below in all ACANs.

    An ACAN is a public notice indicating to the supplier community that a department or agency intends to award a contract for goods, services or construction to a pre-identified supplier, thereby allowing other suppliers to signal their interest in bidding, by submitting a statement of capabilities. If no supplier submits a statement of capabilities that meets the requirements set out in the ACAN, on or before the closing date stated in the ACAN, the contracting officer may then proceed with the award to the pre-identified supplier.
  2. Definition of the requirement

    Provide a description of the requirement that is sufficiently defined so that industry can understand the government's high-level requirements.

    • The Department of (indicate name of organization) has a requirement for the supply of quantity x (describe the product, system, or equipment, e.g. software licenses, VHF communications system, fire fighting equipment), in accordance with (if applicable) Standard/Specification/Regulation No. x. The product/system/equipment (as applicable) must (describe the salient physical, functional or other essential characteristics, including performance criteria, and any requirement to integrate with existing systems or equipment. Also refer to a part number, model number and/or brand name, if applicable, and add the words "or equivalent". Include all information on any optional items, quantities, periods, etc.).
    • OR

      The Department of (indicate name of organization) has a requirement to (describe the services, e.g. "provide architectural and engineering services"; "provide technical investigation and engineering services in support of..."; "conduct a study of x to assess..."; "carry out a financial audit of x to determine..."; "develop an economic model to permit the analysis of..."). The work will involve the following: (enumerate the tasks and describe the objectives, expected results, performance standards, constraints, and, to the extent possible, deliverables).

  3. Criteria for assessment of the Statement of Capabilities (Minimum Essential Requirements)

    Detail the criteria against which the statement of capabilities submitted by potential suppliers will be assessed. This will allow the contracting officer to have an adequate basis for evaluating a potential supplier's statement of capabilities. The pre-identified supplier must be evaluated on the same basis.

    • Any interested supplier must demonstrate by way of a statement of capabilities that its product/equipment/system (as appropriate) meets the following requirements:

      (Summarize the essential functional characteristics or, if necessary to properly define the goods, the physical or design characteristics, and describe any requirements for interchangeability with existing systems or equipment. Also include to the extent possible performance or output criteria. If applicable, refer to recognized Canadian or international standards, specifications, and/or regulations.)

    • OR

      Any interested supplier must demonstrate by way of a statement of capabilities that it meets the following requirements: (this list should include those qualifications deemed essential to carry out the work)

      • Experience (e.g. x years experience in the past x years conducting y; x number of projects similar in size, scope and complexity);
      • Knowledge and understanding of (e.g. x equipment; x economic model; x software);
      • Academic qualifications (e.g. must possess an undergraduate degree from a recognized university in the field of [e.g. business, political science]);
      • Professional designation, accreditation, and/or certification (e.g. professional engineer, Certified General Accountant).
  4. Applicability of the trade agreement(s) to the procurement

    Include, if applicable, a statement indicating if the proposed procurement is subject to one or more of the trade agreements.

    This procurement is subject to the following trade agreement(s) (insert the applicable trade agreement(s)):

    • Agreement on Internal Trade (AIT)
    • World Trade Organization - Agreement on Government Procurement (WTO-AGP)
    • North American Free Trade Agreement (NAFTA)

    Note: In general, the Supply Manual refers only to NAFTA and the WTO–AGP, as the procedural requirements of the other international trade agreements will be fulfilled following compliance to the procedural requirements of NAFTA and the WTO–AGP. See 1.25.16 Bilateral Free Trade Agreements.

  5. Set-aside under the Procurement Strategy for Aboriginal Business

    Include, if applicable, the following statement when the procurement is set-aside under the Procurement Strategy for Aboriginal Business (PSAB).

    This procurement is set-aside for an Aboriginal supplier in accordance with the government's Procurement Strategy for Aboriginal Business (PSAB). Therefore, only suppliers who meet the definition of an Aboriginal business, as defined in the PSAB, may submit a statement of capabilities.

  6. Comprehensive Land Claims Agreement(s)

    Include, if applicable, a statement regarding the applicability of the procurement to one or more of the Comprehensive Land Claims Agreements (CLCAs).

    This procurement is subject to the ______________________ (insert the applicable CLCA).

  7. Justification for the Pre-Identified Supplier

    Indicate the reason(s)/justification for the pre-identified supplier. This should clearly demonstrate why the pre-identified supplier has been identified as the only supplier capable of performing the work or of meeting the government's requirements. (See 3.15.1 Justification of Non-competitive Process).

  8. Government Contracts Regulations Exception(s)

    Indicate all relevant exceptions under the Government Contracts Regulations (GCRs).

    The following exception(s) to the Government Contracts Regulations is (are) invoked for this procurement under subsection ___________________(for example: subsection 6(d) - "only one person is capable of performing the work").

  9. Exclusions and/or Limited Tendering Reasons

    Indicate, as applicable, the exclusion(s) and/or the limited tendering reason(s) invoked (see Annex 3.2 Limited Tendering Reasons contained in the Trade Agreements) under the trade agreement(s).

    The following exclusion(s) and/or limited tendering reasons are invoked under the (section of the trade agreement(s) specified):

    • Agreement on Internal Trade (AIT) – Article(s) _____ (insert applicable article(s))
    • World Trade Organization - Agreement on Government Procurement (WTO-AGP) – Article(s) _____ (insert applicable article(s))
    • North American Free Trade Agreement (NAFTA) – Article(s) _____ (insert applicable article(s))

    Note 1: Trade agreements make no reference to ACANs, but if the trade agreement covered procurement is being directed to a supplier, there is a requirement to indicate the exclusion(s) or the limited tendering reason(s) invoked.

    Note 2: In general, the Supply Manual refers only to NAFTA and the WTO–AGP, as the procedural requirements of the other international trade agreements will be fulfilled following compliance to the procedural requirements of NAFTA and the WTO–AGP. See 1.25.16 Bilateral Free Trade Agreements.

  10. Ownership of Intellectual Property

    Where intellectual property will be created during the course of the contract, a statement should indicate whether an exception set out in the Treasury Board Policy on Title to Intellectual Property Arising under Crown Procurement Contracts is being invoked or if the ownership of intellectual property will rest with the contractor.

    • Ownership of any Foreground Intellectual Property arising out of the proposed contract will vest in the Contractor.
    • OR

      Canada intends to retain ownership of any Foreground Intellectual Property arising out of the proposed contract on the basis that the main purpose of the contract is (insert appropriate exception to the Treasury Board Policy on Title to Intellectual Property Arising under Crown Procurement Contracts, e.g. to generate knowledge and information for public dissemination).

  11. Period of the proposed contract or delivery date

    Provide the period of the proposed contract or the required delivery, including potential renewal or option years.

    • The product/system/equipment (as appropriate) must be delivered on _________ (insert the delivery date required or requested. If the contract includes optional quantities and/or optional goods, insert the delivery date (e.g. within x days of exercising the option)).
    • OR

      The proposed contract is for a period of x years, from (insert estimated start date) to (insert estimated completion date). (If the contract includes an option to extend the contract period, insert the option information, e.g. two one-year periods.)

    • OR

      If the contract includes deliverables, state the date(s) that the deliverables are due.

  12. Cost estimate of the proposed contract

    Include a cost estimate, where appropriate, provided that it will not prejudice negotiations with the proposed contractor (pre-identified supplier), or compromise the pre-identified supplier's competitive position if the requirement proceeds to a traditional or electronic bidding process (could be provided as a range).

    The estimated value of the contract, including option(s), is $ x (GST/HST extra).

  13. Name and address of the pre-identified supplier

    Include the name and, usually, the address of the pre-identified supplier (proposed contractor) in the ACAN.

  14. Suppliers' right to submit a statement of capabilities

    Provide an explanation to suppliers of how they may proceed in responding to the ACAN.

    Suppliers who consider themselves fully qualified and available to provide the goods, services or construction services described in the ACAN may submit a statement of capabilities in writing to the contact person identified in this notice on or before the closing date of this notice. The statement of capabilities must clearly demonstrate how the supplier meets the advertised requirements.

  15. Closing date for a submission of a statement of capabilities

    Include the day, month and year for the closing date for accepting statements of capabilities. See 3.15.5.1 Advance Contract Award Notice Time Limit.

    The closing date and time for accepting statements of capabilities is (e.g. February 11, 2011 at 2:00 p.m. EST).

  16. Inquiries and submission of statements of capabilities

    Include the name, position, address, phone, fax and e-mail address where suppliers may inquire or submit a statement of capabilities.

    Inquiries and statements of capabilities are to be directed to:

    (Name and title of contact)
    (Address)
    Telephone:
    Facsimile:
    E-mail:

Annex 3.4: Task Authorization

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Annex 3.4.1: A Guide to Preparing and Administering Task Authorization for Public Works and Government Services Canada Clients

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1.0 Purpose

The purpose of the Guide to Preparing and Administering Task Authorizations is to provide procedural guidance to Public Works and Government Services Canada's ( PWGSC's) clients when contracts for services containing task authorizations are issued by PWGSC and the client is authorized to issue individual task authorizations (TAs). This guide incorporates advice on preparing and administering TAs. Many of the principles discussed in this document equally apply to other mechanisms by which goods or services are ordered under a contract on an "as and when requested" basis such as a service order. For the Department of National Defence (DND) requirements, this guide supplements the internal procedure for administering TAs documented in article 3.3.2 of DND's Procurement Administration Manual (PAM).

2.0 Definitions
2.1 Contracts with Task Authorizations

A contract with Task Authorizations (TAs) is a method of supply for services under which all of the work or a portion of the work will be performed on an "as and when requested basis" through predetermined conditions including an administrative process involving task authorizations.

2.2 Task Authorization

A TA is a structured administrative tool enabling PWGSC or a client, or both to authorize work, by a contractor on an "as and when requested" basis in accordance with the conditions of the contract.

3.0 Application of Contracts with Task Authorizations
  1. A contract with TAs may be used when there is a definite need for services but the exact nature, the timeframes of the required services, activities and deliverables will only be known when the service(s) will be required during the period of the contract. PWGSC determines when the client's needs would be best addressed by the use of a contract with TAs. If the client is authorized to issue TAs, the limit of this approval would be stipulated in the contract. All TAs in excess of this limit have to be forwarded to PWGSC for authorization. A contract with TAs can be set up to cover multiple years. This approach can eliminate the need to establish a new contract every year. Multiple contracts with task authorizations may be issued in certain circumstances when one contract would not be sufficient to fulfill all requirements. In such cases, the contractors' order of ranking, the specific work allocation process, Canada's total liability for all issue TAs and the authorization limit would be identified in the contracts.
  2. Some examples of contracts with TAs are as follows:
    1. a requirement for translation where the work is generally defined and the specific tasks for translation (e.g. a required translation of 50,000 words) are on an as and when requested basis;
    2. a requirement for maintenance of equipment where the general maintenance work is defined in the contract and, when the equipment failure/issue occurs, the specific maintenance task is authorized on an as and when requested basis;
    3. a requirement for an informatics technology specialist over a defined period, but the specific activities and deliverables cannot be identified in advance nor the timing or level of effort predicted.
  3. An advantage of using contracts with TAs is the mitigation of contractual risks as a result of better-defined tasks, the establishment of a level of effort on a per task basis and more precise pricing for each specific task thereby ensuring better management of the contract.
  4. When they are properly used, contracts with TAs provide a structured framework offering operational speed and flexibility to clients. Contracts with TAs will be successful provided that there is a clear understanding and agreement between PWGSC and the client as to their respective roles and responsibilities relating to the management of the contract including for authorizing and issuing TAs and task authorization management. The improper use of contracts with TAs can lead to major problems between the government and its suppliers, between PWGSC and its clients, and for the government in the eyes of the public.
4.0 Conditions of Use
  1. As a condition of use of contracts with TAs, the PWGSC contracting officer will, as a minimum:
    1. ensure the contract with TAs is the appropriate method of supply for these required services in consultation with the client.
    2. decide whether the client will be allowed to authorize and issue TAs, and determine the financial limit of this authority. These decisions will be made in consultation with the client and the associated provisions will be detailed in the contract. All TAs in excess of the determined limit must be forwarded to PWGSC for authorization and issuance.
    3. consult with the client to reach an agreement on the roles and responsibilities of both organizations including the client's responsibilities for reporting.
    4. discuss, as required, the use of contracts with TAs with the client and in particular the administration of TAs.
5.0 Task Authorization Process and Administration

The client authorized to issue tasks to the contractor is responsible for issuing TAs in accordance with the TA process and administration of the TA detailed in the contract. If the task does not seem to be within the scope of the work, PWGSC must be consulted before any TA is contemplated.

The responsibilities of the client are detailed below:

  1. TA Statement of Work (SOW) or task description
    1. ensure the task (or revised task) description of the work required (activities to be performed, deliverables to be submitted, completion dates for major activities or submission dates for deliverables or, as applicable, both) included in the TA is in accordance with the contract Statement of Work (SoW). This includes:
      1. ensuring that the text of the TA does not have the potential to create employer-employee relationships. See the Canada Revenue Agency publication RC 4110 - Employee or Self-Employed?; and
      2. Setting dates or timeframes for completing tasks taking into consideration the expiry date of the contract. A task must be completed on or before the expiry date of the contract; however, if a task cannot be completed by such date, a contract amendment to extend the contract period to the task completion date would have to be issued by PWGSC before the TA can be authorized and issued.
    2. provide to the contractor the task or description of the work , the schedule, the quantity, and the associated payment provisions, all in accordance with the conditions of the contract.
    3. facilitate knowledge transfer at the end of the work to reduce reliance on the same consultant or contractor.
    4. consult with the contractor and the contracting officer, as applicable.
  2. Task Authorization Stage
    1. the response from the contractor must be reviewed by the client to ensure conformity with the conditions and payment provisions stipulated in the contract and its amendments, e.g. predetermined categories of resources and rates or pricing stipulated in the contract and its amendments are used by the contractor to quote on the level of effort for the specific task.
    2. if resources are named in the contract (i.e. specific individuals are identified for specific contract categories), replacement must be in accordance with the conditions of the contract or subsequent amendments and meet the criteria used in the selection of the individual. However, for contracts that do not contain named resources, then the client should complete and retain on file an evaluation of such new named resource. The evaluation must completely assess such resource ensuring he/she meets all qualifications as stipulated in the contract or its amendments.
    3. before authorizing a task, the client must ensure that:
      1. the task is within the client's authority limit; if the value of the task exceeds the client authorization limit contained in the contract and contract amendments, the TA must be forwarded to PWGSC for authorization.
      2. the task can be completed on or before the expiry date of the contract, and,
      3. the authorization of the task will not result in the cumulative value of all task authorizations to exceed the limitation of expenditure for all TA s.
    4. the TA is finalized, including the total value of the TA task, in accordance with the conditions of the contract, and the client and/or PWGSC authorizes the TA by signing and dating the TA.
    5. the contractor signs and dates the TA authorized by the client and/or PWGSC and provides the signed original with their attachments and a copy as detailed in the contract.
  3. Start of the work for a TA

    Work on a TA cannot commence until a contract allowing task authorizations has been awarded and the TA has been authorized and issued in accordance with the conditions of the contract. Contracts must never be awarded and TA s must never be authorized retroactively. The TA form must be authorized by the client and/or, if required, by PWGSC and signed by the contractor before the work starts.

  4. Task Authorization Management
    1. before the contract is issued or the TA process implemented, the client must inform PWGSC when personnel other than the project or technical authority are involved in the TA process. The client must also confirm that appropriate training on the use of TA s has been provided to such personnel.
    2. the client must notify the PWGSC contracting authority when the client authority named in the contract is to be replaced so that the contract can be amended.
    3. the client must create and update a record of all tasks authorized under a contract and provide such a record to PWGSC as agreed between the two organizations.
    4. the client must monitor task performance, work delivered, conduct proper cost review and provide reports to the PWGSC contracting authority as agreed between both organizations.
    5. The client must have specific processes in place to ensure that billing rates and categories of resources or other payment provisions included in authorized and issued TA s are in accordance with the conditions of the contract.
    6. the client must provide complete and timely reporting of performance or arising issues under a TA to the PWGSC contracting authority.
    7. the client must ensure that the dollar value does not exceed the individual TA financial/dollar limit(s) specified in the contract with task authorizations or any limit placed on the cumulative value of TA s under the contract.
    8. before authorizing payment of an invoice in accordance with departmental procedures for an authorized and issued TA, the client must ensure that:
      1. the timesheets are in accordance with the contract, where applicable;
      2. the services have been performed, received and accepted; if applicable, an individual who has direct knowledge of the level of effort reported must verify the level of effort reported on the timesheet for the contractor resource;
      3. the invoice is consistent with the conditions and payment provisions stipulated in the contract or subsequent amendments and all required substantiating documentation is completed, approved and on file. See paragraph 7 below relative to separation of duties.
6.0 Revising a Task Authorization authorized by the client
  1. The client may revise a TA that it originally authorized subject to the work being within the scope and value of the contract as well as within the client authority limit set in the contract. Any revision to the TA is subject to concurrence by the contractor. A TA revision, which will bring the TA value above the client TA limit, must be referred to the PWGSC contracting officer.
  2. (b) An authorized TA may be revised to either reduce an activity (or activities) or to cancel the task in its entirety, however a TA cannot be revised to terminate a task. In situations when the contractor is in default or for the convenience of Canada, the termination provisions of the applicable general conditions will apply and the contract may be terminated either entirely or in part for default or for convenience. Such matters must be referred to the PWGSC Contracting Authority.
7.0 Separation of duties

The Treasury Board (TB) Directive on Delegation of Financial Authorities for Disbursements requires that the authority to enter into contract or amendment must be separate from the certification authority under section 34 of the Financial Administration Act. In Chapter 3 of the 2008 December Report of the Auditor General of Canada, the Office of the Auditor General raised issues relative to the application of separation of duties with respect to task authorizations and stated that combining procurement and certification functions under the responsibility of one individual was not in keeping with the TB Policy on Delegation of Authorities. Therefore, PWGSC recommends that the client ensure that the individual who signs the task authorization not also certify associated invoices. However, as specified in the above-mentioned TB directive, where the client's current processes in place or other circumstances do not allow such separation of duties, the client may implement alternate control measures. The client is responsible to ensure that its current processes or alternate control measures can withstand scrutiny under audit.

8.0 Corrective measures

The PWGSC Contracting Authority may take corrective measures such as reducing or revoking the client's authority to issue TAs where there are indications that the TA process is not working in accordance with the contract and the agreement between the client and PWGSC.

9.0 Tips
9.1 Method of Supply Planning
  1. Do not request that PWGSC establish more labour categories and contracts than are necessary.
  2. Do not add new contract categories to engage specific individuals.
9.2 Employer-Employee Relationships
  1. Avoid using employment-type language in describing the work such as specifying the number of hours of work per day/week or the manner in which the work is to be conducted.
  2. Avoid long-term assignments or a continuing relationship where a steady income stream from the department or agency is involved; state clearly the start and completion dates and ensure the contractor sets his or her hours of work.
  3. Avoid controlling how the contractor carries out the work; work and results should only be overseen by the project/technical authority.
  4. Avoid having the contractor work on government premises.
9.3 Administration of Task Authorizations
  1. Do not split a requirement to get around the client authority limit stipulated in the contract.
  2. Avoid task descriptions for TAs that could create a conflict of interest.
  3. Ensure the price is fair and reasonable for the specific task and in accordance with the basis of payment in the contract.
  4. Ensure there are sufficient funds.

Annex 3.4.2: Record of Agreement Template – for Public Works and Government Services Canada Clients

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Remarks to the PWGSC Contracting Authority:
(Delete the instructions before forwarding to the client the completed e-mail and Record of Agreement).

  1. A Record of Agreement should be used when it has been determined that the needs of the client would be best met through a contract with a Task Authorization (TA) process subject to any sector/regional operating procedures regarding its use. To that effect, the following is a TA Record of Agreement template that would formalize the administrative procedures between the client and Public Works and Government Services Canada.
  2. The completed template may be sent as an email to the appropriate client and client acceptance should be received before submission of the Contract Plan and Approval (CPAA) or Procurement Plan approval.
  3. An email template is provided below:

Subject:Requisition No. ___________, email TA Record of Agreement

Dear _________( Insert client name)

We considered that your requirement contained under the above subject requisition would best be met through a contract with a Task Authorization (TA) process. To that effect, the following is the TA Record of Agreement that would formalize the administrative procedures between our organizations for this requirement. A copy of the Guide to Preparing and Administering Task Authorizations for PWGSC's clientsis attached.

In order to proceed with Public Works and Government Services Canada's ( PWGSC) internal approval of this proposed procurement strategy, we require your department's confirmation that it agrees to the TA Record of Agreement described below, namely that it understands its roles, responsibilities and reporting requirement with respect to the proposed TA process as well as PWGSC's right to implement corrective actions if PWGSC considers that necessary.

Please confirm your understanding of the TA process described herein, by return e-mail, preferably by close of business ________( insert time and date), as a delay in responding could impact the planned solicitation release date.

Should you wish to discuss any of the items specified herein, please do not hesitate to contact me.

Yours truly,

______________( Insert name of the PWGSC Contracting Authority)


RECORD OF AGREEMENT BETWEEN

PUBLIC WORKS AND GOVERNMENT SERVICES CANADA

_______________( insert PWGSC Division name) and

__________________( Insert client name; for DND, insert DND'S division name, e.g.: D MAR P 3-5)

(hereinafter identified as the Authorized Client)

PERTAINING TO THE USE OF TASK AUTHORIZATIONS

UNDER CONTRACT NO____________( Insert contract number)

  1. Purpose

    The purpose of this document is to formalize a Record of Agreement between PWGSC and the Authorized Client regarding their respective roles and responsibilities when using the contract with task authorizations identified above (refer to the "Matrix of Roles and Responsibilities" attached hereto). It is imperative that the Authorized Client and the PWGSC contracting authority work closely together at all times during the period of the contract.

  2. Period of the Agreement

    The conditions of this Record of Agreement will be in effect for the entire duration of the contract.

  3. Task Authorization

    As specified in the contract (once awarded), the Authorized Client's designated authority may authorize individual task authorizations up to a limit of $______( insert amount), Goods and Services Tax (GST) or Harmonized Sales Tax (HST) extra, inclusive of any revisions to the authorized TAs. Any TA in excess of that limit or any revisions to the authorized TA that would increase the TA total value above that limit must be authorized by ________( insert, as applicable,"the Authorized Client designated authority and the PWGSC Contracting Authority" or"the PWGSC Contracting Authority") before issuance.

  4. Contract Amendment Process

    The Authorized Client understands that it must not request the contractor to perform any work in excess of or outside the scope of the contract and it must not issue TAs where the cumulative value of all TAs would exceed the contract value. Any anticipated changes to the contract must be authorized, in writing, by the PWGSC contracting authority through the issuance of a contract amendment before any additional work or TA is authorized. At any time during the contract period, when there is a need to amend the contract, the Authorized Client mustinform the PWGSC contracting authority accordingly, in writing (email), and provide him/her the following:

    1. a clear and accurate rationale for amending the contract; e.g. the reason why the work cannot be completed by the contract expiry date, why there is a shortfall of funds, etc.;
    2. the cumulative value of all TAs (GST or HST extra) issued to date;
    3. the total contract expenditures (GST or HST extra) to date;
    4. the estimated price breakdown for any additional work required;
    5. the consequences of not amending;
    6. justification for the required amendment versus initiating a new procurement; and
    7. the status of the replacement procurement in the case of on-going work.

    If PWGSC determines that the contract cannot be amended, the Authorized Client will be advised accordingly. If the contract can be amended, the Authorized Client will then forward to the PWGSC contracting authority a duly signed requisition amendment ( PWGSC- TPSGC 9200).

  5. Contract Management – Corrective Measures

    If there are indications that the Authorized Client is not complying with the conditions of this agreement, the PWGSC contracting authority will discuss the matter with the Authorized Client's designated representative, the contractor or both and take any of the following corrective measures, deemed appropriate:

    1. change the detail and/or frequency of the information reporting;
    2. discuss with the Authorized Client's staff responsible for issuing TAs, or with the contractor if needed;
    3. reduce any dollar limit that might have been placed on individual TAs and/or suspend or cancel the Authorized Client's authority limit for TA authorization.

    Both parties agree to comply with the conditions of this Record of Agreement. Further, it is understood and agreed that this agreement may be amended from time to time, as necessary. Except for any change resulting from a corrective measure specified in 5 (a) to (c) above, amendments will not be implemented until an amended Record of Agreement has been formalized and accepted via email by both parties.

    Matrix of Roles and Responsibilities in Contracts with Task Authorizations
    Item Roles and Responsibilities
    X = primarily responsible
    S = supporting role
    Authorized Client PWGSC
    1.0 Task Authorization (TA) Process
    1.1 Ensure that the personnel authorized to issue TAs are properly trained. X
    1.2 If more than one contract is awarded for the same requirement, ensure that the work is allocated in accordance with the contract. X
    1.3 Ensure that the work required in each TA is within the scope of the contract. X S
    1.4 Verify that there are still sufficient uncommitted funds in the contract. X
    1.5 Ensure that the value of the TA to be authorized does not exceed the Authorized Client's dollar limit imposed on individual TAs. Refer any TA exceeding that amount to the PWGSC contracting authority for authorization. X
    1.6 Ensure that TAs are issued in accordance with the task authorization process detailed in the contract. X
    1.7 Ensure that the TA delivery/completion date falls on or before the expiry date of the contract. X
    1.8 Ensure that the cost breakdown or payment provisions and the categories of personnel provided by the contractor are strictly in accordance with the conditions of the contract. X
    1.9 Ensure that the level of effort and other elements of cost are commensurate with the work to be performed. X
    2.0 Reporting Requirements
    2.1 Forward a copy of each duly authorized and signed TA (including its attachments) and all revisions to authorized TAs to the PWGSC contracting authority, as soon as they are issued. X
    2.2 Provide to the PWGSC Contracting Authority a ________( insert"monthly" or"quarterly", as applicable) usage report, which will include as a minimum: a list of each issued TA and TA revision, i.e. TA Number, TA revision number, a title and/or brief description of each task, start and completion date for each task, the active status of each task (completed or in progress), the total value committed and expended for all TAs to date; the limitation of expenditure for each task, the limitation of expenditure for all tasks as stated in the contract, and the contract cumulative expenditure to date. X
    3.0 Contract Management
    3.1 Ensure the personnel designated by the Authorized Client to administer the TA authorization process understand the TA process, as required. X S
    3.2 Report contractor performance problems immediately to the PWGSC contracting authority so that appropriate remedial action may be taken in relation to the contract. A TA that the Authorized client originally authorized may be revised subject to the work being within the scope and value of the contract as well as within the client authority limit set in the contract. Any revision to the TA is subject to concurrence by the contractor. A TA revision, which will bring the TA value above the client TA limit, must be referred to the PWGSC contracting officer. An authorized TA may be revised to either reduce an activity (or activities) or to cancel the task in its entirety, however a TA cannot be terminated for default or for convenience. In situations when the contractor is in default or for the convenience of Canada, the termination provisions of the applicable general conditions will apply and the contract may be terminated either entirely or in part for default or for convenience. Such matters must be referred to the PWGSC contracting authority. X X
    3.3 Ensure that each invoice is in accordance with the conditions of the contract and each authorized and issued TA. Also, ensure that the individual who signs the task authorization does not certify associated invoices unless the current processes in place or other circumstances do no allow such separations of duties. In such cases, the Authorized client may implement alternate control measures. Copies of all claims/invoices, supported by reports are to be provided to the PWGSC contracting authority. X
    3.4 Monitor the contract closely to ensure that all authorized and issued tasks remain within the scope of the contract. X
    3.5 Take any necessary corrective measures if there are indications that the TA process is not working as planned (refer to the article entitled "Contract Management – Corrective Measures" in this Record of Agreement). X
    3.6 Ensure that the contractor complies with the reporting requirements. X
    3.7 Compile usage reports and keep up to date usage statistics, ensuring that the financial limitation of the contract is never exceeded. X X

Annex 3.5: Procurement Review Committee Requirements and Approval Process

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  1. The Procurement Review Committee (PRC) Secretariat is part of the Policy, Risk, Integrity and Strategic Management Sector, and can be reached either by telephone: 819-956-3513 or by e-mail at: SecrtariatduCEA.PRCSecretariat@tpsgc-pwgsc.gc.ca.
  2. When a PRC review is required, the Secretariat will, as part of the background document, request that the contracting officer develop procurement strategies for consideration by the PRC. As a member of the PRC, the contracting officer plays a major role in these deliberations. The PRC's recommendations are recorded in a Record of Review that accompanies the contract submission to Treasury Board (TB).
  3. Recommendations that involve increased cost or risk must be supported by a cost-benefit analysis using the factors set out in the TB policy. The department whose program will be supported by the benefits being sought carries out this analysis.
  4. The use of relative weightings for evaluating socio-economic benefits should be limited, except in special circumstances, to procurements exceeding $50,000,000. When relative weightings are utilized for evaluating socio-economic benefits, TB approval of the procurement strategy is required before issuing the bid solicitation, regardless of delegated levels. TB approval will be sought by the department acting as a proponent of the alternate strategies.
  5. Where socio-economic or environmental benefits form part of the bid evaluation, the PRC may request that the contracting officer provide a briefing on the results of the bid evaluation.
  6. The contracting officer may be required to provide the PRC with feedback relative to the results of the Committee's recommendations. However, monitoring the achievement of the benefits being sought is the responsibility of the department whose program was supported by the socio-economic benefits.
  7. All procurements that contain a requirement for local content or regional economical benefits, including those procurements for which the PRC has imposed local content or regional economic benefits, must ensure that the Notice of Proposed Procurement/solicitation documents contains details of the restrictions or practices. When the value of the procurement is $2,000,000 or below and local content or regional economic benefits have been sought, these procurements must be reported as "exceptional circumstances." In order to prepare the report, it will be necessary to include the details of the restrictions in the Contract Award Notice as well.
  8. The following process is followed for review and approval of requirements:
    1. The Detail Document (see Exhibit A: Detail Document - Procurement Review Committee) is forwarded to PRC Committee members by e-mail. Committee members are given five working days to review each individual requirement. At any time within those five days, members can request that the PRC Secretariat place a requirement on hold, pending further discussions or clarifications.
    2. Queries on a particular requirement sent to the PRC Secretariat by Committee members will be forwarded directly to the responsible contracting officer for direct reply.
    3. If no queries or concerns have been received at the end of the fifth day, the PRC Secretariat will then issue a Record of Decision.
    4. Copies of both the Detail Document and Record of Decision are provided to all PRC members and the responsible PWGSC contracting officer whose name has been indicated on the Detail Document.
    5. A requirement that has been placed on hold will only be released once direction to do so has been received by e-mail from the PRC member who has made such a request;
    6. Contracting requirements that are initially under $2,000,000 must be reviewed by the PRC if the total estimated value increases to $2,000,000 or above.
    7. Amendments to a requirement must be added to the Detail Document by the contracting officer and returned to the PRC Secretariat for forwarding to PRC members for further review. PRC members are given three working days to review amendments. At the end of this time period, a Record of Decision will be issued.
  9. When completing the Detail Document, the following should be taken into consideration:
    1. socio-economic or environmental benefits, if any, must be clearly indicated in the Detail Document;
    2. the Project Value should clearly identify whether it is one contract or part of a project involving several requirements to be sent for individual PRC review and approval, or whether the PRC is being requested to approve the entire project. If this is the case, then this should be clearly stated in the detail document.
    Exhibit A: Detail Document - Procurement Review Committee

    (2010-01-11)

    In accordance with the Treasury Board Procurement Review Policy, the following information on a procurement requirement is submitted for your consideration. If there is no request for additional time to consider the socio-economic potential of this requirement by the date below you will be notified by e-mail that no further review is required. If you determine that further review is required, you are requested to provide the reason(s) for your interest and a statement of the benefits being sought.

    (Date to be determined by the Procurement Review Committee Secretariat) / Date à être déterminée par le Secrétariat du Comité d'examen des acquisitions)

    Procurement Review Committee (PRC) - Detail Document
    Comité d'examen des acquisitions (CE) - Description détaillée

    PRC N o/ N oCEA:(To be determined by the PRC Secretariat / À être déterminé par le Secrétariat du CEA)

    Project Title / Operating Department / Ministère opérationnel :

    Project Ref. No / No du projet :

    Project Value / Valeur du projet : $______M / ______M$

    Estimated Contract Value / Valeur estimative du contrat : $_____M / _____M$

    Commodity Description / Description des biens ou services :

    Project Status / État du projet :

    Procurement Strategy and Other Related Information / Stratégie d'approvisionnement et autres renseignements pertinents :

    Competitive / Concurrentiel ( ) Government Electronic Tendering Service (GETS) ( ) Directed / Source unique ( ) ACAN/ PAC ( )

    Source(s) of supply / Source(s) d'approvisionnement :

    Justification for Sole Sourcing ( if applicable) / Justification du recours à un fournisseur unique ( le cas échéant) :

    Procurement Category Code / Code de catégorie d'achat :

    Specifications / Spécifications :

    Military / Militaires( ) Commercial / Commercial( )

    Developmental Procurement ( if applicable) / Achats aux fins de développement ( le cas échéant) :

    Estimated Contract Award Date / Date prévue d'attribution du contrat:

    Contact Points / Points de contact:

    PWGSC Contracting Authority / Autorité contractante de TPSGC:

    Telephone / Téléphone:( ) ______
    Fax / Télécopieur:( ) _______
    E-mail / Courriel:______________

    Operating Department Project Authority / Responsable du projet au ministère opérationnel: ________________
    Telephone / Téléphone:( ) ______
    Fax / Télécopieur:( ) _______
    E-mail / Courriel:______________

    PRC Secretariat / Secrétariat du CEA
    819-956-3513

Annex 3.6: Canadian Content Policy

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  1. Introduction

    The Canadian Content Policy is a Cabinet-mandated policy. The Policy encourages industrial development in Canada by limiting, in specific circumstances, competition for government procurement opportunities to suppliers of Canadian goods and services.

  2. Application
    1. The Policy applies only to procurements carried out by Supply and Services Canada (SSC), which is now a part of Public Works and Government Services Canada (PWGSC). Therefore, this policy will normally apply to goods and services contracting carried out by Acquisitions Branch, except for those categories of procurements which were not done by the former SSC. Furthermore, the Policy does not apply when another government departments does its own contracting and would not normally apply to construction procurement that had been previously carried out by the former Public Works Canada.
    2. The Policy applies to competitive procurements with an estimated value of $25,000 or more, exceptfor the following:
      1. government procurements subject to the international trade agreements;
      2. procurements made in furtherance of aid to developing countries, but does apply to purchases made by the Canadian International Development Agency (CIDA) on its own account;
      3. procurements made by PWGSC Acquisitions offices located outside Canada; and
      4. Cabinet-mandated sourcing, including sourcing related to industrial and regional benefits, shipbuilding, ship repair, refit and mid-life modernization.
  3. Determining Eligible Bidders
    1. Eligible bidders are those supplying Canadian goods and/or services.
    2. A good wholly manufactured or originating in Canada is considered a Canadian good. A product containing imported components may also be considered Canadian for the purpose of this policy when it has undergone sufficient change in Canada, in a manner that satisfies the definition specified under the North American Free Trade Agreement (NAFTA) Rules of Origin. For the purposes of this determination, the reference to "territory" in the NAFTA Rules of Origin is to be replaced with "Canada".
    3. For photocopiers, computers and office equipment within Federal Supply Classification (FSC) groups 36, 70 and 74, there are special rules – see paragraph (e), "Other Canadian Goods and Services", below.
    4. A service provided by an individual based in Canada is considered a Canadian service. Where a requirement consists of only one service, which is being provided by more than one individual, the service will be considered Canadian if a minimum of 80 percent of the total bid price for the service is provided by individuals based in Canada.
    5. Other Canadian Goods and Services
      1. For photocopiers, computers and office equipment within FSC groups 36, 70 and 74, only the products of the following firms are considered Canadian goods:
        1. MERIT Partner under the MERIT Partnership Program (administered by Industry Canada [IC] and PWGSC);
        2. companies which, on March 31, 1992, were allocated to Priority Group 1 under the Priority Groups Policy in effect at that time; or
        3. CIRCLE Canada companies as agreed on by IC and PWGSC.
      2. Textiles: Textiles are considered to be Canadian goods according to a modified rule of origin, copies of which are available from the Clothing and Textiles Division, Logistics, Electrical, Fuel and Transportation Directorate.
  4. Preparing a Bid Solicitation
    1. When a requirement is covered by the Canadian Content Policy, the bidder must certify the Canadian content by submitting a certification that the good or service offered meet the definition of Canadian goods and/or services.
    2. When the requirement consists of one good or service, the bidder must certify that the good or service is Canadian. See section 9, "The Rules of Origin Determination", for examples of how to determine whether a good is Canadian.
    3. When requirements consist of more than one good and/or service, the contracting officer must decide, at the procurement planning stage, whether the Canadian content certification will be done on an aggregate or individual basis:
      1. aggregate:multi-item requirements will be certified on an aggregate basis. A minimum of 80 percent of the total bid price must consist of Canadian goods to meet the requirements of the Policy; or
      2. item by Item:multi-item requirements awarded on an item by item basis will be certified on an item-by-item basis. In these cases, suppliers will be asked to identify separately, each item that meets the definition of Canadian goods.
    4. For requirements consisting of more than one service, a minimum of 80 percent of the total bid price must be provided by individuals based in Canada.
    5. For requirements consisting of a mix of goods and services, 80 percent of the total bid price must consist of Canadian goods and Canadian services. See section 9, "The Rules of Origin Determination", for an example of, how to determine whether a mix of goods and services meets the 80 percent rule.
    6. A bid can be accepted in part without resubmission of a certification.
    7. The contracting officer must first decide whether a requirement will be solely or conditionally limited to Canadian goods and or services or whether the procurement will be open to all suppliers.
    8. Solely Limited: the bid solicitation or request for standing offers will be solely limited to suppliers who could offer Canadian goods and/or services when the contracting officer believes there exists, in the marketplace, three or more such suppliers. Certifications for competitive procurement solely limited to Canadian goods and/or services are provided in the Standard Acquisition Clauses and Conditions(SACC) Manual, under clause numbers: A3051T, A3052T, A3053T, A3055T, A3056T and A3059T for bid solicitations; and M3051T, M3052T, M3053T, M3055T, M3056T and M3059T for requests for standing offers. Except for bids that will be publicly opened, the contracting officer will determine whether:
      1. the bidder will be required to submit the completed certification of Canadian content with the bid, or
      2. the bidder should submit the completed certification with the bid, but it is not mandatory. If the certification is not completed or submitted with the bid, the contracting officer will contact the bidder and provide the bidder with a timeframe within which to submit the completed certification.

        Note 1: For publicly opened bids, the bidder will be required to submit the completed certification with the bid.

        Note 2: The contracting officer will normally not require bidders to submit certifications with their bid unless the requirement is urgently needed by the client.

    9. Conditionally Limited: the bid solicitation or request for standing offers will be conditionally limited when the contracting officer is uncertainwhether three or more suppliers of Canadian goods and/or services exist. Certifications for competitive procurement conditionally limited to Canadian goods and/or services are provided in the SACC Manual, under clause numbers: A3061T, A3062T, A3063T, A3065T, A3066T and A3069T for bid solicitations; and M3061T, M3062T, M3063T, M3065T, M3066T and M3069T for requests for standing offers. The bidder will be required to submit the Canadian content certification with the bid; or
    10. Open: when the contracting officer is of the opinionthat three or more suppliers of Canadian goods and/or services do not exist, the bid solicitation or request for standing offers must be open to all suppliers. Bidders are not required to provide a certification.
    11. Once the sourcing strategy is determined, the contracting officer will prepare a Notice of Proposed Procurement (NPP). The procurement opportunity will be coded on the Government Electronic Tendering Service (GETS) as:
      1. Solely Limited, Code O-5;
      2. Conditionally Limited, Code O-4; or
      3. Open, Code O-1.
  5. Bid Handling
    1. The supplier is responsible to demonstrate that its bid meets the definition of Canadian goods and/or services and must submit a completed certification. When the SACC Manual clauses: A3052T and A3062T for bid solicitations; and M3052T and M3062T for requests for standing offers are used, the supplier must clearly identify the status of each individual product.
    2. Bids to which the Canadian Content Policy applies will be evaluated as follows:
      1. If the procurement process was solely limited to Canadian goods and/or services, and
        1. the bidder was required to submit the certification with the bid, only bids with a valid certification will be evaluated. The bid evaluation process can proceed where there is at least one bid with a valid certification otherwise the bid solicitation must be reissued; or
        2. the bidder was not required to submit the certification with the bid, the contracting officer will contact the bidder and provide the bidder with a timeframe within which to submit the completed certification. If the bidder does not comply by submitting the completed certification within the prescribed timeframe, the bid will be declared non-responsive. A bid will only be provided to the client department for evaluation once the completed certification is received. The bid evaluation process can continue as long as there is at least one bid with a valid certification otherwise the bid solicitation must be reissued.
      2. If the procurement process was conditionally limitedto Canadian goods and/or services, the contracting officer will determine, first, if there are three or more bids with a valid Canadian content certification. In that event, the evaluation will be limited to the bids with the certification; otherwise, all bids will be evaluated. If the bids with a valid certification are later declared non-responsive or withdrawn, and, and after such there are less than three responsive bids with a valid certification of Canadian goods and/or services, the evaluation will continue among those responsive bids which contain a valid certification. If allbids with a valid certification are subsequently found to be non-responsive or withdrawn, then allother bids received will be evaluated. (See SACC Manual clause A3070T.)
    3. PWGSC may verify the validity of the certification. If the certification is declared non-responsive, then the offered goods and/or services are deemed not to meet the definition of Canadian content. Verification of the certification must in no way alter the price quoted or any substantive element of the bid.
  6. Contract Award

    Contracts awarded on the basis of the bid having met the definition of Canadian content under the Canadian Content Policy will include SACC Manual clause A3060C or M3060C, as applicable.

  7. Set-asides and Canadian Content
    1. If the value of the procurement is equal to or greater than $25,000, the Canadian Content Policy will be applied to procurements set-aside for Aboriginal business.
    2. In applying the Policy under a set aside procurement, it must be recognized that there are two levels of certification.
    3. The first level of certification will be to qualify the bidder(s) as eligible for set-aside consideration, i.e. bidders must provide a certification that they are an Aboriginal business.
    4. As the second level, contracting officers must then apply the Policy, in the same manner as any other procurement, in the context of the supplier community which is eligible to respond (i.e. the Aboriginal business community). Contracting officers must determine, on the basis of their knowledge of this community, whether there are a sufficient number of eligible firms to carry out the procurement as: solely limited(e.g. three or more Aboriginal businesses exist which are able to provide Canadian goods and/or services); conditionally limited(e.g. there may be three or more Aboriginal suppliers of Canadian goods or services); or open(e.g. there is an insufficient number of Aboriginal businesses able to provide Canadian goods and/or services; the procurement is open to all Aboriginal businesses regardless of the origin of the goods and services supplied).
  8. Discretionary Audits and Reviews

    The authority for discretionary audits results from either the contractual terms, or statute ( Defence Production Act, section 19). If a contracting officer has concerns about the certification of Canadian content under the Canadian Content Policy, the contracting officer should discuss the use of a discretionary audit or review with their management and with the Acquisition Policy and Process Directorate.

  9. The Rules of Origin Determination
    1. The Canadian Rules of Origin for Goods (Chapter 4 of the North American Free Trade Agreement) and Canadian Customs Tariff Harmonized System are used to determine if imported components that go into the production of an item for resale to the government are sufficiently altered or converted in Canada to be considered "Canadian."
    2. The Harmonized Commodity Description and Coding System is a structured classification system for goods that has been adopted by Canada and most of the world's trading nations, for customs purposes.
    3. For the purposes of this determination, the reference to "territory" in the Rules of Origin must be replaced with "Canada".
    4. Products containing imported components may be considered Canadian when they have undergone sufficient change in Canada in a manner that satisfies this amended definition. There are three basic steps to determine if any product that is partially or wholly constructed from imported components meets the Rules of Origin definition:
      1. Locate the heading number in the Harmonized System that best reflects the final product for sale.
      2. Find the appropriate heading number in the Harmonized System that identifies imported components used to construct the final product.
      3. Look up the section in the rules of origin that defines whether the conversion that took place in Canada allows the goods to be defined as Canadian.

    Example 1 – Determining Whether a Good is Canadian

    1. A bidder proposes hats, which are manufactured in Canada that use imported calves leather.
    2. Analysis of Canadian content:
      1. Look up "hats" in the index of the Canadian Customs Tariff Harmonized System (HS) and find the type that matches the kinds of hats to be sold: Hats and other headgear, plaited or made by assembling strips of any material, whether or not lined or trimmed. The HS number is 6504.00.00. The first two numbers indicate the good is listed in Chapter 65.
      2. Look up "leather, bovine" in the index: it falls under HS heading 4104.
      3. Finally, refer to the Rules of Origin which lists the conditions for transforming goods listed in the HS into Canadian goods (Chapter 65 is for Headgear and Parts Thereof and is listed in Section XII of the rules). The second rule for Chapter 65 applies: A change from 65.03 to 65.07 from any heading outside that group. As the leather is classified outside 65.03 to 65.07, the final product (the hats) for sale are considered to be sufficiently transformed and therefore the hats are deemed to be Canadian for the purposes of this policy.

    Example 2 – Determining Whether a Mix of Goods and Services meets the 80 percent Rule of Origin

    1. There is a PWGSC solicitation for:
      1. 100 wooden office desks;
      2. 100 electric space heaters with maintenance and repair included;
      3. 100 telephone sets with maintenance and repair included, and
      4. 100 metal swivel chairs.
    2. A bidder has proposed:
      1. unfinished wooden office desks which are imported into Canada and finished in Canada;
      2. electric space heaters which were constructed using domestic labour/materials and imported parts. The maintenance/repair of the electric space heaters is being done by Canadian-based personnel;
      3. telephone sets which were constructed using domestic labour/materials and some imported parts. The maintenance/repair of the telephones is being done by United States-based individuals;
      4. metal swivel chairs which were constructed using domestic labour/materials and some imported parts.
    3. Below are the prices for the goods and services offered in the bid:

      100 wooden office desks @ $150 each = $15,000
      100 electric space heaters @ $200 each = $20,000
      Maintenance/Repair = $5,000
      100 telephone sets @ $50 each = $5,000
      Maintenance/Repair = $1,000
      100 metal swivel chairs @ $25 each = $2,500
      Total Bid Price= $48,500

    4. Analysis of Canadian content:
      1. Wooden office desks:
        1. Unfinished wooden office desks (HS 9403.30) were imported and finished in Canada. The final good (finished wooden office desks) falls in same the subheading (HS 9403.30) as the unfinished good.
        2. The NAFTA rules of origin covering HS 9403.30 (wooden office desks) require a change from another chapter, or a change from parts heading 9403.90, provided there is sufficient regional value content. These rules are not satisfied.
        3. Therefore, the wooden office desks are notconsidered Canadian goods.
      2. Electric space heaters:
        1. Electric space heaters (HS 8516.21) were constructed using domestic labour/materials and imported parts (HS 8516.90).
        2. The NAFTA rules of origin covering HS 8516.21 (electric space heaters) allow a change from subheading 8516.90, provided there is a regional value content of not less than 60 percent where the transaction value method is used or 50 percent where the net cost method is used.
        3. After calculations are done, the regional value content is found to be 65 percent using the transaction value method.
        4. Therefore, the electric space heaters are considered Canadian goods.
      3. Telephone sets:
        1. Telephone sets (HS 8517.11) were constructed using domestic labour/materials and some imported plastic tubes (HS 3917).
        2. The NAFTA rules of origin covering HS 8517.11 (telephone sets) require a change to subheading 8517.11 from any other subheading, except 8517.90.11, 8517.90.12, 8517.90.13, 8517.90.14 or 8517.90.41.
        3. Therefore, the telephone sets are considered Canadian goods.
      4. Metal swivel chairs:
        1. Metal swivel chairs (HS 9401.30) were constructed using domestic labour/materials and some imported parts (HS 9401.90).
        2. The NAFTA rules of origin covering HS 9401.30 (metal swivel chairs) allow a change from subheading 9401.90, provided there is a regional value content of not less than 60 percent where the transaction value method is used or 50 percent where the net cost method is used.
        3. After calculations are done, the regional value content is found to be 37 percent using the transaction value method.
        4. Therefore, the metal swivel chairs are notconsidered Canadian goods.
      5. Maintenance/repair of telephones:

        The maintenance/repair of telephones is being done by U.S.-based individuals. Therefore, this service is notconsidered a Canadian service.

      6. Maintenance/repair of electric space heaters:

        The maintenance/repair of electric space heaters is being done by Canadian-based individuals. Therefore, this service is considered a Canadian service.

    5. Calculation of Percent of Bid Price Considered Canadian
      1. Canadian goods and services

        100 electric space heaters = $20,000
        100 telephone sets = $5,000
        Maintenance/Repair = $5,000
        Total Canadian Goods and Services= $30,000

      2. Non-canadian goods and services

        100 wooden office desks = $15,000
        100 metal swivel chairs = $2,500
        Maintenance/Repair = $1,000
        Total non-Canadian Goods and Services= $18,500
        Total Bid Price= $48,500

      3. Percent of the Bid Price that is composed of Canadian goods and services = $30,000/$48,500 = 62%
    6. Conclusion

      The supplier has not met the Canadian content requirement that "no less than 80 percent of the bid price consists of Canadian goods and services".

Annex 3.7: National Security Exception Request Letter – Template

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(Clients should use their appropriate departmental letterhead; and delete the instructions provided in the letter.)

Date:

Address:

_________(insert name of Assistant Deputy Minister)

Assistant Deputy Minister

Acquisitions Branch

Public Works and Government Services Canada

Place du Portage, Phase III, 11A1 – Room 113

11 Laurier Street

Gatineau, Quebec K1A 0S5

Dear Ms/Mrs/Mr. __________ (insert last name of ADM/AB, PWGSC):

Subject: Request for a National Security Exception for the procurement of _____(insert project title)

I am writing to request that you invoke the National Security Exception contained in all of Canada’s trade agreements, current and future, including the World Trade Organization Agreement on Government Procurement (WTO-AGP), Article XXIII(1); the North American Free Trade Agreement (NAFTA), Article 1018(1); the Canada-Chile Free Trade Agreement, Article Kbis-16(1); and, the Agreement on Internal Trade (AIT), Article 1804, with respect to the procurement of_______ (insert procurement description, including additional details of project objective/purpose as needed to demonstrate the project's necessity to the protection of Canada's National Security interests by virtue of its connection to Canada's participation in the anti-terrorism campaign and associated operation at home or abroad).

For the reasons detailed herein, this procurement is necessary for the protection of Canada's national security interests. I therefore ask that you invoke the national security exception to exempt the above noted procurement from the application of the trade agreements for all purposes. Please contact ______ (insert project authority's name, title and telephone number) if you require further information on the nature of the requirements and/or______ (insert security authority's name, title and telephone number)for further details on the nature of the threat to national security.

Yours sincerely,


________________________
Signature of appropriate Assistant Deputy Minister
__________(insert client department' name)

Annex 3.8: Comparison of Different methods of Supply

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The table below provides a comparison between the different methods of supply used when the precise nature, timing and/or quantity of the need cannot be set out in advance.

Comparison Table
Comparison Table
Methods of Supply Contract with Task Authorization Standing Offer Supply Arrangement
Determining the Method to Use A contract with Task Authorizations (TAs) is a method of supply for services under which all of the work or a portion of the work will be performed on an "as and when requested" basis through predetermined conditions including an administrative process involving task authorizations. Contracts with TAs are used in service contracting situations when there is a defined need by a client to rapidly have access to one or more category of service(s) that are expected to be needed on a repetitive basis during the period of the contract. Under contracts with TAs, the work to be carried out can be defined but the exact nature and timeframes of the required services, activities and deliverables will only be known as and when the service(s) will be required during the period of the contract. The contract with TAs must stipulate the conditions for issuing TAs. A TA is a structured administrative tool enabling PWGSC or a client to authorize work by a contractor on an "as and when requested" basis in accordance with the conditions of the contract. TAs are not individual contracts. The standing offer method of supply is used when it is possible to clearly define the requirement but expected quantities (level of effort) and timing are not known. It is used when the client/ PWGSC is unwilling or unable to offer a minimum work guarantee, or wants to maintain multiple sources of supply. It is used to satisfy the requirements of departments and agencies for commonly ordered, commercially available goods, services or both, by arranging with suppliers to submit standing offers to provide goods, services or both, during a specified period. A call-up against a standing offer is a contract. This method of supply is used to establish a pool of suppliers when there is a recurring need for a certain type of good or service, but a standing offer is not suitable due to the inability to fully define the requirement in advance, and there is a desire to compete the requirement. The supply arrangement (SA) establishes a framework that permits expeditious processing of individual bid solicitations which result in contracts.
Solicitation Process and Evaluation Criteria A bid solicitation is used to select one or more bidder(s) to establish contracts that will allow services to be carried out on an "as and when requested basis" through predetermined conditions and an administrative process involving task authorizations. Multiple contracts with task authorizations may be issued in certain circumstances when one contract would not be sufficient to fulfill all requirements. The quantity and level of services specified in the bid solicitation are only an approximation of the requirements, but the contract will include a minimum work guarantee or some other form of consideration. A Request for Standing Offer (RFSO) is used to select offeror(s), who meet the stated evaluation criteria in the solicitation, to provide PWGSC with one or more standing offers for the provision of goods or services or both at predetermined pricing under set conditions. The quantity of goods or the level of effort for services and if applicable, the estimated expenditure specified in the RFSO is only an approximation of the requirements A Request for Supply Arrangement (RFSA) is used to establish a suitable pool of suppliers (source list) who meet the stated evaluation criteria stipulated in the solicitation and to establish supply arrangements. An SA is an arrangement between Canada and pre-qualified suppliers that allows identified users to solicit bids from a pool of pre-qualified suppliers for specific requirements within the scope of a SA.
Contractual Obligation The contract creates a contractual obligation and enough funding must be committed at the outset to cover the total estimated cost of the contract since the contract requires consideration. The contract obligation is limited only by a minimum guarantee clause or by other considerations in the contract. There is no contractual obligation on the part of Canada until a call-up is made. Each call-up is a separate contract and funds are committed at that time. The standing offer is not a contract. The offeror is bound by its offer unless its offer is withdrawn. There is no contractual obligation between Canada and the supplier to buy goods or services at the SA stage. There is a contractual obligation with the award of each contract.
Binding Legal Agreement The signed contract is the binding legal agreement established between the contracting department or agency and the Supplier. The task authorization is not an individual contract but an administrative process that enables specific tasks to be carried out in accordance with the conditions of the contract. The call-up is the acceptance of the offer and is a binding contract established between the contracting department and the offeror. Each contract awarded will be considered to be a separate binding contract established between the contracting department and the supplier.
Work Authorization The work is authorized on an "as and when requested" basis when a TA is authorized by the client or by PWGSC. The work is authorized on an "if and when requested" basis when a call-up is issued. When individual needs are identified, individual bid solicitations are issued based on the conditions of the SA and the work is authorized through the award of individual SA contracts.
Financial Limits The limit for the client for authorizing a TA is set in the contract. When the client requires specific services described generally in the contract, a TA is issued to authorize the performance of the work by a contractor as long as it is within the scope of work of the contract and within the TA limit of the client; PWGSC can issue TAs that are over the client limit. The Standing Offer Authority will set the call-up limit in the standing offer document for the identified user(s) not to exceed the Treasury Board (TB) Contracts Directive, Appendix C. See 4.10.20.1.a. for more details. The Supply Arrangement Authority will set the contracting limits in the SAs for the client or identified user(s), not to exceed TB Contracts Directive, Appendix C. See 4.10.25.1. c. for more details.
Minimum Guarantee or other Consideration When all the work under the contract will be authorized using TAs, the client must commit to a minimum supply, and the contract must include a limit on the contractor's expectations; e.g., a "minimum guarantee". Not applicable Not applicable
Payment Provisions The payment provisions are firm:
  • basis of payment;
  • method of payment;
  • all inclusive firm rates, etc.
The payment provisions are firm:
  • basis of payment;
  • method of payment;
  • all inclusive firm rates, etc.
The pricing method(s) is (are) usually a ceiling price/rate, or sometimes no rates are provided until individual requirements are competed. If the SA includes ceiling prices or rates, suppliers will be allowed to lower their prices or rates based on the actual requirement or statement of work described in the bid solicitation.
Monitoring and Reporting Monitoring and reporting by the client of contractor performance, and of client usage of task authorizations, is a condition of the client's use of the contract. Monitoring and reporting by the client of performance, and of client usage by the client or offeror, in accordance with the standing offer are a requirement of use by the client of the standing offer. Monitoring and reporting by the client of contractor performance, and of client usage, in accordance with the SA are a requirement of use by the client of the SA.

4 Chapter 4 - Solicitation Process

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4.1 Introduction

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This chapter provides information on pre-solicitation requests, various methods of solicitation and various sourcing tools. It also contains information on how to prepare and issue a solicitation. Finally, contracting officers will find information on closing procedures, bid receiving, modification and withdrawal of bids/offers/arrangements. Contracting officers are reminded that Canada seeks competitive solicitations whenever possible.

4.5 Pre-Solicitation Requests

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Before a formal solicitation is issued, solicitations for information such as Price and Availability (P&A) enquiries and Requests for Information or Letters of Interest may be issued.

4.5.1 Price and Availability Enquiry

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A Price and Availability (P&A) enquiry is a request sent to suppliers for information concerning approximate prices and availability of specific goods or services. It is used when such information is needed by Public Works and Government Services Canada ( PWGSC) or by a client department for program planning or budgetary purposes. A P&A enquiry could be made directly to selected suppliers, or it may be publicly posted on Government Electronic Tendering Service (GETS). P&A enquiries must clearly indicate that the request is not a solicitation and that there are no commitments with respect to future purchases or contracts.

4.5.5 Request for Information or Letter of Interest

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  1. A Request for Information (RFI) or Letter of Interest (LOI) is used when detailed information and feedback are required from suppliers. Such requests might outline a potential requirement and request suppliers to describe their ability to satisfy the requirement and to provide ideas and suggestions on how the eventual solicitation might be structured. Responses are used to assist the client department and PWGSC in finalizing their plans for the requirement and in developing achievable objectives and deliverables. RFIs/ LOIs would normally be posted on GETS in order to obtain replies from a wide audience. If a source list is to be used, the RFI or LOI may be sent only to those on the list. RFIs/ LOIs must clearly indicate that they are not solicitations and that there are no commitments with respect to future purchases or contracts.
  2. RFIs/ LOIs identify the client department's potential requirement and its business objectives.
  3. The main objectives of an RFI/ LOI are to:
    1. allow suppliers time to:
      1. assess and comment on the adequacy and clarity of the requirements as currently expressed;
      2. offer suggestions regarding potential alternative solutions that would meet requirements, such as solution with a lower environmental impact;
      3. comment on the procurement strategy, preliminary basis of payment elements, and timelines for the project, and
      4. comment on the draft solicitation when included with the RFI/ LOI.
    2. provide information to assist the client department to:
      1. determine whether to proceed with requirements/strategy as planned, and if so, further developing internal planning, approval and solicitation documents that may potentially lead to a solicitation;
      2. refine the procurement strategy, project structure, cost estimate, timelines, requirements definition, and other aspects of the requirement;
      3. become a more "informed buyer" with an enhanced understanding of industry goods and service offerings in the areas of interest; and
      4. assess potential alternative solution concepts that would meet its requirement, such as environmentally preferable solutions.

4.10 Solicitation Methods

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Various methods of solicitation may be used depending upon the circumstances of the particular procurement.

4.10.1 Request for Quotation

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  1. A Request for Quotation (RFQ) may be used to solicit bids for commercial goods and/or services valued below $25,000 (low dollar value), including all applicable taxes, from one or more suppliers.
  2. The contract requirement must be well defined such that bids may be evaluated and compared on the basis of price and delivery and where contract award may be determined on the basis of lowest-priced bid that meets the requirements. Because of its abbreviated nature, a RFQ may not contain all of the terms and conditions that are typically used to form a contract.
  3. RFQs are not publicly posted. Contracting officers may have suppliers submit their RFQs directly to them if a specific date and time is set for the receipt of the quotations.

4.10.5 Telephone Buy

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A telephone buy (T-buy) is a form of RFQ when the bids are solicited, from one or more selected suppliers either, verbally (in-person) or over the telephone, for requirements below $25,000, including all applicable taxes. Written confirmation from the bidder is not required for bids received by telephone, but the contracting officer must record the details of the telephone bid on the procurement file. A verbal contract may be entered into by telephone (and order may be placed) if the contracting officer has the appropriate authority. The order must be confirmed in writing by issuing the applicable contract document and providing a copy to the contractor. (See Chapter 7 Award of Contracts and Issuance of Standing Offers and Supply Arrangements).

4.10.10 Invitation to Tender

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  1. An Invitation to Tender (ITT) is used where selection is based on the lowest price. It should be used when all of the following criteria apply:
    1. two or more sources are considered capable of carrying out the requirement;
    2. the requirement is adequately defined to permit the evaluation of bids against clearly stated criteria;
    3. the market conditions are such that bids can be submitted on a common pricing basis;
    4. it is intended to accept the lowest-priced responsive bid without negotiations; and
    5. the evaluation of bids will exclude any Product, Resource, Operating and Contingency (PROC) costs or socio-economic considerations, other than the employment equity provisions.
  2. An ITT can be used to solicit bids through public advertisement on GETS, through direct invitation of selected suppliers by means of a source list, where permitted, or by invitation of one source only if conditions for a non-competitive process have been met.
  3. An ITT can be opened publicly. Public opening should be considered for all ITT s estimated to exceed $25,000. ITT s for requirements less than $25,000 may be opened publicly if circumstances warrant. Public openings should be considered for any bid where the contract award will have a high degree of public visibility.

4.10.15 Bid Solicitation

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  1. A bid solicitation may be used for low dollar value, medium and higher complexity requirements. It can be used when the bidder selection is based on price or best value. The standard instructions 2003 and 2004 of the Standard Acquisition Clauses and Conditions Manual must be used in bid solicitations for goods and/or services. The templates Simple, MC and HC must be used when establishing a bid solicitation subject to the procedures outlined in 2T-PROC1.
  2. A Request for Proposal (RFP) is a form of bid solicitation that is used when the bidder selection is based on best value rather than on price alone. A RFP should be used when, owing to the nature of the requirement, suppliers are invited to propose a solution to a problem, requirement or objective, and the selection of the contractor is based on the effectiveness of the proposed solution.
  3. Bids must be evaluated and the successful supplier must be selected in accordance with specific criteria and procedures as set out in the bid solicitation.
  4. A bid solicitation can be used to solicit bids through public advertisement on GETS, through direct invitation of selected suppliers by means of a source list where permitted, or by invitation of one source only if conditions for a non-competitive process have been met.
  5. Responses to the bid solicitation may result in negotiations before contract award when the bid solicitation states the right to negotiate in accordance with the international trade agreements.
  6. The preparation of bids is often costly to suppliers. To keep the total cost down while ensuring freedom of access to suppliers, consideration should be given to soliciting bids in two steps.
    1. during the first step of this process, suppliers are requested to provide letters of interest and qualifications, from which a short list is developed. During the second step, suppliers on the short list are requested to submit detailed bids;
    2. suppliers not included on the short list are still able to request the bid solicitation and submit bids.
  7. Such a process might be appropriate where many suppliers are known. When doing a two-stage procurement, contracting officers must follow procedures required under North American Free Trade Agreement (NAFTA) and World Trade Organization Agreement on Government Procurement (WTO-AGP) for selective tendering.
  8. The bid solicitation should include, as a minimum, the following information:
    1. a clear definition of the requirement;
    2. bidder instructions;
    3. bid preparation instructions;
    4. clear evaluation procedures;
    5. certification requirements;
    6. security and financial requirements;
    7. validity of the bid;
    8. resulting contract clauses; and
    9. instructions informing bidders that they may request information about the results of the RFP and how their bid was evaluated. (See 7.40 Debriefings to Unsuccessful Bidders/Offerors/Suppliers for information to be included in debriefings.)

4.10.20 Request for Standing Offers

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  1. A Request for Standing Offers (RFSO) is used to solicit offers for standing offer methods of supply. For more information on the application of standing offers, see 3.40 Standing Offers.
  2. A RFSO can be used to solicit offers through public advertisement on GETS, through direct invitation of selected suppliers by means of a source list where permitted, or by invitation of one source only if conditions for a non-competitive process have been met.
  3. The RFSO must give instructions on the use, purpose and limitations of the proposed standing offer. Standard Acquisition Clauses and Conditions Manual (SACC) standard instructions 2006 (competitive) and 2007 (non-competitive) and general conditions 2005 are designed specifically for standing offers and must be incorporated by reference in each RFSO. The template RFSO must be used when establishing an RFSO subject to the procedures outlined in 2T-PROC2.
  4. A RFSO must include the following information, as a minimum:
    1. a clear definition of the requirement and the period for making call-ups;
    2. information on the number of standing offers intended to be authorized for use;
    3. offer preparation instructions;
    4. clear evaluation criteria;
    5. clear evaluation procedures and basis of selection;
    6. instructions informing offerors that they may request information about the results of the RFSO and how their offer was evaluated. (See 7.40 Debriefings to Unsuccessful Bidders/Offerors/Suppliers for information to be included in debriefings.)
    7. clear ranking methodology where applicable;
    8. clear call-up procedure(s) including the method of allocating the work among multiple standing offers;
    9. a notice to offerors regarding disclosure of their unit prices (see SACC Manual general conditions 2005);
    10. conditions applicable to the RFSO;
    11. conditions applicable to the standing offer;
    12. resulting contract clauses applicable to ensuing call-ups; and
    13. the estimated utilization, whenever practical.

4.10.20.1 Standing Offer Procedures

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  1. Call-up Limits: A call-up issued against a standing offer constitutes an individual contract and normal Treasury Board (TB) contracting limits apply. Contracting officers will set the call-up limit in the standing offer document for the client department as defined in the standing offer, as the case may be. For standing offers for goods, services or construction, contracting officers may set the maximum call-up limit using Appendix C - Treasury Board Contracts Directive, as a guide. The Directive sets the dollar limit for contract entry for goods, services and construction, above which departments must seek the approval of TB to enter into the contract. For most clients, their individual call-up limits (GST/HST included) are usually the normal TB contracting limits as detailed in the table below; however, PWGSC has the authority to further limit the value of individual call-ups.
    Table 1 - Financial Call-Up Limitations for Clients
      Competitive Non-competitive
    Goods/Construction $400,000 $40,000
    Services Excluding A&E $400,000 $100,000
    A&E Services $40,000 $40,000
  2. Financial Limitation: The inclusion of a limitation of expenditure in standing offers is optional. The contracting officer will determine the need for inclusion of a limit on the basis of the type of standing offer (Master or Individual), the degree of control over total expenditures and the needs of the client department. SACC Manual clause M4506C may apply.
  3. Identified Users: The identified users authorized to make call-ups against standing offers could include any government department, agency or Crown corporation listed in Schedule I, Schedule I.I, Schedule II, Schedule III of the Financial Administration Act. See SACC Manual template RFSO, Part 6B, article 6.
  4. Standing Offers Reporting: The standing offer authority may indicate in the standing offer the reporting requirement for the offeror, or the client, as applicable. The standing offer should indicate the time frame within which each report must be submitted following the reporting period. See SACC Manual clause M7010C. See also 8.75.1 Reporting for Standing Offers and Supply Arrangements for more details on reporting.

4.10.20.5 Ranking and Methodology for Standing Offers

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  1. One Standing Offer:

    Where only one standing offer will be authorized for use as the result of a competitive RFSO, the resulting call-ups are considered competitive and the competitive call-up authorities can be used.

  2. Multiple Standing Offers:

    If more than one standing offer will be authorized for use based on a reasonable expectation of business activity such that a single offeror would lack the capacity to meet the demands, clear ranking methodologies and call-up procedures must be described in the RFSO, so that suppliers are aware of these when preparing their offer. The two models of ranking methodology are described below:

    1. right of first refusal basis:

      The call-up procedures require that when a requirement is identified, the identified user will contact the highest-ranked offeror to determine if the requirement can be satisfied by that offeror. If the highest-ranked offeror is able to meet the requirement, a call-up is made against its standing offer. If that offeror is unable to meet the requirement, the identified user will contact the next ranked offeror. The identified user will continue and proceed as above until one offeror indicates that it can meet the requirement of the call-up. In other words, call-ups are made based on the "right of first refusal" basis. When the highest-ranked offeror is unable to fulfill the need, the identified user is required to document its file appropriately. The resulting call-ups are considered competitive and the competitive call-up authorities can be used.

    2. proportional basis:

      The call-up procedures require that call-ups be issued on a proportional basis such that the highest-ranked offeror receives the largest predetermined portion of the work; the second highest-ranked offeror receives the second largest predetermined portion of the work, etc. (for example, 50 percent to the highest-ranked offer, 30 percent to the next highest-ranked offer and 20 percent to the third highest-ranked offer). This predetermined distribution of the resulting work is to be described in the RFSO so that potential offerors are aware of these when preparing their offer. It is also known as "collective best value". The highest-ranked standing offer represents the best value for Canada, and its offeror receives the largest portion of the work. A clear advantage in terms of distribution of expected business volume should be given to the highest-ranked offeror (for example, 20 percent or more than the next offer) and the same for the others. The determination of what constitutes a clear advantage is the responsibility of the contracting officer and may vary by commodity, service or by business case. The resultant call-ups are considered competitive and the competitive call-up authorities can be used.

      Where individual standing offers are to be authorized based on the proportional basis approach, the contracting officer should inform the authorized user of his/her obligation to monitor call-up activities to ensure work is allocated in accordance with predetermined work distribution.

    3. In both cases above, contracting officers should clearly state in the RFSO the expected number of standing offers that are intended to be authorized for use. If the intention is that multiple standing offers will be authorized for use, the RFSO should state the basis upon which call-ups will be issued, whether right of first refusal, proportional or another method. If call-ups must be issued against standing offers under the proportional basis approach, the breakdown must be stated (for example, 50 percent, 30 percent and 20 percent) in the RFSO.
    4. In addition to the above, when the intention is that multiple standing offers will be authorized for use, contracting officers could include a condition that only those standing offers, which are within, for example, 10 percent of the best-priced offer, will be considered. The method of such calculations should be explicitly described in the RFSO.
  3. Non-competitive call-ups:

    In other instances, more than one SO will be authorized for use but no ranking is established. This would occur, for example, when prices are sought for a full range of items contained in a catalogue where items and ranking of offers is impossible. The authorized call-up authority may choose whichever SO to use. For some requirements, the contracting officers may set parameters to guide the authorized users in the selection of one of the standing offers. Call-ups made against these standing offers are non-competitive and only the non-competitive call-up authorities can be used.

4.10.20.10 Standing Offer Forms

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The following forms are used for call-ups against a standing offer and are available through PWGSC Forms CatalogueThis information is only accessible to federal government employees. Web site:

Standing Offer Forms
Forms Number Forms Title
PWGSC- TPSGC 942 (PDF 405 KB)This information is only accessible to federal government employees. - ( Help on File Formats) Call-up Against a Standing Offer
PWGSC- TPSGC 944 (PDF 346 KB)This information is only accessible to federal government employees. Call-up Against Multiple Standing Offers
PWGSC- TPSGC 8251 (PDF 328 KB)This information is only accessible to federal government employees. Call-up Against a Standing Offer for Temporary Help
PWGSC- TPSGC 7169-1 (PDF 593 KB)This information is only accessible to federal government employees. Call-up Against a Standing Offer for Security Guard Services
PWGSC- TPSGC 191 (PDF 18 KB)This information is only accessible to federal government employees. Acquisition Card Application (MasterCard) 1may also be used at the time of the call-up against standing offers, as an alternative to other payment methods identified in the standing offer 2.

4.10.25 Request for Supply Arrangements

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  1. A Request for Supply Arrangements (RFSAs) is used to solicit arrangements from suppliers for the establishment of supply arrangements (SAs). For more information on the application of SAs, see 3.45 Supply Arrangements.
  2. Standard Acquisition Clauses and Conditions Manual standard instructions 2008, general conditions 2020 and the template RFSA must be used when establishing an RFSA. For more information, consult the procedures outlined in 2T-PROC3.
  3. The RFSA should include, as a minimum, the following information:
    1. a clear definition of the requirement;
    2. supplier instructions;
    3. arrangement preparation instructions;
    4. clear evaluation procedures and basis of selection for the establishment of the list of qualified suppliers;
    5. certification requirements;
    6. conditions applicable to the SA, including the terms of the solicitation;
    7. resulting contract clauses applicable to any contract resulting from each solicitation; and
    8. instructions informing suppliers that they may request information about the results of the RFSA and how their offer was evaluated. (See 7.40 Debriefings to Unsuccessful Bidders/Offerors/Suppliers for information to be included in debriefings.)
  4. The list of qualified suppliers as a result of a RFSA is considered to be a source list under international trade agreements.

4.10.25.1 Supply Arrangement Procedures

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  1. Before establishing a supply arrangement (SA), the contracting officer will prepare and issue an RFSA, which will allow for a suitable pool of suppliers who meet the stated evaluation criteria. Industrial security requirements (that is, personnel, physical and information technology security) should be identified at this time, when any or all of these security aspects will be applicable to all client departments of the SA.
  2. The following forms must be used by client departments for the first page of the bid solicitation issued under a SA and for the first page of the resulting contract:

    PWGSC-TPSGC 9400-3 (PDF Version 123 KB)This information is only accessible to federal government employees. - (Help on File Formats), Bid Solicitation
    PWGSC-TPSGC 9400-4 (PDF Version 410 KB)This information is only accessible to federal government employees. - (Help on File Formats) Contract

  3. Contracting officers will set the contracting limits in the SA document for the identified users as defined in the supply arrangement, as the case may be. For supply arrangements for goods, services or construction, contracting officers may set the maximum contract limit using the Appendix C - Treasury Board Contracts Directive, as a guide. The TB Contracts Directive sets the dollar limit for contract entry for goods, services and construction, above which departments must seek the approval of TB to enter into the contract.
  4. A legal contract does not exist between Canada and the supplier until a contract is awarded through the completion of form PWGSC-TPSGC 9400-4 (PDF Version 410 KB)This information is only accessible to federal government employees. - (Help on File Formats).
  5. Supply Arrangement Reporting: The supply arrangement authority may indicate in the supply arrangement the reporting requirements for the supplier, or the client, as applicable. The SA should indicate the time frame within which each report must be submitted following the reporting period. See SACC Manual clause S0010C. See also 8.75.1 Reporting for Standing Offers and Supply Arrangements for more details on reporting.
  6. Financial Viability: Supply arrangement authorities should note that since the statement of work or requirement cannot be adequately defined in advance, only a preliminary review of the supplier's financial viability will be conducted for the sole purpose of pre-qualifying suppliers for SAs. See SACC Manual clause S0030T. See also 5.60.1 Financial Capability for more details on financial capability.
  7. Identified Users: The identified users authorized to use supply arrangements could include any government department, agency or Crown corporation listed in Schedule I, Schedule II, Schedule III of the Financial Administration Act. See SACC Manual template RFSA, Part 6A, article 6.

4.10.25.5 International Trade Agreements and Use of Supply Arrangements

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For bid solicitations and proposed contracts under a supply arrangement (SA), the following applies:

  1. Where the estimated value of a proposed contract under the SA is below the applicable North American Free Trade Agreement (NAFTA) threshold and/or the World Trade Organization - Agreement of Government Procurement (WTO-AGP) threshold, these agreements do not apply.
  2. Where the estimated value of a proposed contract under the SA is above the applicable NAFTA and/or the WTO-AGP threshold, NAFTA and/or the WTO-AGP applies to the bid solicitation.
  3. Where NAFTA and/or WTO-AGP apply to a bid solicitation under a SA, a Notice of Proposed Procurement (NPP) must be published on the Government Electronic Tendering Service (GETS) and suppliers must be given at least 40 calendar days to bid. In addition, a supplier that requests to participate in the bid solicitation under the SA may apply for qualification. If qualified, the supplier must be included in the SA within a reasonable period of time. However, after bid closing, the contracting officer does not have to delay the contract award process in order to allow a supplier to go through the qualification process.

4.10.25.10 Ongoing Qualification Process

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Pursuant to International Trade Agreements, the existence of a list of qualified suppliers must be published by an invitation to qualify at least once a year on GETS. The invitation to qualify must contain the conditions to be fulfilled by suppliers to qualify. Suppliers must be allowed to apply for qualification at any time.

4.10.25.15 Agreement on Internal Trade and Use of Supply Arrangements

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Where the estimated value of a proposed contract under the supply arrangement is above the AIT threshold, AIT applies to the bid solicitation. Otherwise, AIT does not apply to that proposed contract.

Where AIT applies to a bid solicitation under a supply arrangement, the AIT allows the use of source lists without publication of a NPP, provided that all suppliers on the source list be invited to bid and that they be able to apply for qualification at any time. It is PWGSC policy that suppliers must be given at least 15 calendar days to bid.

4.10.25.20 Ongoing Qualification Process

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Pursuant to AIT, the existence of a list of qualified suppliers must be published at least once a year by an invitation to qualify on GETS or predetermined newspapers. The invitation to qualify must contain the conditions to be fulfilled by suppliers to qualify. Suppliers must be allowed to apply for qualification at any time.

4.10.30 Professional Services Sourcing Tools

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Professional services sourcing tools that may help client departments with their requirements are provided below:

  1. Temporary Help Services (THS) are traditionally used:
    1. when a public servant is absent for a temporary period of time;
    2. when there is a requirement for additional staff during a temporary workload increase and there is an insufficient number of public servants available to meet the requirement; or
    3. a position is vacant and staffing action is being completed.

      THS is a tool to assist federal departments in the National Capital Region in their procurement of THS with a value below the North American Free Trade Agreement (NAFTA) threshold, including all subsequent amendments and Goods and Services Taxes. Some of the sources are:

      1. Public Works and Government Services Canada ( PWGSC) issues Regional Master Standing Offers (RMSOs) to provide for qualified personnel for temporary assignments.
      2. RMSO s for temporary help services are requested and authorized by the regional offices of PWGSC. Contracting officers must keep client departments informed of contracting processes, procedures and definitions of categories of service with respect to THS.
      3. There is a temporary help contracting officers' network, which has been working with functional guidance from the Professional Services Procurement Directorate, Services and Technology Acquisition Management Sector.
      4. for additional information, consult the contact person identified on the Temporary Help Services (On-Line System) Web site.
  2. Professional Services Online is an electronic procurement tool that assists federal departments and agencies in the procurement (below the NAFTA threshold) of professional services.
  3. SELECT is a database of approved firms, providing construction, architectural and engineering services, as well as related maintenance and consulting services. It is used by PWGSC to invite suppliers to bid on real property consulting services below the NAFTA threshold, and for construction services below the AIT threshold.
  4. In-Service Support Supply Arrangement (ISS SA) is currently limited to a supply arrangement for the professional services related to Human Resources Management, Organizational Management and Project Management.

4.15 Preparation of the Solicitation Documents

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  1. The solicitation documents must be prepared in a way to reflect the approved procurement strategy.
  2. Contracting officers must perform due diligence in identifying potential conflicts of interests. This can be done by asking the client department if anyone who is not an employee of Canada is or will be involved in the preparation of the requirement or involved in the preparation of the statement of work or requirement, the evaluation criteria, and the evaluation. Contracting officers may also consider asking if any employees or former public servants have connections in their personal or professional life, which may lead to suppliers asking questions about favoritism. If there is a potential conflict of interest, then certain steps must be taken in accordance with 4.45(c) relative to former public servants. Contracting officers should consult the conflict of interest clause contained in the Standard Acquisition Clauses and Conditions(SACC) Manual standard instructions.

4.15.1 Departmental Standard Procurement Documents

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  1. Public Works and Government Services Canada (PWGSC) has committed to promoting a "common look and feel" in acquisition documents by standardizing terminology, simplifying contract language by using plain language, and ensuring more consistency and uniformity.
  2. PWGSC has implemented departmental standard procurement documents which include standard instructions, general conditions and templates for bid solicitations, requests for standing offers (RFSOs) and requests for supply arrangements (RFSAs) for use by its contracting officers for the procurement of goods, services or both, excluding construction and architectural and engineering requirements.
  3. Subject to the applicable procedures for use of the Standard Procurement Templates contained in the SACC Manual, contracting officers must use the bid solicitation and resulting contract templates for competitive and non-competitive requirements for low dollar value (Simple), medium complexity (MC) and higher complexity (HC), and the templates for Request for Standing Offers (RFSO) and Request for Supply Arrangements (RFSA) for the procurement of goods, services or both. To maintain the "common look and feel" for PWGSC's acquisition documents, contracting officers must not modify or change the order and content of these templates, except where indicated. Where applicable, contracting officers should obtain from their supervisor the most current standard template used within their respective area that has been customized for specific requirements in accordance with the standard templates. Directorates needing assistance in developing documents based on these templates should contact the Procurement Process Tools Division of the Policy, Risk, Integrity and Strategic Management Sector, by e-mail at: outilsapprov.proctools@tpsgc-pwgsc.gc.ca.
  4. Procedures 2T-PROC1, 2T-PROC2 and 2T-PROC3 instruct contracting officers on how to use the templates referenced above. They are available in Section 2 of the SACC Manual and on the Departmental Standard Procurement Documents Web site.
  5. Procurement of most goods and services must be carried out using the general conditions and supplemental general conditions found in the SACC Manual. The conditions to be used depend on the nature and complexity of the procurement and are provided in Annex 4.1: General Conditions and Supplemental General Conditions.
  6. Real Property Contracting utilizes their own separate standard templates for construction and architectural and engineering services.
  7. The cover pages of solicitations generated by the Automated Buyer Environment (ABE) must be used for solicitations issued by PWGSC (whether issued through ABE or manually posted on GETS). Manager's approval is required to issue solicitations that do not use ABE generated cover pages. Solicitations must specify the solicitation closing date on the cover page.
  8. Contracting officers must ensure that instructions for the submission of solicitations and the solicitation closing date and time for each solicitation are clearly stated in the procurement documents. Contracting officers must also ensure that the solicitation closing date, which appears on the Notice of Proposed Procurement, is consistent with the solicitation.

4.15.5 Green Procurement Requirements

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  1. Contracting officers must ensure that value for money has been achieved for Canada. Value for money includes the consideration of many factors such as cost, performance, availability, quality and environmental performance.
  2. Contracting officers must consider green procurement in the preparation of solicitation documents and resulting contracts, including requests for standing offers and requests for supply arrangements, to ensure that environmental considerations, if appropriate, are addressed. Contracting officers must also consult with relevant commodity teams with respect to Green Procurement Plans and Guide to Completion. Environmental considerations that are related to specific commodities can then be utilized in the procurement. Contracting officers should consider departmental green procurement targets and the green procurement experience of other departments.
  3. Until such time as standard clauses and conditions on environmental performance considerations have been developed centrally, they should be developed by contracting officers as appropriate to support the inclusion of environmental performance requirements, recognizing that they will have to be approved by Legal Services.
  4. Contracting officers can consult Annex 2.2: Green Procurement: Environmental Factors and Evaluation Indicators for a list of factors to be considered in developing the solicitation, as well as the Green Procurement Checklist within the Environmental Awareness Tool Kit.
  5. For additional information, consult the Developing Green Procurement Specifications within the Environmental Awareness Tool Kit and section 3.2 Selection According to Technical Capacity of the Guideline for Integration of Environmental Performance Considerations in Federal Government Procurement.
  6. Contracting officers can contact the Green Procurement Team, within the Procurement Renewal Office, by e-mail at AchatsEcologiques.GreenProcurement@tpsgc-pwgsc.gc.ca, to obtain assistance with integrating environmental considerations in their solicitation documents.

4.15.10 Methods of Responding to a Solicitation

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  1. The method and location of bid receipt must be specified in the solicitation.
  2. The following methods of response may be used:
    1. in writing and submitted to the specified Bid Receiving Unit: all ($) dollar values;
    2. in writing and submitted directly to the contracting officer: below $25,000, including all applicable taxes;
    3. verbally by telephone
      1. below $25,000, including all applicable taxes;
      2. any amount, in cases of documented extreme urgency (director's approval is mandatory);
    4. by electronic transmission (CD or facsimile) and submitted to the specified Bid Receiving Unit.
  3. When some form of response is not acceptable, including any form of electronic transmission, this must be clearly indicated in the solicitation and should be in the Notice of Proposed Procurement.

4.15.15 Technical Data

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  1. For technical data, not owned by PWGSC, the contracting officer must ensure that the government obtains the right for the distribution and use of such data.
  2. For DND requirements form PWGSC-TPSGC 1065, Request for Distribution of Technical Data, must be used. Contracting Officers must send (by fax,/ e-mail, etc.) the completed form to DSCOs repository section / staff DSCO 4-7 @ the National Printing Bureau (NPB - 45  Blvd. Sacré-Coeur, Gatineau, QC) in sufficient time to ensure that the data will be available when the bid solicitation is issued.
  3. PWGSC will not provide data available to potential bidders through normal business channels.

    Examples of such material technical data are specifications of Canadian Standards Association (CSA), Society of Automotive Engineers (SAE), National Electrical Maintenance Association (NEMA), Underwriters' Laboratories of Canada (ULC) Standards and the Canadian General Standards Board (CGSB).

4.20 Official Languages Obligations in Procurement

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  1. PWGSC must comply with the Official Languages Act and the Official Languages Regulations. The basic rule is that any member of the public in Canada has the right to communicate with and to receive available services in either official languages from federal institutions head or central office or from any office in the National Capital Region, or elsewhere where there is significant demand in that language. Relating to procurement, this generally means that a supplier may receive solicitation documents and bid in either official language.
  2. The official languages parameters provided below are pursuant to the TB Contracting Policy, Appendix F - Official Languages, Official Languages, for all federal departments and agencies that are subject to the Government Contract Regulations.
  3. When procurements are national in scopeor originate from an office having the obligation to serve the public in both official languages, pursuant to the Act and Regulations, all regular or standardized documents must be provided in both official languages. This requirement also applies to public notices, statements of terms and conditions, basic forms, bid solicitations, standards, purchase descriptions and contracts.
  4. On an exceptional basis, when a bilingual office can justify that demand will be in one language only or that it is legally and/or technically impossible to provide the non-standard documents such as specifications in both languages, those documents may be issued in one language only. When this occurs, the reason for not issuing the documents in both official languages must be clearly documented on file.
  5. Such a decision requires before the factsubstantiation. Acceptable justifications might include:
    1. an industry that has specifically requested documents in one language; and
    2. a two-stage procurement, in which second stage suppliers have all indicated that the working language is either English or French - not both.
  6. The fact that documents have never been asked for in the second official language in the past is NOT an acceptable justification. If there is subsequently a request from a supplier for documents in the second official language, the client department must be notified immediately and requested to provide a translation of the document, as soon as possible. The bidding process must be suspended while the document is being translated and the solicitation closing date must be extended, accordingly. The requester must have sufficient time, after receipt of the translated documents, to prepare a proper bid using those documents. This may require an additional extension to the closing date in order to provide equity of opportunity.
  7. When the procurement is not national in scopeor when an office of a federal institution does not have official languages obligations (i.e. unilingual offices), the solicitation documents may be prepared in the official language of the majority of the population concerned only. It is suggested that when a unilingual office anticipates significant demand for service (documents, etc.) relating to a particular procurement in the second official language, it considers transferring the file to a bilingual office before the Notice of Proposed Procurement (NPP) is issued, so that bilingual services will be available.
  8. Another reason that could justify not publishing a bilingual solicitation is when the owner of a copyright, trademark, patent, or licensed material refuses permission to have the material translated. In that case, the NPP must indicate that the documents will be issued in one language only and the reason included, when this would provide useful information to suppliers. A NPP might state: "Due to copyright restrictions, document X is available only in English or in French."
  9. Suppliers who carry out work on behalf of a department or agency in a location where the department or agency would have to provide services or communications to the public in both official languages must also do so in both official languages. This means that the Statement of Work must include the conditions to ensure that, when the public includes members of both official language communities, the supplier observes the requirements of the Act and Regulations on service to the public and, where applicable, of Treasury Board policies.
  10. While the Treasury Board Secretariat requires that contracts be available in the two official languages, PWGSC Legal services advise that only one version should be signed, that is, that selected by the contractor.

4.21 Integrity Provisions

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  1. Further to the Integrity Framework as summarized in section 3.51 Integrity Overview, all solicitations must include the appropriate standard instructions and the general conditions which include the Integrity Provisions.
  2. All competitive solicitations must include standard instructions 2003, 2006 or 2008 and the applicable general conditions. By submitting a bid, offer or arrangement, the bidder, offeror or supplier is certifying the accuracy of the statements made in these provisions.
  3. All solicitations negotiated on a sole source basis must either include standard instructions 2004 or 2007.
  4. Bidders, offerors and suppliers must ensure that subcontracts include Integrity Provisions no less favourable to Canada than those imposed in the resulting contract. However, subcontractors are not required to provide a list of their directors for verification nor is the contracting officer required to submit the names of subcontractors for verification.
  5. For bid solicitations under supply arrangements, contracting officers should include instructions in bid solicitation templates that clients should modify subsections 4 and 5 of the Integrity Provisions as contained in Section 01 of the standard instructions.
  6. In accordance with the Integrity Provisions, bidders, offerors and suppliers who are incorporated, including those bidding as a joint venture, must provide a complete list of names of all individuals who are currently their directors. Bidders, offerors and suppliers bidding as sole proprietorship, including those bidding as a joint venture, must provide the name of the owner. Bidders bidding as societies, firms, or partnerships do not need to provide lists of names.
  7. When requested by Canada, suppliers must provide a Consent to a Criminal Record Verification (PWGSC-TPSGC 229) form for directors or owners. As part of the criminal records verification, persons may be required to provide fingerprints or further proof of identity to complete the verification process.
  8. Where the bidder, offeror or supplier refuses to provide the Certification, the contracting officer is to request a written response explaining the reasons for the refusal or request the name and phone number of a senior manager. PWGSC higher management will contact them. As these provisions are mandatory,any request for an exception is to be presented to the Assistant Deputy Minister, Acquisitions Branch for those product/services.
  9. In cases where there is an impediment to contracting with a proposed contractor (i.e. an offence) who is also the sole source of supply, the contracting officer must first consider developing alternative sources of supply. Where that is not feasible, the contracting officer must determine what mitigating measures should be put in place to ensure that risks to Canada are properly managed. The contracting officer should consult with the Acquisition Program Integrity Secretariat (APIS), of the Policy, Risk, Integrity and Strategic Management Sector (PRISMS) to determine the appropriate measures. Contact the Integrity Support Services, within APIS, by email at DGAIntegrite.ABIntegrity@tpsgc-pwgsc.gc.ca.
  10. See section 5.16 Integrity Compliance for details on the process to be followed before contract award, issuance of a standing offer or supply arrangement, or publishing of a pre-qualified supplier list.

4.25 The Requirement

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  1. The requirement could take the form of technical requirements for the procurement of goods or a Statement of Work for the procurement of services. Requirements must be defined and specifications and estimates established before bids/offers are solicited and contracts let, so that all potential suppliers are treated equally. Adequate specification details must be available to all interested or qualified suppliers.
  2. For more information on the preparation of the requirement, consult Chapter 2 - Defining the Requirement and Requisition Receipt.

4.30 General Instructions for the Preparation of a Solicitation

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4.30.1 Requirement and Statement of Work

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The requirement must be clearly identified, the deliverables and the delivery schedule defined and the tasks must be included in the Statement of Work.

For more information, consult the Statement of Work Guide (available on GCpedia - Acquisitions Program Policy Suite - Procurement ProcessThis information is only accessible to federal government employees.).

4.30.10 Industrial Security in Contracts

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  1. For all proposed procurement with security requirements, including pre-contractual agreements, contracts, call-ups and service agreements, the Security Requirements Check List (SRCL) must be prepared by the client department and provided directly to the Canadian Industrial Security Directorate (CISD) prior to sending the TPSGC-PWGSC 9200 Requisition for Goods and Services and Construction form to PWGSC Allocation Unit. Therefore, for every proposed procurement, the department identifies the security requirements by completing an SRCL or by certifying in writing that there are no security requirements. CISD will then provide the security clauses to the client department. The SRCL and the security clauses, or the Certification, must be provided along with the TPSGC-PWGSC 9200 Requisition for Goods and Services and Construction form and must be on file and available upon demand.
  2. A Request for Private Sector Organization Screening (PSOS) form may also be included with the SRCL if the client knows of possible bidders that are not registered with CISD. This form is prepared by the client department, the contracting officer or prime contractor (where subcontracting is required) to initiate registration with CISD.

    Note: To request a copy of the PSOS form, please contact the Industrial Security Program's Security and Information Services at SSIDSFPFormulaires-.ISSPSSDForms@tpsgc-pwgsc.gc.ca.

  3. The PSOS form provides CISD with mandatory information not included in the SRCL to conduct background and security screenings. As CISD is now under a cost recovery regime, costs will be associated with all screening requests the client departments/contracting officers are sponsoring.
  4. The role of CISD is to:
    1. review the SRCL, Request for Private Sector Organization Screening (PSOS) form if applicable and any attachments which contain security provisions, such as the Statement of Work, for accuracy, completeness, and authorized signatures;
    2. for potential international contracts, ensure that the participating countries have the appropriate industrial security Memorandum of Understanding (MOU), arrangements, or agreements with Canada (see 4.30.25 Industrial Security and International Contracts). If foreign-based suppliers are expected to bid, a list of the applicable country of origin should be provided to CISD, and the appropriate clauses related to foreign-based suppliers will be provided;
    3. sign the SRCL form as the Contracting Security Authority and provide the applicable security clauses to the client department;
    4. provide information to the contracting officer on the security status of each potential bidder, contractor, or offeror, as applicable;
    5. provide to Canadian-based bidders, contractors, or offerors, information on the preparation and transmission of classified or protected information or assets. Classified information and assets must be forwarded to the Document Control Section (DCS).
  5. The fully signed SRCL must contain the following signatures:
    1. the Organization Project Authority must sign the form to indicate that the SRCL properly reflects the security requirements of the requirement;
    2. the Organization Security Authority must also sign the form to indicate that the SRCL properly reflects the industrial security requirements of the requirement. CISD will not process the SRCL and provide the applicable clauses if the above two signatures are not provided;
    3. the contracting officer must sign block 16 "Procurement Officer" only after CISD have advised that the successful bidder has received their security clearance, which means just prior to award. That signature on the SRCL confirms that:
      1. all information on file relating to the industrial security requirement has been provided to CISD for their review prior to solicitation stage;
      2. the contracting officer intends to attach the fully completed and signed SRCL, as well as, insert the security clauses provided by CISD into the contract; and
      3. CISD has provided confirmation that the proposed contractor meets the security requirements.

        IMPORTANT: When security clearances such at IT, Production and/or COMSEC are required, seek assurance of these specific security types from CISD as they are contract specific and not blanket clearances held by the organizations.

    4. CISD signs as indicated in (a) (iii) above.
  6. Client departments may provide the hard copy of the SRCL form Security Requirements Check List (SRCL) (form TBS/SCT 350-103) or use the E-SRCL Security Requirements Check List (SRCL) (PDF Version 383 KB) - (Help on File Formats).
  7. If a requirement is cancelled, the contracting officer must advise CISD immediately so that the file can be appropriately closed out.
  8. Contracting officers may not reuse previously approved clauses, except in processes or instruments that have been approved by CISD.

4.30.15 Industrial Security in Solicitations

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  1. When there are industrial security requirements, the evaluation section or the security requirements section of the solicitation documents must clearly state whether security requirements must be met before solicitation closing date or before contract award. The contracting officer should be fully aware of the time frames required for the required security clearances to be granted, and whether or not the solicitation document will contain conditions or a time limit in which suppliers must obtain the required security clearance, following the solicitation closing date. The choice of such time frames must not unfairly discriminate between potential suppliers.
  2. The completed SRCL must be attached as an annex to the solicitation, though the signature page may be omitted.
  3. Contracting officers should specify in their solicitation document whether or not suppliers must include information in their bid to allow the security verification process or clearance process to begin. Contracting officers may contact CISD for assistance in determining the best approach.
  4. For procurements with security requirements for work to be performed or documents safeguarded at the contractor’s facilities, security clearance has to be obtained for those facilities before any work can start. The contractor’s address indicated in the bid document is not necessarily the location of where the contractor intends to perform work or keep documents. It is important for the Canadian Industrial Security Directorate (CISD) to know, as early as possible in the process, in which of the contractor’s facilities the work will be performed or the government's sensitive information/assets will be safeguarded if issued a contract, standing offer or supply arrangement.
  5. In the solicitation document, the Contracting Officer needs to add, under the Security references "Location(s) of Work Performance" for the contractor to complete.

4.30.20 Industrial Security in Standing Offers and Supply Arrangements

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  1. When the contracting officer and the client department have determined that it is appropriate to use a standing offer or supply arrangement method of supply for requirements with an industrial security requirement, the solicitation documents should specify the minimum level of security clearance required as well as the circumstances under which a higher level would be required. Instructions to users of the arrangement must be clear on:
    1. how to identify which level of security applies in resulting contracts; and
    2. the client department's responsibility in confirming with CISD, prior to issuing a contract or call-up, that the suppliers meets the security requirement.

    IMPORTANT: When security clearances such as IT, Production and/or COMSEC are required, seek assurance of these specific security types from CISD as they are contract specific and not blanket clearances held by the organizations.

  2. Once the solicitation phase is complete, the contracting officer must provide CISD with a copy of the Request for Standing Offers or Request for Supply Arrangements, as well as a list of proposed suppliers so that CISD can validate that the selected suppliers meet the minimum security requirements stipulated in the arrangement.
  3. Resulting call-ups and contracts, which have security requirements, must identify the applicable security requirement, and the applicable SRCL must be attached to the call-up or contract.
  4. A copy of all such call-ups and contracts must be sent to CISD. It is not necessary to send the "authorization to use" document to CISD.

4.30.25 Industrial Security and International Contracts

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  1. For contracts with foreign-based suppliers, the contracting officer must advise CISD of the country of origin for each foreign-based supplier that is interested in participating in the procurement activity. CISD will then verify if there is an industrial security MOU or arrangement in place with the relevant foreign country. If so, the appropriate equivalent security clauses will be provided to the contracting officer.
  2. Protected/classified information or assets for transmittal outside of Canada must be sent to the Document Control Section (DCS) of CISD who will then forward it to the recipient. Onward transmission and receipt through approved security channels will be undertaken by DCS.
  3. The contracting officer must submit the Statement of Work to CISD for review of any security wording to ensure compliance with the terms of the bilateral agreement.

4.30.30 Foreign Ownership, Control or Influence

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  1. A Foreign Ownership, Control or Influence (FOCI) evaluation must be done in all situations where a third party individual, firm or government is assumed to possess dominance of, or authority over, a Canadian facility to such a degree that a third party individual, firm or government may gain unauthorized access to extremely sensitive information (INFOSEC). A FOCI evaluation is an administrative determination of the nature and extent of foreign dominance over the contractor's management and/or operations.
  2. Requirements involving the potential release of extremely sensitive information (INFOSEC), a special category of classified Communications Electronic Security (COMSEC) information, are subject to a FOCI review by the Industrial Security Program (ISP). Recommendations regarding the use of FOCI will then be submitted to the procurement directorate, and if appropriate, to the Procurement Review Committee Secretariat, Acquisitions Branch.
  3. Suppliers must be informed of the requirement for a FOCI evaluation in the solicitation; however, completed packages from suppliers should only be requested after the bid evaluation process has determined which supplier(s) will be awarded a contract. The material that a supplier has to provide for such an evaluation is often extensive and time consuming to provide.
  4. Contracting officers must provide two copies of the FOCI submission for the successful supplier(s) to ISP. Verification of the FOCI and the required Facility Security Clearance of the potential Canadian or United States-based supplier must be obtained from ISP before contract award.
  5. Any irregularity known to contracting officers regarding compliance with the INFOSEC access approval of the contractor involving extremely sensitive INFOSEC must be immediately reported to the Director of ISP.

4.30.35 Comprehensive Land Claims Agreements

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For more information on Comprehensive Land Claims Agreements, consult 9.35 Comprehensive Land Claims Agreements.

4.30.40 Procurement Strategy for Aboriginal Business

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For more information on Procurement Strategy for Aboriginal Business, consult 9.40 Procurement Strategy for Aboriginal Business.

4.30.45 Standard Instructions, Clauses and Conditions

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Standard instructions, clauses and conditions set out in the Standard Acquisition Clauses and Conditions (SACC) Manual issued by PWGSC may be added in the solicitation documents to meet specific commodity needs. Contracting officers must ensure that there are no inconsistencies with the applicable general conditions.

4.30.45.1 Equivalent Products

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  1. When there is no alternative to specifying a particular manufactured product, the solicitation should, whenever possible, include SACC Manual clause B3000T for equivalent products. Before issuing the solicitation, the contracting officer should contact the client department to discuss the potential for equivalent products and any mandatory performance criteria related to the item being specified that must be included in the solicitation to ensure proper evaluation of a substitute product's equivalency. Contracting officers must ensure that all references to a manufacturer's brand name, model and/or part number contained anywhere within the solicitation are followed by the words "or equivalent".
  2. For procurements subject to North American Free Trade Agreement (NAFTA), World Trade Organization Agreement on Government Procurement (WTO-AGP) or Agreement on Internal Trade (AIT), provision for equivalent products must be made. Contracting officers must give consideration to supplier claims of equivalence and have some way to determine if the proposed products are, indeed, equivalent.

4.30.45.5 No Substitute Products

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When a manufacturer's brand name, model and/or part number are used in the item description and substitutes will not be considered in a solicitation, SACC Manual clause B4024T should be used. This clause must not be used in solicitations subject to NAFTA or WTO-AGP.

4.30.45.10 Multi-Item Bids/Offers

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  1. A requirement can either be on an aggregate basis or an item-by-item basis or a combination of the two. If it is on aggregate basis, the entire requirement will be awarded to a single supplier. An item by item basis will be used, for example to obtain better prices for certain products or to provide complete coverage when one supplier cannot meet the entire requirement.
  2. The evaluation of multi-item bids/offers should be governed by cost-benefit considerations.
  3. The savings generated from the split of a requirement into more than one contract should be compared with the additional costs usually associated with the award of multiple contracts or issuance of multiple standing offers:
    1. costs to PWGSC, for example, the costs of awarding, administering and closing-out contracts;
    2. costs to the client department, for example, extra billing and inspection, and other related administrative costs; and
    3. costs to the contractor, for example, transportation costs, price per unit.
  4. Sectors/regions should determine their own administrative premiums for costs such as those identified in paragraphs (i) and (ii) above.
  5. The savings from awarding more than one contract must also be weighed against possible disadvantages, such as:
    1. the difference in delivery times for components provided by different suppliers;
    2. the compatibility of items supplied by different suppliers; and
    3. the service or maintenance of items after delivery.
  6. While the standard instructions of the bids and offers provide for their acceptance "in whole or in part", it is sometimes appropriate to emphasize the option to award a contract or issue a standing offer, on either an aggregate or an item-by-item basis. When using the aggregate or item-by-item basis, SACC Manual clause A0272T should be used for bid solicitations and M0032T for Request for a Standing Offer (RFSOs).

4.30.45.15 Bidders' Conferences and Site Visits

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  1. Whenever there is a bidders' conference or site visit planned:
    1. The Notice of Proposed Procurement (NPP) and solicitation documents must clearly state that there will be an optional bidder's conference or optional/mandatory site visit, then indicate the location, date and time.
    2. Schedule the meeting on a date that will:
      1. allow suppliers time to obtain and review the solicitation; and
      2. allow for preparation and distribution of minutes in sufficient time for suppliers to prepare and submit bids/offers/arrangements before the solicitation closing date.
    3. In the event of a mandatory site visit, the NPP and solicitation documents must clearly state that:
      1. the site visit is mandatory; and
      2. failure to attend will result in the bid being declared non-responsive.
    4. In the event of either an optional site visit or bidder's conference:
      1. the NPP and solicitation documents must indicate that attendance by suppliers is optional; and
      2. suppliers that do not attend are not precluded from submitting a bid.
  2. To provide location, timing and administration of the bidder's conference or site visit in the solicitation, SACC Manual clauses A9083T, A9038T or A9040T may be used respectively for a bidders' conference, an optional or a mandatory site visit. Contracting officers should request in the solicitation that suppliers identify, in writing, before the meeting date, the names of the representatives who will attend and a list of the issues they propose to raise.
  3. The bidders' conference normally takes place at the Public Works and Government Services Canada ( PWGSC) office that issues the solicitation, or at another suitable location arranged by that office. While a bidders' conference is normally held as one meeting, the scope of the solicitation may dictate the need for a series of cross-country regional conferences.
  4. The contracting officer must prepare and distribute an agenda outlining elements, including questions raised by suppliers, to be discussed before the conference. PWGSC will chair all bidders' conferences, and prepare the minutes, which include any clarifications or specification changes, which may result in a change to the requirement. Client departments are also expected to attend the conference and be available to answer any questions relating to the requirement.
  5. The minutes must be distributed to all suppliers who have requested the solicitation documents, and to all suppliers who have been invited to respond, in sufficient time to allow suppliers to prepare and submit responses before the solicitation closing date. Any clarifications or changes to the solicitation resulting from the bidders' conference will be included as an amendment to the solicitation. Suppliers who do not attend will not be precluded from submitting a bid/offer/arrangement. The minutes should be made available to all attendees of the bidder's conference.
  6. Where practical, consideration should be given to using various technical means of allowing suppliers to participate either directly or indirectly, such as through the use of video conferencing, teleconferencing or web casting. Video or audio recordings of the conference could be made and distributed to others who were not able to attend. However, it is not recommended to permit suppliers to record the conference for their own purposes.
  7. Site visits must be arranged in conjunction with the client department. The contracting officer should attend any site visit. Although there are no formal minutes, the client department must be instructed to advise PWGSC of any clarifications, or changes in specifications, resulting from the site visit. The original solicitation must then be amended to reflect these changes or clarifications.
  8. A copy of the solicitation amendments must be provided to all suppliers who have already requested a solicitation document, or all suppliers who have been invited to respond.

4.30.45.20 Intellectual Property

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  1. It is the policy of the Government of Canada that the contractor be the owner of any foreground information (as defined in the conditions applicable to the contract) created by the contractor in performance of the contract. This is however subject to some exceptions set out in Section 6 of TB Policy, Title to Intellectual Property Arising Under Crown Procurement Contracts.
  2. Client departments should be requested to fully justify any requests to retain ownership of intellectual property (IP), as provided for in the policy, except for the case of non-software copyright, where the practice of PWGSC practice is to make Canada ownership the norm.
  3. The solicitation should make clear to suppliers the ownership of any IP rights, as determined by the client department. SACC Manual clauses may be used in conjunction with the general conditions and supplemental general conditions to meet the requirement of the client department. See Annex 4.2: Intellectual Property.

4.30.50 Taxes and Duties

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For more information on taxes and duties, consult annexes Annex 4.3: Taxes and Duties, Annex 4.4: Supplies Exempt from GST/HST and Annex 4.5: Goods Subject to Excise Tax.

4.30.55 Ontario Labour Legislation

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Solicitations for janitorial, food catering and security services must include SACC Manual clause A0075T whenever information concerning each employee of a previous supplier must be provided to other suppliers, in accordance with the Ontario labour legislation. See 4.70.105 Ontario Labour Legislation and Annex 4.6: Ontario Labour Legislation.

4.30.60 Communications Notification

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Process cancelled as per direction from Communications Branch in July 2010.

4.35 Evaluation Criteria

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All evaluation criteria must be clearly specified in the solicitation document and their relative weighing and importance must be described. If applicable, the solicitation must also indicate whether, and under what conditions, alternatives or substitutes will be considered. Additionally, consideration should be given to when a condition will have to be met, that is a condition of contract award versus a condition of bid submission. For example, a certificate of insurance may not be available at the time of submission as it may only be issued on award of a contract. In this case, a requirement for a certificate of insurability may be more appropriate.

4.35.1 Mandatory Criteria

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Contracting officers must ensure that mandatory requirements represent truly essential requirements, since not even a single mandatory requirement can be later waived when faced with an otherwise good bid/offer/arrangement. Contracting officers should discuss this with client departments since the bulk of the mandatory requirements are typically defined by the client department. Mandatory evaluation criteria identify the minimum requirements that are essential to the successful completion of the work. Contracting officers must minimize the number of mandatory criteria in order to increase probability of receiving responsive bids/offers/arrangements. Mandatory criteria must be clearly specified in the solicitation document and may include:

  1. licensing requirements;
  2. minimum performance characteristics of equipment;
  3. requirements for delivery dates or condition;
  4. essential minimum qualifications or experience of proposed personnel;
  5. budget limitations.

4.35.5 Rated Criteria

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  1. Only bids/offers/arrangements that meet the mandatory criteria are subject to point rating, as applicable. Rated criteria are used to assess various elements of the technical bid/offer/arrangement so that the relative merits of each bid/offer/arrangement can be used to distinguish one bid/offer/arrangement from another. The maximum points that can be achieved for each rated criterion must be specified in the solicitation document.
  2. When point rating is used, bids/offers/arrangements may have to achieve a minimum number of points overall to be considered responsive, and often they must achieve a minimum number of points for certain individual criteria. Solicitation documents must clearly identify any minimum thresholds and clearly indicate that such minimums are mandatory. When assigning weights to each criterion, the contracting officer and the client department should ensure that a high aggregate of points for minor criteria does not overcompensate for a low aggregate of points for major criteria.
  3. When evaluating knowledge and experience is important, contracting officers must specify in the solicitation documents how knowledge and experience will be assessed. In the case of joint ventures for example, whose experience will be assessed, i.e. the experience of a joint venture member only or a pooling of experience of all the members.

4.40 Evaluation Process and Method of Selection

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  1. The evaluation process and the method of selection such a lowest price, best value, etc., must be clearly described in the solicitation documents.
  2. For detailed guidance on the development of evaluation and selection criteria, consult the Basic Guide for Bid Evaluation Process (available on GCpedia - Acquisitions Program Policy Suite - Procurement ProcessThis information is only accessible to federal government employees.).
  3. For the basis of selection, contracting officers must use the appropriate SACC Manual clauses; for example: A0027T, A0031T, A0034T, A0035T, A0036T, A0069T, M0031T, M0034T, M0035T, M0069T, S1001T, S1002T, etc.
  4. The Canadian International Trade Tribunal (CITT) has determined that although suppliers may be aware of the department's normal practice to award contracts to the lowest-responsive supplier, this does not relieve it of the obligation to state its method of selection in the solicitation. If the department intends to rely on a publicly available policy, it must be incorporated into the solicitation.
  5. For more information on evaluation procedures, consult Chapter 5 - Evaluation and Selecting the Contractor.

4.45 Certifications

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A requirement for certifications must be included in all solicitation documents. Suppliers must provide the required certifications to be awarded a contract or issued a standing offer or supply arrangement. Canada will declare the bid non-responsive if the required certifications are not completed and submitted as requested. Compliance with the certifications provided to Canada is subject to verification by Canada during the evaluation period (before award of a contract, or issuance of a standing offer or supply arrangement) or after award of a contract, or issuance of a standing offer or supply arrangement, during the entire period of the contract, standing offer or supply arrangement. Non-compliance to certification may also lead to the termination of a contract.

In some cases, certifications are required as a precedent to contract award or the issuance of a standing offer or supply arrangement. In other cases, the certifications are required at solicitation closing. Some common certifications are provided below.

  1. Federal Contractors Program for Employment Equity
    1. The Federal Contractors Program (FCP) for employment equity is a program administered by Human Resources and Skills Development Canada (HRSDC) – Labour. The FCP is intended to address employment disadvantages for four designated groups: women, Aboriginal peoples, persons with disabilities and members of visible minorities. Its goal is to achieve equality so that no person is denied employment opportunities for reasons unrelated to ability.
    2. Public Works and Government Services Canada is to request and obtain from the bidder/offeror, the necessary evidence of compliance with the FCP in its procurement, in order to comply with the Employment Equity Act.
    3. The FCP requires that bidders subject to the FCP, including a bidder who is a member of a joint venture, bidding for federal government contracts, certify that they have not been declared non-compliant with the FCP by HRSDC-Labour and to make a formal commitment to implement employment equity. Consult Annex 5.1 Federal Contractors Program for Employment Equity for more information.
  2. Former Public Servant
    1. Former public servants must comply with the Conflict of Interest Act. This is a term of all general conditions and forms part of all solicitations.
    2. For service contracts, SACC Manual clauses A3025T, A3026T, M3025T, M3026T, S3025T, as applicable, must be used in all solicitations to ensure compliance with former public servant policies. Suppliers are required to self-identify as a former public servant, if applicable, and to make available to Canada any additional details of their status with respect to cash-out amounts and time equivalents, pension payment details and status of ownership.
    3. Former public servants must provide the required certification before contract award or issuance of a standing offer or supply arrangement. Canada will declare a bid/offer/arrangement non-responsive if the required certification(s) is not completed and submitted as requested.
    4. This certification will be a condition precedent to contract award, as opposed to a mandatory requirement for evaluation purposes.
    5. All certifications that suppliers provide to Canada are subject to verification by Canada during the evaluation period (before award of a contract) and after award of a contract to ensure compliance. For more information on definitions and exceptional contracting authorities, consult Chapter 3 Procurement Strategy and Chapter 6 Approvals and Authorities.
  3. Canadian Content
    1. When the Canadian Content Policy applies to a requirement, the appropriate SACC Manual Canadian content certification clause must be included in the solicitation. These clauses describe the type of solicitation (limited, open or conditionally limited).
    2. SACC Manual clause A3050T, which defines Canadian content, must also be included in the solicitation. See Chapter 3 Procurement Strategy.
  4. Price Certification and Rate Certification
    1. A price certification or a rate certification is required for all negotiated firm-price and fixed-time rate contracts valued at $50,000 or more, for the acquisition of commercial or non-commercial goods and/or services.
    2. Price certification clauses:
      1. C0001T: acquisition of goods and/or services from foreign-based suppliers;
      2. C0002T: acquisition of commercial goods and/or services, other than petroleum products, from Canadian-based suppliers, other than agency and resale outlets;
      3. C0003T: acquisition of non-commercial goods and/or services from Canadian-based suppliers;
      4. C0004T: acquisition of commercial goods and/or services from Canadian agency and resale outlets, including subsidiaries of foreign-based manufacturers; and
      5. C0006T: acquisition of petroleum products.
    3. rate certification clauses:
      1. C0600T: acquisition of commercial goods and/or services from Canadian-based suppliers; and
      2. C0601T: acquisition of non-commercial goods and/or services from Canadian-based suppliers.
  5. Integrity Provisions

    Integrity Provisions must be included in all procurement instruments. See section 4.21 Integrity Provisions for details.

4.50 Financial Security

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  1. Financial security can be required from a supplier to:
    1. protect Canada against loss should a supplier fail to enter into a contract (bid financial security);
    2. ensure that a contractor's obligations under a contract are carried out (contract financial security); or
    3. protect subcontractors and material suppliers (payment bond).
  2. The financial security may be a security deposit (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit or a surety bond).
  3. The decision to obtain financial security for competitive solicitations must be taken before issuing the solicitation and the solicitation must state clearly what is mandatory.
  4. Suppliers have the right to determine which form of financial security they will provide. See SACC Manual clauses E0004T and E0007C.
  5. Government guaranteed bonds will be valued at current value;
  6. Treasury Board has an updated list of Appendix L - Acceptable Bonding Companies whose bonds may be accepted as security by the government.
  7. For more information on risk management, consult Chapter 3 - Procurement Strategy; for information on the handling of bid and contract security, consult Chapter 7 Award of Contracts and Issuance of Standing Offers and Supply Arrangements.

4.50.1 Surety Bond Forms

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The surety bond forms are:

  1. PWGSC- TPSGC 504, Bid Bond;
  2. PWGSC- TPSGC 505, Performance Bond; and
  3. PWGSC- TPSGC 506, Labour and Material Payment Bond.

4.50.5 Bid Financial Security

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  1. The decision to obtain bid financial security should take into account the following:
    1. the extent of bidder prequalification possibility;
    2. the type of work and custom of the trade;
    3. the likelihood of attempts to withdraw;
    4. the consequences of the failure or inability of the bidder to enter into a contract.
  2. The amount of bid financial security must be the minimum required to ensure that the bidder enters into the contract. SACC Manual clause E0004T must be used in conjunction with E0008T when bid financial security is required. When clause E0004T is used to require bid financial security and a contract financial security is required under the resulting contract, it must be used with E0003T, E0005C and E0008C. When clause E0004T is used to require bid financial security, but no contract financial security is required, clause E0009T must be used.
  3. If the estimated contract value is $250,000 or less, the security should not exceed 10 percent of the bid price. In the case of larger acquisition values, the contracting officer will determine the percentage.
  4. Any letter of credit received by Canada must have an appropriate expiry date. The letter of credit should not have its expiry date coincide with the projected cessation of the risk that it covers. For instance, the expiry date stated in the letter of credit should not be the same date as the one projected for the contract award. The expiry date should allow for a comfortable turn-around time from the estimated date of the contract award, to ensure that the contracting officer is satisfied that the bidder has discharged its obligations for which the letter of credit was provided. If the bidder has not met its obligations, the contracting officer must have sufficient time to prepare and present the required demand for payment under the letter of credit.
  5. To prevent problems in obtaining contract financial security (if required) at a later date, the solicitation must specify that, if the required contract security is not provided within the period specified, a security deposit (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit) given as bid security will be forfeited or payment demands will be made against the bid support letter of credit. The amount forfeited must not exceed the difference between the bid price and the amount of the contract entered into by Canada. This provision is also contained in form PWGSC- TPSGC 504.
  6. Unless the acceptable form of security is limited to security deposits (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit), the solicitation must include a list of insurance companies (Treasury Board Contracting Policy Appendix L - Acceptable Bonding Companies) whose bonds may be accepted as security by the government, together with the applicable surety bond form. Deviation from the surety bond form will be permitted only with the prior approval of Legal Services.
  7. For more information on procedures on the handling bid security, consult Annex 5.2: Handling, Custody and Safekeeping of Financial Security/Handling of Bills of Exchange. The contracting officer must instruct the specified bid receiving unit of the handling of bid securities received.

4.50.10 Contract Financial Security

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  1. For the successful supplier, the contracting officer must ensure that bid financial security is not released until the contractor provides the required contract financial security. The decision to obtain contract financial security, and the amount of security required, should take into account the following:
    1. the type of work and custom of the trade;
    2. the consequences of the failure or inability of the contractor to carry out its contractual obligations;
    3. costs associated with the provision of security, compared with the degree of risk involved.
  2. For construction contracts with an estimated value of $100,000 or more, contract financial security must be sought.
  3. Decisions as to whether and how much financial security will be required should be based on the circumstances of the individual procurement. Some businesses may encounter difficulty in obtaining certain kinds of security; therefore, contracting officers should be sensitive to this and not require unreasonable contract security. In certain cases, perhaps an advance form of security may not be needed; holdbacks in contract payment may suffice. Treasury Board recommends that financial security not be considered until the estimated cost of the contract exceeds $100,000. However, issues relating to the nature of the requirement are usually more important than the dollar value.
  4. When the decision to obtain contract financial security has been taken, the contracting officer must stipulate in the solicitation documents that contract financial security will be required. When the contractor is required to provide contract financial security after contract award, SACC Manual clause E0007C must be used in conjunction with E0008C. When the successful supplier must provide a security deposit as contract financial security, clause E0005C must be used in conjunction with E0008C.

4.55 Controlled Goods

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Whenever the controlled goods program applies to a requirement, the following applies:

  1. Controlled goods cannot be released to persons that are not registered, exempt or excluded by the Controlled Goods Program (CGP). For more information on controlled goods, visit the Controlled Goods Directorate Web site.
  2. SACC Manual clause A9130T must be included in solicitations when there is production of or access to controlled goods.
  3. When the solicitation contains controlled goods ( *for example, a drawing or Statement of Work), only those controlled goods cannot be released to any persons that are not registered, exempt or excluded under the CGP. The remainders of the items are processed as usual.

    Note: "Not all drawings" or Statements of Work are controlled goods themselves, even if they relate to controlled goods.

  4. Registered Persons are listed on the Controlled Goods Directorate (CGD) Web site. (Note: the information contained in this list is for information purposes only.) This list is updated daily based on information provided by registered persons. Canada cannot guarantee the completeness of the information contained in this list, as some registered persons have asked not to be listed. If a registered person does not appear in this list, contact CGD at 1-866-368-4646 or by e-mail at dmc-cgd@tpsgc-pwgsc.gc.ca for further verification. Once the contracting officer has verified that the person requesting the controlled goods is registered, the solicitation documents, drawings, statements of work, etc. containing the controlled goods may then be released through adequate means to preclude the examination of controlled goods by unauthorized persons.
  5. An export permit to ship a controlled Technical Data Package (TDP) is required to all countries except, in most cases, the United States. Contracting officers must first determine if their TDP is, in fact, controlled. The ultimate authority for making this determination is the Export Controls Division, Department of Foreign Affairs and International Trade Canada (DFAIT). A determination needs to be made as to whether or not the supplier has access to controlled goods, in Canada, under the Defence Production Act.
  6. Generally, if the TDP contains technical information for the "development, production or use" of an item controlled under the DFAIT's Export Control List (most items under Group 2; Item 5504 under Group 5; and all items under Group 6), then the TDP is also controlled. Refer also to a shorter version, published by CGD, of the items that are controlled. If the TDP is designed solely for the solicitation of bids, it is probably not controlled. Contracting officers should contact the Export Controls Division, DFAIT, at 613-996-2387, for assistance in making this determination.
  7. Security precautions for transferring controlled goods will vary, depending on the type and size of the controlled goods. Safeguards chosen must adequately preclude the examination and unauthorized transfer of controlled goods by a person who is not registered, exempt or excluded under the CGP and should be such as to make tampering evident. These include:
    1. using double envelopes, security seals and security-sealed containers;
    2. marking transfer containers with a return address;
    3. recording how the controlled good is being transferred;
    4. determining the reliability of a postal or courier service;
    5. transferring controlled goods by first class or registered mail, or by a reliable postal or courier service that offers: proof of mailing, a record while in transit, and a record of delivery;
    6. recording the controlled good being transferred, who is transferring it, and the identity and address of the person to whom it was transferred; or
    7. upon receipt, examining the packaging and sealing devices, and reporting tampering.

4.60 Transportation Costs

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  1. For most requirements with an estimated expenditure of $25,000 or more, including Goods and Services/Harmonized Sales Tax (GST/HST), with known delivery points, bids/offers should be solicited on the basis of Free On-Board (FOB) destination.
  2. For requirements with unknown delivery points, bids/offers should be solicited on the basis of FOB origin only. See the Glossary " Incoterms" .
  3. When Incoterms are used, contracting officers must ensure that suppliers understand the differences in the acronyms used particularly those that use the same letters: FOB in Incoterms means Free On-Board, not Freight on Board.
  4. For more information on transportation costs and the applicable SACC Manual clauses to be used for good requirements, consult 4.70.100 Transportation Costs Information.

4.65 Exchange Rate Fluctuation Risk Mitigation

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  1. The exchange rate risk on the purchase of materials, components or products from outside Canada is generally considered a normal business risk for suppliers. However, in some cases, it may be in the interest of Canada to accept the risks and benefits of currency fluctuations. In such circumstances, the bidder may be offered the choice to mitigate their risk by having an exchange rate fluctuation provision included in the contract.
  2. When determining if an exchange rate fluctuation provision will be included, contracting officers may consider such factors as: the likelihood that currency fluctuations will reduce the number of bidders; the duration and value of the contract; previous concerns of suppliers; potential impact on prices, and the willingness and/or ability of the client department to accept such provision.
  3. An exchange rate fluctuation provision would not generally be applied to procurements done by the European and Washington regions, or procurements on the behalf of the Canadian Commercial Corporation. This provision should also not be used with telephone buys nor with cost reimbursable contracts (or cost reimbursable items of a contract).
  4. The solicitation must indicate if an exchange rate fluctuation provision is included as a choice for the bidder, and explain clearly how such provision will be applied. The solicitation must indicate the method for determining the initial exchange rate. For example the initial exchange rate is typically "the noon rate as published by the Bank of Canada on the solicitation closing date".
  5. The solicitation must also indicate the date to be used in determining the exchange rate for adjustment purposes. This will typically be the Bank of Canada noon rate on such a date. It is often preferable to use the delivery date as the exchange rate for adjustment purposes. Contracting officers may also choose to use the direct shipment date, as indicated on the Canada Customs Coding Form, CBSA Form B3-3, or some other date. Contracting officers must always ensure that the solicitation (and contract) clearly specifies the method for determining the date for the exchange rate for adjustment. Where a modification to a clause is required, contracting officers are encouraged to work with the Procurement Process Tools Division (outilsapprov.proctools@tpsgc-pwgsc.gc.ca) and legal services to modify the appropriate Standard Acquisition Clauses and Conditions (SACC) Manual clause. Generally, bids must be submitted in Canadian currency.
  6. Exchange rate fluctuation provisions must be identified in procurement plans, contract requests, and Contract Planning and Advance Approvals (CPAA), since it is part of the basis of payment and may impact the total contract costs. The client should be informed of and agree with the decision to use this provision in the solicitation and the contract. The client should provide a buffer in the commitment, or alternatively, be aware that a supplemental section 32 certification of the Financial Administration Act may become necessary in order for the payment to be made. The client project authority may need to inform the department financial authority of a potential impact to the commitment. Approval of the procurement/contract does not need to be sought again due to any increases in the total contract value resulting from exchange rate fluctuation that may occur.
  7. To have the exchange rate fluctuation provision apply, bidders must identify this choice as per the instructions in subsection j. The FCC is defined as the portion of the price or rate that will be directly affected by exchange rate fluctuation. The FCC should include all related taxes, duties and other costs paid by the supplier and which are to be included in the adjustment amount.
  8. When bidders are offered the choice to mitigate their risk against the exchange rate fluctuation, SACC Manual clause C3010T must be incorporated by reference in the solicitation, and clause C3015C, which may be used for various methods of payment such as milestone and cost incurred progress payments, must be used in the resulting contract clauses.
  9. Whenever exchange rate fluctuation is not expected to be an issue, and therefore it is not proposed to offer mitigation against it, the SACC Manual clause C3011T must be included in the solicitation to clearly indicate to bidders that a request for exchange rate adjustment will not be considered and that inclusion of such request in the bid will render the bid non-responsive.
  10. To have the exchange rate fluctuation provision apply, the bidders must identify this choice and clearly indicate the applicable FCC, generally in Canadian dollars, and the applicable foreign currency for each line item in the financial proposal for which the adjustment will be applied. Bidders may indicate this using form PWGSC-TPSGC 450 Claim for Exchange Rate Adjustments. The FCC amount will then be used in the calculation of the adjustment amount when invoiced and paid.
  11. The exchange rate adjustment amount will be calculated by the successful bidder using the following formula:

    Adjustment = FCC x Qty x ( i1 - i0 ) / i0

    where formula variables correspond to:

    FCC
    Foreign Currency Component (per unit)
    i0
    initial exchange rate (CAN$ per unit of foreign currency [e.g. US$1])
    i1
    exchange rate for adjustment (CAN$ per unit of foreign currency [e.g. US$1])
    Qty
    quantity of units

    This calculation may be done for each line item and the sum of adjustments shown as a single line item on the invoice.

  12. Example

    In a solicitation for 100 "regular chairs", the successful bidder bid CAN$200 per chair and specified an FCC for each chair of CAN$100 (50%) representing the initial value of materials from the US, including all applicable customs, taxes and exchange rate costs which are impacted by the exchange rate. The solicitation specified that the initial rate is based on the bid closing date and that the rate for adjustment is based on the delivery date. The bid closed on March 1, and on that day, the exchange rate was 1.0000 CAN$ per US dollar. On May 1, when the chairs were delivered, the exchange rate changed significantly to 1.1500 CAN$/US$.

    Calculation:

    Adjustment
    = (FCC per unit) x Qty x ( i1 - i0 ) / i0
    = $100 x 100 x (1.1500 CAN$/US$ – 1.0000 CAN$/US$) / 1.0000 CAN$/US$
    = $1,500
    Figure 1: Sample invoice including exchange rate adjustment
    Description of unit Qty Unit price (CAN$) Value (CAN$)
    Regular chair 100 $200 $20,000
    Exchange rate adjustment (on regular chairs, US$ exchange rate for March 1, 2013 to May 1, 2013) 100 $15 $1,500
    Subtotal: $21,500

    Alternatively, had the new rate been 0.8900 CAN$/US$, then the exchange rate adjustment would be: $1,235.96 representing a reduction in the price paid by Canada.

    Note: Suppliers should submit a separate calculation sheet for each invoice submitted showing the exchange rate adjustment for all line items with an FCC.

  13. The exchange rate adjustment will only be applied when the exchange rate fluctuation is greater than 2% (increase or decrease), i.e. abs[(i1 – i0) / i0] > .02, where "abs" represents the absolute value.
  14. The choice by a bidder to mitigate their risk against the exchange rate fluctuation will not have an impact on the evaluated price. The exchange rate adjustment is applied at the time of payment.
  15. The client payment office is responsible for ensuring that the adjustment is in accordance with the contract provisions.
  16. Contracting officers must ensure that the initial exchange rate, the FCC for each item, and the associated foreign currency for each FCC is clearly indicated with the prices in the contract to facilitate the payment process.
  17. Contracting officers must also ensure that the basis of payment clause specifies:

    "The price paid will be adjusted in accordance with the exchange rate fluctuation provision (as applicable)."

    Note: The words "as applicable" are used, since it is the bidder's choice to include an exchange rate fluctuation provision and the exchange rate fluctuation must be greater than 2% (increase or decrease).

  18. Invoicing

    The supplier must indicate the exchange rate adjustment amount (either upward, downward or no change) as a separate item on each invoice or claim for payment submitted under the contract. This must be shown even when there is no adjustment claim due to the change in the rate being below the threshold.

  19. The total estimated cost of the contract must be amended upward, where needed, to address changes due to the exchange rate fluctuation. The final contract amendment should amend the contract price upward or downward, as needed, to reflect the actual price paid.

4.70 Conditions of the Resulting Contract

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4.70.5 General Conditions

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  1. Standard Acquisition Clauses and Conditions (SACC) Manual general conditions describe the rights and obligations of both the government and the contractors in various types of contractual situations. Contracting officers must determine which general conditions apply to a specific requirement. Only one set of general conditions is to be used for a requirement. Additional conditions, not addressed in the chosen general conditions, may be added to the procurement document; however, contracting officers must ensure that there are no contradictions, inconsistencies and redundancies in the clauses contained in the template, the standard instructions and the general conditions. Legal Services should be consulted for any additional conditions.
  2. The general conditions are incorporated by reference in the procurement document. The remarks contained in the general conditions provide instructions on their application.
  3. For more information on the general conditions and their use, consult Annex 4.1: General Conditions and Supplemental General Conditions.

4.70.5.1 Warranty

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  1. In a contract for the sale of goods, any affirmation of fact or any promise by the supplier relating to the goods is an express warranty. The warranty provisions in the general conditions do not negate or limit in any way the operation of other relevant warranties that are, as a general rule, implied or imposed by law.
  2. Examples of relevant warranties that are implied by law are:
    1. the fitness of the goods for the purpose intended; or
    2. the merchantable quality of the goods.
  3. These warranties are implied in most contracts for the sale of goods through the International Sale of Goods Contracts Convention Act, a version of which exists in all Canadian provinces and territories except Quebec. In Quebec, the warranty under the Civil Code is a warranty of ownership and of quality, which includes latent defects.
  4. The contracting officer may negotiate an increase to the warranty time period in a contract, subject to client department agreement to the proposed time period and related cost. This change in warranty time period should be addressed in the contract approval document.
  5. Any requests for lessening Canada's full rights at law, a disclaimer, limitation of the contractor's liability, or decrease of the warranty time period, must be reviewed by Legal Services, be acceptable to the client department, and form part of the contract approval document.
  6. It may be necessary to consider obtaining a broader warranty than that contemplated by the warranty provision appearing in the SACC Manual general conditions to cover "symptomatic defects" or "epidemic failures."
  7. These are cases where the same or similar defects have developed in several identical items of finished work, or components, and it is reasonable to assume that the same defects will be found in the total quantity of such items, which have already been delivered, or will be delivered.
  8. Where this type of warranty is requested by the client department, or considered desirable by PWGSC, the contracting officer, in consultation with the client department, must determine the extent and nature of the warranty required, and request Legal Services to prepare a suitable provision to cover the requirement. In the case of negotiated firm price contracts, the contracting officer must obtain the client department's agreement to the estimated cost of this warranty.
  9. The general conditions provide that contractors must carry out warranty work at their own expense. The following interpretations apply:
    1. in the case of firm price contracts awarded as a result of a competitive solicitation, where the procurement process precludes any adjustment to the price quoted, costs incurred as a consequence of warranty consideration must be the responsibility of the contractor;
    2. in the case of negotiated firm price contracts, where contingency for warranty work becomes a factor for consideration during the price negotiations, the amount included in the firm price must be kept to reasonable levels, and must be specifically approved. Supporting details must be part of the cost summary presented in the contract approval document;
    3. in the case of negotiated firm price contracts governed by the Defence Production Act, the contractor must certify that the price is based on costs computed in accordance with Contract Cost Principles 1031-2, which do not permit any increase in reserves for guaranteed work. Therefore, costs for work and/or expenses in order to provide for product correction/adjustment/replacement under warranty requirements, are not to be included in the contract price since provision for these expenses has already been included in the certified price;
    4. in cost reimbursable contracts, the contractor is not allowed to charge any contingency for warranty as an element of cost. If the contractor is required to make good under the warranty provisions, the contracting officer may allow recovery of the reasonable cost incurred for direct labour and direct material only. There is to be no allowance for overhead or profit;
    5. if the contracting officer is of the opinion that reasonable warranty costs may be allowed, then an appropriate clause approved by Legal Services must be inserted in the contract to authorize such costs. The contract should contain a line item providing for the allowance of costs, with or without a maximum estimated expenditure.

4.70.10 Supplemental General Conditions

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  1. Contracting officers must determine which SACC Manual supplemental general conditions apply to a specific requirement. The supplemental general conditions must be used in conjunction with one set of SACC Manual general conditions. Their purpose is to expand upon and clarify specific points within the context of an identified subject area.
  2. The supplemental general conditions are incorporated by reference in the procurement document. The remarks contained in each set of the supplemental general conditions provide instructions on their application.
  3. For more information on the use of supplemental general conditions, consult Annex 4.1: General Conditions and Supplemental General Conditions and the SACC Manual.

4.70.15 Term of the Contract and Options

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The period of the contract or the delivery date must be indicated, as applicable. SACC Manual clause A9022C may be used in contracts for services. If the contract contains option periods, use in conjunction with A9009C.

4.70.20 Basis of Payment

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  1. The following are the bases of payment that may be used. In descending order of preference, these are:
    1. firm price;
    2. firm price subject to economic price adjustment;
    3. fixed time rate;
    4. cost reimbursable with incentive fee;
    5. cost reimbursable with fixed fee;
    6. cost reimbursable with fee based on actual costs;
    7. cost reimbursable with no fee.
  2. The Basis of Payment should reflect the commodity, the duration of the contract, and how well the requirement was defined. Multiple bases of payment may be used in one contract.

4.70.20.1 Firm Price

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  1. This provides for a price, which is not subject to adjustment for performance of the contract or part of it. It gives maximum profit incentive to the contractor for cost control in that the contractor assumes full responsibility for all costs under or over the firm price. In addition, it places a minimum administrative burden on both contracting parties. See SACC Manual clause C0207C.
  2. Use this basis of payment when buying commercially available goods or readily quantifiable services when:
    1. the contractor has previously manufactured the particular good or provided the particular service, or similar goods or services, and has sufficient experience to permit a realistic statement of work based on firm specifications;
    2. the statement of work can have a cost applied to it in terms of quantities of material and labour time required; and
    3. a realistic estimate of the material prices and labour and overhead rates applicable during the contract period can be made.
  3. Subsequent to the negotiation of a firm price basis of payment for a non-competitive requirement, the contractor must resubmit the price bid based on the agreement reached.
  4. A discretionary audit clause may be included in the contract, as appropriate, subject to the receipt of a price certification in accordance with SACC Manual clauses C0002T or C0004T or C0006T.

4.70.20.5 Economic Price Adjustments in Firm Price Contracts

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  1. It may not be possible to obtain a realistic estimate of the material prices and/or labour and overhead rates required for the use of a firm price basis of payment, and it may be necessary to negotiate provisions for price adjustments. These provisions provide for revisions to the firm base price upon the occurrence of certain contingencies.
  2. Under changing market conditions, one or more elements of the cost of a good or service may be subject to significant fluctuations in price, so that neither the buyer nor the supplier would have confidence in accepting a fixed or firm price over an extended period of time. The purpose of including an economic price adjustment (EPA) and/or a foreign currency adjustment (FCA) in the contract is to eliminate these risks for the contractor, as they are outside of the contractor's control. Contracting officers must advise the client departments to seek TB approval for EPA and/or FCA relief and the appropriate financial models to use, before inserting the clauses in the solicitation documents.
  3. Economic price adjustments should not normally be included in contracts with delivery schedules of less than 12 months, or contracts valued under $100,000.
  4. There are a number of possible actions:
    1. postpone the procurement;
    2. use available substitute products;
    3. provide advance information on requirements to potential contractors, to benefit from their improved ability to control costs by forward planning, and to make full use of the commodity futures markets in appropriate circumstances;
    4. reduce the period of term contracts or the quantities ordered on production contracts;
    5. increase production rates to compress the duration of contracts;
    6. reduce administrative time allowances in the procurement process (solicitation, award decision, award of contract and authority to commence work), but taking into account required time frames under the North American Free Trade Agreement and the World Trade Organization Agreement on Government Procurement;
    7. procure the unstable element separately in the construction industry. This technique is known as pre-bidding;
    8. isolate the unstable element in pricing the work and providing for price adjustment, both upward and downward, on it alone, in accordance with a reliable predetermined formula such as an established economic index.
  5. When a competitive bidding process is used, the proposed economic price adjustment provisions must be considered in the evaluation of the bid. In all other situations, economic price adjustment provisions must be agreed upon during negotiation of the initial or base year contract price.
  6. When a provision for future wage or price adjustments on one or more elements of the cost of a good or service, is necessary to protect the contractor and the government against significant economic fluctuations, economic price adjustment provisions may be used in firm price type contracts and in contracts that contain firm price elements within the basis of payment.
  7. Adjustments to firm prices in a contract will be allowed only if provided for in the contract.

4.70.20.10 Fixed Time Rate

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  1. A fixed time rate provides for the payment to the contractor for the actual amount of time spent in performance of the work, as determined by government audit, on the basis of a predetermined fixed time rate. The fixed time rate usually includes direct labour rates, overhead rate and profit. See the SACC Manual clauses C0212C and C0214C.
  2. Use this basis of payment when:
    1. it is not possible to estimate in advance the extent or duration of the work, but it is possible to determine within reasonable limits the applicable direct labour and overhead rates during the contract period; and
    2. there is provision for adequate controls to ensure that the contractor is not using inefficient or wasteful methods.
  3. Contracts or parts of contracts with a fixed time rate basis of payment may also provide for a ceiling price, by which the contractor is bound to complete the prescribed work without additional payment, whether or not the actual costs exceed the ceiling price. If a ceiling price must be used, there must be full agreement between the parties as to what constitutes the prescribed work. SACC Manual clause C6000C must be used in a ceiling price contracts where it is necessary to ensure against the contractor making changes or carrying out additional work without the prior approval of the contracting officer.
  4. Before deciding on using a ceiling price in a fixed time rate contract, the contracting officer should consider whether a firm price contract would be more appropriate.
  5. When contracts or parts of contracts with a fixed time rate basis of payment do not include a ceiling price, a limitation of expenditure must be made a term of the contract by including in the contract SACC Manual clause C6001C.
  6. Following the negotiation of fixed time rates, the contractor must resubmit the price bid based on the agreement reached and include a rate certification.
  7. Time verifications, rate certifications and discretionary audits must be provided for in contracts.

4.70.20.15 Cost Reimbursable with Incentive Fee

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  1. A cost reimbursable with incentive fee basis of payment reimburses the contractor for costs incurred in performance of the work, as determined by government audit, and adds a fee which is adjusted by formula in accordance with the relationship that total allowable actual costs bear to a predetermined target.
  2. Use this basis of payment when the criteria required for a firm price basis of payment are lacking and the goods and services being acquired are of a nature that the assumption by the contractor of a degree of cost responsibility is likely to provide a positive incentive for effective cost control and contract performance.
  3. When a cost reimbursable with incentive fee basis of payment is used, it is necessary to negotiate in advance a target, a target fee, a maximum fee and a formula for fee adjustment.
  4. The target should be the estimated costs of performing the work, computed in accordance with Contract Cost Principles 1031-2, assuming the contractor's current efficiency trend is maintained.
  5. The target fee, based on the target cost, and the maximum fee should be an amount no greater than that calculated in accordance with the procedures for profit determination.
  6. The formula provides for both an increase in fee above the target fee, up to the maximum fee, based on a sharing between the contractor and Canada of any decrease in actual acceptable costs below the target, and a decrease in the fee below the target fee, based on a sharing between the contractor and Canada of any increase in actual acceptable costs above target.
  7. Contracts or parts of contracts with this basis of payment should not include a ceiling price, which requires agreement between the parties as to what constitutes the prescribed work, since this conflicts with the reason why this basis of payment is being used in the first place, that is, the fact that a realistic statement of work cannot be submitted by the contractor.
  8. In contracts or parts of contracts with this basis of payment, which do not include a ceiling price, it is mandatory that a limitation of expenditure be made a term of the contract by including in the contract SACC Manual clause  C6001C.

4.70.20.20 Cost Reimbursable with Fixed Fee

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  1. This provides for the reimbursement to the contractor of the actual cost incurred in performance of the work, as determined by government audit, together with a predetermined fixed fee. Although the fixed fee does not vary with actual costs incurred, it may be renegotiated under certain circumstances. See SACC Manual clause C0202C.
  2. Use this basis of payment when circumstances do not permit the use of a firm price or fixed time rate, and the possible savings from the use of an incentive fee are likely to be more than offset by the complexities of contract administration resulting from its use.
  3. The amount of the fixed fee, based on an estimate of the costs to be incurred, should be no greater than the appropriate amount of profit. If it is not possible for both parties to reach agreement on an estimate of the costs to be incurred, as a basis for calculating the fixed fee, swing points are used. Swing points are the amounts of estimated costs, one higher and one lower than the amount used for the calculation of the fixed fee, at which the fixed fee will be renegotiated.
  4. Contracts or parts of contracts with this basis of payment may also include a ceiling price, through which the contractor is bound to complete the prescribed work without additional payment, whether or not actual costs exceed the ceiling price.
  5. If it is possible to determine the prescribed work and for the parties to agree on an estimated amount to complete it as a basis for the ceiling price, it may be appropriate to use another basis of payment, that is, one which provides for a more equitable sharing of responsibilities and risks between the contractor and Canada.
  6. In contracts or parts of contracts with this basis of payment, which do not include a ceiling price, it is mandatory that a limitation of expenditure be made a term of the contract by including in the contract SACC Manual clause C6001C.

4.70.20.25 Cost Reimbursable with Fee Based on Actual Costs

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  1. This basis of payment provides for the reimbursement to the contractor of costs incurred in performance of the work, as determined by government audit, together with a fee based on the actual costs incurred. See SACC Manual clause C0205C.
  2. Use this basis of payment only when circumstances permit the use of no other basis of payment.
  3. The amount of fee, based on the actual costs incurred, as determined by government audit, will be no greater than the appropriate level of profit.
  4. Ceiling prices are not applicable when this basis of payment is used.
  5. In contracts or parts of contracts with this basis of payment, which do not include a ceiling price, it is mandatory that a limitation of expenditure be made a term of the contract by including in the contract SACC Manual clause C6001C.

4.70.20.30 Cost Reimbursable with No Fee

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  1. A cost reimbursable with no fee basis of payment provides only for the reimbursement to the contractor of actual costs incurred, as determined by government audit. See SACC Manual clause C0201C.
  2. Except for contracts covering the provision of assistance to a contractor, this basis of payment is rarely used. Contractors cannot normally be expected to accept a contract, which provides for no profit for the manufacture of goods or the provision of services.
  3. A ceiling amount to be paid by Canada for completion of the prescribed work may be included, if appropriate.
  4. In contracts or parts of contracts with this basis of payment, which do not include a ceiling price, it is mandatory that a limitation of expenditure be made a term of the contract by including in the contract SACC Manual clause C6001C.

4.70.20.35 Cost Reimbursable Contracts - Audit

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  1. Cost reimbursable contracts or contracts with cost reimbursable elements require special attention because the price is not specified in the contract, but rather is determined after the completion of the work. All cost reimbursable contracts must include a clause indicating that the costs incurred will be subject to audit by PWGSC. See SACC Manual clause C0205C.
  2. For all cost reimbursable contracts valued at $50,000 or more awarded to Canadian suppliers, the contracting officer must, on completion of the work, place on file a certification that the final amount paid represents a reasonable price.
  3. This certification may be based on the findings of a formal or an informal audit. This audit provides the basis for certification that the price is reasonable.
  4. All contracts containing cost reimbursable elements must include an appropriate basis of payment clause (see clauses C0201C, C0202C, C0203C and C0205C.)
  5. All cost reimbursable contracts must also include clause C0300C, which calls upon the contractor to provide a cost submission to the contracting officer upon completion of the contract or annually for multi-year contracts spanning more than one contractor fiscal year.
  6. The requirement for a cost submission will be listed as a mandatory deliverable item within the contract. However, for repair and overhaul (R&O) service contracts, the contracting officer or audit agency may determine whether a cost submission is needed as a deliverable item. The clause C0307C pertaining to R&O service contracts must be used.

4.70.20.40 Cost and Profit

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Whenever a contract is to be awarded on a non-competitive basis, or when, following a competitive process, price negotiations with the successful supplier are required, contracting officers must consult Chapter 10 Cost and Profit.

4.70.20.45 Withholding of 15 percent on Service Contracts with Non-residents

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  1. The Income Tax Act and the Income Tax Regulations require client departments, on whose behalf a contract for services rendered in Canada has been awarded by PWGSC to a non-resident contractor, to withhold 15 percent from the payment of fees, commissions or other amounts paid to non-resident individuals, partnerships or corporations, other than for services performed in the course of employment. Client departments are responsible for: withholding 15 percent of any amounts payable, in lieu of taxes; remittance of this amount to CRA; and reporting the amounts paid, and withheld, to CRA. The SACC Manual general conditions include a provision regarding the withholding of 15 percent from the payment. A waiver or a reduction of the withholding may be obtainable as detailed in paragraph (e) below.

    Withholding of the 15 percent of the payment does not represent a definite tax, but rather a payment on account of the non-resident contractor's overall tax liability to Canada.

  2. Payments for duties of employment performed in Canada, made to non-resident individuals, are not subject to the 15 percent withholding, but are subject to tax deductions on a basis similar to that applicable to residents.
  3. Withholding pursuant to subsection 105(1)of the Income Tax Regulations does not apply to travel expenses as detailed in the following:

    Reasonable travel expenses

    • 24. The CRA provides an administrative exception from withholding for reasonable travel expenses. Travel expenses reimbursed to the non-resident for meals to a maximum of CAN$45 a day per person and accommodation to a maximum of CAN$100 a day per person will not be subject to Regulation 105 withholding and will not require vouchers to be retained by the payer.
    • 25. Reasonable travel expenses, in excess of the above amounts, supported by vouchers retained by the payer and either paid directly to third parties on behalf of a non-resident, or reimbursed to a non-resident will also not be subject to Regulation 105 withholding.
    • 26. Such travel expenses are limited to those expenses incurred for transportation, accommodation, or meals. These amounts have to be reported on a T4A-NR information slip (see 41-42) as travel expenses, but are not to be included in gross income on this information slip.

      Canada Revenue Agency

      Income Tax Information Circular IC75-6R2

  4. When a contract provides for services to be performed in more than one country, including Canada, an allocation of the contract price is required. Only the portion of the payment attributable to services performed in Canada will be subject to a withholding of 15 percent. (Client departments should consult sections 32-34 of Income Tax Information Circular IC75-6R2.)
  5. Although most tax treaties between Canada and other countries provide for some relief from Canadian tax, Canada does not normally relinquish its right to withhold tax pursuant to the provisions of section 153 of the Income Tax Act and subsection 105(1) of the Income Tax Regulations. If the non-resident contractor can adequately demonstrate, based on treaty protection, that the withholding normally required is in excess of the ultimate tax liability, or that the withholding creates undue hardship to the contractor, then the CRA may issue permission to the payer authorizing a reduction of the subsection 105(1) withholdings. The procedure to apply for a reduction of withholding is detailed in Income Tax Information Circular IC75-6R2 Appendices A and B, as well as in CRA's T4061, Non resident Tax Withholding, Remitting, and Reporting 2-8. Requests for a waiver or a reduction of the withholding will not be entertained unless deductions at source are remitted to CRA.
  6. If asked for information on the withholding, contracting officers may refer client departments and suppliers to CRA's Income Tax Information Circular IC75-6R2 or CRA's helpline.

4.70.20.50 Types of Price Adjustments

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  1. The price adjustment formula must provide for both upward and downward revision of the firm base price, and include a ceiling price or limitation of expenditure. It must identify, if applicable, the economic wage or price index to be used, the firm price element, and the base period for which adjustments are to be made.
  2. The calculation of any adjustment formula should remain consistent with the cost/price accounting treatment used to arrive at the firm base price. This will ensure accuracy in measuring the amount of variation from the firm base price.
  3. The various economic price adjustment clauses are in subsection 5-C of the SACC Manual. The price adjustment method used should be the simplest, most suitable adjustment formula to provide the protection necessary to both parties with the least administrative effort. The requirements of materiality and practicality must be met.

    The advice of a cost analyst is appropriate in the development of any significant or major economic price adjustment provisions, or for the implementation of an economic price adjustment provision through the use of an accounting type formula, in accordance with the Guideline on the Use of Cost and Price Analysis Services (located under the theme of Risk ManagementThis information is only accessible to federal government employees. of the Acquisitions Program Policy Suite).

  4. Adjustment provisions to prices for commercial goods and services should be based on increases or decreases from an agreed upon posted reference or firm base price. If the original contract or firm base price includes a discount factor, from the initial or then current established catalogue price, the same discount factor should be applied to the adjusted price, unless otherwise stated in the contract.
  5. Statistics Canada publishes a variety of reports, providing changes in price indices, material and labour costs. The Department of Labour performs this function in the United States. Private sector surveys may also be used.
  6. Adjustments to actual rates for labour or actual costs for material are based on the increases or decreases in firm base price elements experienced by the contractor.
  7. The use of this adjustment method is limited to contingencies beyond the contractor's control, and where the contractor's accounting system permits timely compilation of all necessary cost data relative to the economic price adjustment during contract performance.
  8. A company's union agreement with its employees may be considered an acceptable economic labour rate index for that company, provided that it reflects comparable labour rate movements within that industrial sector.

4.70.25 Contract Performance Incentives

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  1. Contract performance means the fulfillment or accomplishment of the work that is required under the contract.
  2. When required, the contract may contain various mechanisms for encouraging timely performance, such as:
    1. Contract financial security:
      1. security deposits, whereby the contractor deposits securities (government guaranteed bonds, bill of exchanges or irrevocable standby letters of credit), which PWGSC may convert to complete the contractor's obligation; or
      2. performance bonds, which are a type of surety bond used to guarantee the performance of the contract.
    2. Holdbacks, whereby an amount is withheld to ensure the due performance of the contract.

      The normal arrangements for holdbacks will be incorporated by including the SACC Manual clause H1003C in the contracts.

    3. Liquidated damages clause, whereby provision is made for Canada to recover the pre-estimated loss or rate of loss that would result from a delivery default, without being required to prove actual damages.
  3. Where the inclusion of a liquidated damages clause is appropriate, the contracting officer must incorporate such provisions by including the SACC Manual clause D0024C in the contract.
  4. Care should be taken to ensure that the rate of assessment of liquidated damages is reasonable. The probable damages should be established by reference to the individual circumstances of the particular procurement. The contract should specify the ceilings for collection of liquidated damages. Such ceilings or maximums can be stated in either of the following two ways:
    1. by specifying a fixed amount payable upon delinquency. This method should be used when it is intended that the contract will be terminated immediately when delinquency occurs and the goods or services "reprocured" elsewhere. The cost of "reprocurement" must be included in the overall fixed amount; or
    2. by specifying a rate of assessment of damages. This rate per calendar day of delay must not exceed a stated percent of the contract price. This method should be used when, upon default occurring, it is intended to serve notice of default requiring the contractor to remedy the default within a stated period of time. The cost of "reprocurement" must be excluded in computing liquidated damages, since this item will be claimable separately in the event that the contract is terminated and the goods or services procured elsewhere.
  5. To ensure uniformity of application, the amount or overall ceiling should not exceed 10 percent of the contract price. Ceiling prices in excess of 10 percent may be used when justified by the individual circumstances of the particular acquisition, subject to the approval of the contract approval authority.
  6. Incentive payments, whereby provision is made in the pricing basis for increased value to Canada.
  7. Such incentives (e.g., for early delivery cost savings, enhanced performance or additional warranty or other benefits) should be considered only in the case of major procurements with long lead times for delivery, where such payment provisions can act as an incentive to the contractor in putting forth special efforts to achieve earlier than scheduled delivery, and the client department agrees because of substantial realizable cost savings and other benefits.

4.70.30 Method of Payment

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The method of payment is the way Canada will pay for work performed or goods delivered, such as all arrears (preferred), in advance, as a lot delivery or as each item are delivered. Different types of methods of payment are described below:

4.70.30.1 Standard Payment Period and Interest on Overdue Account

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Canada pays for work performed or goods received under a contract in accordance with Canada's standard payment period of 30 days as provided in the general conditions. The general conditions also reflect Canada's policy to automatically pay interest to contractors when an account is overdue and Canada is responsible for the delay. When dealing with federally or provincially regulated public utility companies, the conditions for payment of interest must conform to those approved by the appropriate regulatory bodies. The provisions for payment of interest on overdue accounts set out in the general conditions must be strictly adhered to, except in special cases where the client department requisition specifies a payment period longer than 30 days; for example, when extensive product evaluation, inspection or testing requirements are involved. In such cases, the general conditions may be modified subject to consultation Legal Services.

4.70.30.5 Determination of the Method of Payment

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The most appropriate method of payment must be determined based on the particular procurement. Some of the factors for consideration are the following:

  1. Risk exposure for Canada, if situations such as insolvency, work cancellation or work default occurs. Pertinent factors include:
    1. Can securing unconditional guarantees protect an advance payment or performance bonds from financial institutions or from associated or parent companies with good financial credentials?
    2. What is the likely marketability and resale value of work-in-process to which Canada acquires title by virtue of making progress payments? The disparity between the amount of progress payments and the resale value of inventory is a measure of the risk exposure for Canada.
  2. Financing Cost Estimates: Since provision for progress payments or advance payments involves a real or imputed cost to Canada, this cost should be calculated for each of the available options. Apply the chartered bank prime lending rate, as advised periodically by the Director, Cost and Forensic Accounting Directorate, to the cumulative net financing (that is, cumulative cash payout by Canada minus cumulative value of deliveries under the contract), using reasonable assumptions regarding work progress and item deliveries.
  3. The potential reduction in contract price resulting from the various methods of payment.
  4. Since progress payments or advance payments reduce the need for borrowing by the contractor, or reduce the size of equity capital on which a return must be realized, lower prices should flow through to Canada. The price reduction will vary with the different methods of payment and their relative attractiveness to the contractor.
  5. Financial circumstances that may affect the ability of the client department to finance the various options.

4.70.30.10 Types of Method of Payment

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  1. There are a number of ways payment may be carried out. Payment for the work performed or goods delivered may be made as a single payment, multiple payments or progress payments.
    1. Single payment: When a single payment will be made upon completion of all work and deliveries, Standard Acquisition Clauses and Conditions (SACC) Manual clause H1000C may be used for contracts for goods and services (except construction and utility contracts).
    2. Multiple payments: When there are multiple deliveries and payments will be made on completion of each delivery, SACC Manual clause H1001C may be used in contracts for goods (except construction and utility contracts).
    3. Progress Payments and Advance Payments: In all cases, a payment cannot be made in the current fiscal year for a contract that will not start until the next fiscal year. The requirement that payment be made only for goods or services received in the same fiscal year may require modification of the method of payment for requirements whose period of delivery or service spans fiscal years. Specifically, it may be necessary to provide for multiple payments, at the appropriate point in the contract period.
  2. Progress payments or advance payments may be considered only if all of the following conditions are met:
    1. adequate security for the payment is ensured;
    2. Canada receives value commensurate with the amount of the payment;
    3. the client department has adequate funds to provide the financing; and
    4. one of the following circumstances exists:
      1. There is economic advantage to Canada that clearly outweighs the financing cost associated with the progress payment or advance payment.
      2. The contractor could suffer hardship or provide financing only with difficulty or at rates considered to be uneconomical in relation to prevailing chartered bank prime lending rates.
      3. The value of the contract is considered to be beyond the assessed financial capabilities of the contractor.
      4. There is to be a long duration for contract performance; orthere is an entrenched tradition or practice of receiving progress payments or advance payments from the purchaser in a particular industry or segment of industry. However, payments can only be made for goods or services received in the same fiscal year. Funds must be spent in the fiscal year for which they are appropriated and cannot be carried forward by means of advance payments.
      5. In the case of subscriptions or insurance premiums, which are often for a term of one full year and which may not start exactly on April 1, payments can be restricted to goods or services provided in no more than the current and next fiscal years. For instance, a publication subscription paid in February 2009 cannot cover a period beyond March 2010.
      6. In the case of multi-year contracts requiring continuing advances, contracting officers can negotiate the payment of a series of separate advances covering each fiscal year. Thus, a payment can be made for a maintenance contract, for the period of a contract, from February to March 2009, and then another payment covering the period from April 2009 to March 2010.
      7. In exceptional situations, such as armament purchases or extended warranty service, where up-front payments covering more than one fiscal year must be made to the supplier, contracting officers can determine if an advance payment is unavoidable and can be substantiated. This type of case should be extremely rare.
  3. Special Considerations for Foreign Purchases:
    1. in the case of United States purchases, progress payments or other payments on account have an effect on the application of taxes, relating to the time and place of ownership being transferred to Canada. Legal Services should be consulted to ensure that appropriate terms in the contract protect against unnecessary taxes;
    2. for other foreign purchases, where progress payments or other payments on account are granted, a check should be made to determine if the application of sales, use, or some other form of tax is related to the time and place of ownership being transferred to Canada. If this is the case, Legal Services must be consulted.

4.70.30.15 Progress Payments

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  1. In the case of a progress payment, SACC Manual general conditions 2010A, 2029, 2030, 2035 and 2040 provide that ownership of the materials or work-in-process will be transferred to Canada upon making such payment.
  2. When a progress payment is to be used; milestones, when possible, should be specified to relate payments to measurable progress on the contract. Technical or other contractual achievement yardsticks may be used as milestones. Milestone payment is a form of progress payment addressed under the policy related to progress payments. The value of each milestone should be negotiated before contract award. SACC Manual clause H3009C may be used in contracts when progress payment against milestone will be made in accordance with an established schedule of milestones using form PWGSC- TPSGC 1111 and the amount claimed is subject to holdback. When the amount claimed is not subject to holdback, clause H3010C may be used. Either clause may be used in conjunction with H3022C or H3024C and H4012C.
  3. When progress payments against milestones are not possible because of the nature of the contract, progress payments may be made at set periods of time on a calendar basis (time payment method), or based upon the actual costs incurred for material purchases and the partial completion of work, as certified by company and government inspectors. When progress payments will be made based on cost incurred using progress claim form PWGSC- TPSGC 1111, clause H1003C may be used in conjunction with H3022C or H3024C, if applicable. The clause H1003C may also be used in conjunction with H4500C in all contracts for goods with a Canadian-based contractor when advance or progress payments will be made. When payment will be made on a monthly basis for work performed in contracts for services, clause H1008C may be used. In contracts for maintenance services invoiced monthly or bi-monthly or quarterly, the clause H3020C may be used. The clause H3018C may be used in standing offers for air charter services for the carriage of goods and people.
  4. A combination of milestone and cost incurred progress payments is also possible for different phases of the contract. The combination method can be used, for example, to pay incurred costs in the early stages of a major procurement when it would be difficult to define milestones, with payments for later and more definable stages of the production process made against specified milestone achievements.
  5. If milestone or cost incurred progress payments are not possible, the time payment method of making progress payments should be used with caution. The overriding requirement for use of this method is the existence of a project progress monitoring and control system, to provide the contracting officer with reliable indicators of the actual value of work accomplished when a payment is due. With the exception of rental and service contracts, the time payment method must be approved at the director level or above.

4.70.30.20 Advance Payments

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  1. TB guidelines specify that advance payments should be considered only in extraordinary circumstances.
    1. Contracts for services: Contracts for services valued over $25,000, some form of guarantee given by a financially strong third party should protect any advance payment. The guarantee usually takes the form of a surety bond from an associated or parent company or a financial institution, or an irrevocable Letter of Credit from a Canadian bank. It should provide for return to Canada of the unliquidated balance of the advance, plus interest, in the event of work cancellation or other contract termination for Canada's convenience. Other types of guarantees may be discussed with a cost analyst.
    2. A decision to not request guarantees requires a strong business case.
    3. Contracts for services valued to less than $25,000, security may be dispensed with where the contracting officer certifies that the contractor has been actively engaged in the particular industry and enjoys a good reputation in that industry, and that PWGSC has no record of significant financial or performance problems encountered in past dealings, if any, with the contractor.
  2. Cash Discount Considerations: For all contracts, except those for advertising, payment may be made in advance of the due date when the contractor offers a cash discount for advance payment and the discount at least offsets the cost to Canada for early payment. Cash discounts for advance payment will not be considered in the evaluation of bids/offers.
  3. Special Considerations for Foreign Purchases: In the case of purchases from the United States (U.S.) Government, through the Foreign Military Sales (FMS) program, advance payments are required in accordance with U.S. law before the start of delivery for any goods and services to a foreign-based contractor. In this case, Treasury Board has approved the standard conditions for FMS sales from the U.S. Government. Any change in the standard conditions will require a submission for Treasury Board approval.

4.70.30.25 Holdbacks

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  1. For all contracts where progress payments are provided, holdbacks must be used to avoid overpayment and to act as an incentive for the contractor to complete the job. However, for contracts using milestone payments, a requirement for a holdback may be included at the discretion of the contracting officer.
  2. The following limits on payments for contracts involving progress payments apply:
    1. Firm Price with milestone payments:
      Total Allowable Costs: up to 100 percent of negotiated milestones
      Purchased Accountable Advance Materials: Nil
      Goods and Services Tax/Harmonized Sales Tax: Nil
      Profit: Nil
    2. Firm Price with progress payment on basis of negotiated cost 3:
      Total Allowable Costs: Up to 90 percent
      Purchased Accountable Advance Materials: 100 percent
      Goods and Services Tax/Harmonized Sales Tax: If payable
      Profit: Pro rata
    3. Cost Reimbursable:
      Total Allowable Costs: Up to 90 percent
      Purchased Accountable Advance Materials: 100 percent
      Goods and Services Tax/Harmonized Sales tax: If payable
      Profit: Pro rata
    4. Fixed Time Rate:
      Total Allowable Costs: Up to 90 percent
      Purchased Accountable Advance Materials: 100 percent
      Goods and Services Tax/Harmonized Sales Tax: If payable
      Profit: Pro rata
    5. Price to be negotiated:
      1. Last year's negotiated rates/prices serve as interim rates for the new year 4:
        Total Allowable Costs: Up to 100 percent
        Purchased Accountable Advance Materials: 100 percent
        Goods and Services Tax/Harmonized Sales Tax: If payable
        Profit: Pro rata
      2. All Other Contracts 3:
        Total Allowable Costs: Up to 75 percent
        Purchased Accountable Advance Materials: 100 percent
        Goods and Services Tax/Harmonized Sales Tax: If payable
        Profit: Pro rata
  3. Exceptions to these payment ceilings may be considered:
    1. when recognized trade practices supporting such exceptions can be demonstrated;
    2. in the case of organizations that do not receive a profit or fee; or
    3. when alternative methods of financial protection are employed, for example, security deposits (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit) or surety bonds.
  4. The timing for making decisions relating to the method of payment to be used varies with the solicitation method employed:
    1. for an Invitation to Tender (ITT), the method of payment must be selected, before issuing, and included in the solicitation documents (see SACC Manual clause H1003C.) Financing costs will not constitute an evaluation factor;
    2. for competitive solicitations, the solicitation will clearly specify that any requirement on the part of the supplier for receipt of progress or advance payments will constitute an evaluation criterion (this may require SACC Manual clause H1003C). When evaluating bids/offers, the cost to Canada of providing the progress payments or advance payments will be taken into account, as will the risk of exposure from the method of payment, and the availability of funds.
  5. This cost determination may be waived when all responsive suppliers have requested the identical method and pattern of payment (for example, progress payments on a cost-incurred basis with virtually identical payout schedules).

4.70.35 Audit

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  1. The provision for audit is an integral part of the procurement planning process. SACC Manual general conditions 2029, 2010A, 2010B and 2010C include a clause allowing the government to audit the amount claimed. The general conditions 2030, 2035 and 2040 include a clause allowing authorized representatives of Canada to audit, inspect and examine the accounts and records of the contractor.
  2. There are a number of circumstances where additional, specific provisions for audit (or verification) must be included in a contract. The need for additional audit (or verification) provisions is most often associated with the requirements of a contract to include price certification, time verification, and/or rate certification clauses.

4.70.35.1 Firm Price Contracts - Price Certification and Discretionary Audit

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  1. All non-competitive firm price contracts valued over $50,000 whether for the acquisition of commercial or non-commercial goods and services require the submission of a price certification by the contractor. All such contracts must also have a discretionary audit clause included in the contract.
  2. This applies to all such contracts issued by PWGSC and those issued by Canadian Commercial Corporation (CCC) on behalf of the United States Department of Defence (DoD) and the National Aeronautics and Space Administration (NASA), except for contracts for which the price is based on tariffs fixed by public regulatory bodies and not subject to negotiation by PWGSC.

4.70.35.5 Cost Reimbursable Contracts - Certification and Audit

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  1. In the case of cost reimbursable contracts, a price is not specified in the contract but will be ascertained after completion of the work. Therefore, in accordance with section 34 of the Financial Administration Act, it is necessary for the appropriate authority to certify that the price, based on actual costs incurred when these are known on completion of the work, is reasonable. The purpose of the reference, in all cost reimbursable contracts valued over $50,000, to the costs incurred being determined by government audit, is to provide a basis for such certification of the reasonableness of the price.
  2. Contracts containing cost reimbursable elements must contain an appropriate audit clause. The cost reimbursable bases of payment are: cost reimbursable with fixed time rate; cost reimbursable with incentive fee; cost reimbursable with fixed fee; cost reimbursable with fee based on actual costs; and cost reimbursable with no fee.
  3. Upon completion of a cost reimbursable contract, the contractor will be required to provide a cost submission to the contracting officer. The requirement for a cost submission must be listed as a mandatory deliverable item within the contract, except that it is discretionary in the case of repair and overhaul contracts. (See SACC Manual clause C0300C.)

4.70.35.10 Fixed Time Rate Contracts - Time Verification

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  1. Time charged and the accuracy of the contractor's time recording system are subject to verification by Canada, before or after payment is made to the contractor under the terms of the contract, whether competitive or non-competitive and regardless of value. The extent of the verification carried out should, however, reflect the value of the contract. (See SACC Manual clause C0711C.)
  2. This applies to all such contracts except those for provision of temporary help services and rental of equipment.
  3. Upon completion of a fixed time rate contract, the contractor must provide a submission detailing the actual time incurred in performance of the contract. In addition, SACC Manual clause C0710C or C0711C must be used to provide for the verification of time charged and the contractor's time recording system.

4.70.40 Discretionary Audit Clauses

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Contracting officers must include the following applicable discretionary audit SACC Manual clause in contracts, as follows:

C0100C:
for commercial goods and/or services when price certification clause C0002T, C0004T, or C0006T is used; or when rate certification clause C0600T is used;
C0101C:
for non-commercial goods and/or services when price certification clause C0003T is used; or when rate certification clause C0601T is used.

4.70.45 Time Verification Clauses

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Contracting officers must include the following applicable time verification SACC Manual clause in contracts, as follows:

C0710C:
for fixed time rate contracts for services and material;
C0711C:
for fixed time rate contracts for the verification of time charged and accuracy of recording. Do not use this clause when C0705C is used.

4.70.50 Invoicing Instructions

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  1. The SACC Manual general conditions provide conditions on invoice submission, and the procurement templates provide invoicing instructions.
  2. SACC Manual clause H5001C must be used in contracts for goods or services when the contractor must submit invoices in accordance with all the information required under section "Invoice Submission" of the applicable general conditions, and invoices will be submitted once all the work identified in the invoice has been completed.
  3. When progress payments or advance payments are proposed, the appropriate clause from the SACC Manual must be included in the contract. When progress claim form PWGSC- TPSGC 1111 is required to make progress or milestone payments and supporting documents must be submitted with the claim, clause H3022C may be used. Alternatively, clause H3024C may be used when no supporting document is required with the claim. In contracts for maintenance services invoiced monthly or bi-monthly or quarterly, clause H3020C may be used.

4.70.55 Payment by Acquisition Card

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  1. Contractor invoices may be paid using the Government of Canada Acquisition Card (credit card) in lieu of cheque issue; however, contractors are not obligated to accept credit cards as a payment instrument, unless it is specifically set out in the contract or standing offer. In some instances, advance payment via credit card may still represent a cost saving to the contractor.
  2. The decision to use credit cards for payment of contractor invoices or for payment at point of sale is a cash management decision made by the client department. Where it is anticipated that the client department may use the credit card to pay invoices, this must be identified in the contract (see SACC Manual clauses H3027T and H3027C.) Where it is anticipated that the client department may use the credit card for payment at point of sale in a standing offer, consult the required clause contained in SACC Manual template 2T-RFSO1.

4.70.60 Certifications

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When the supplier provides certifications in its bid/offer/arrangement, these certifications are subject to verification by Canada during the entire period of the contract/offer/arrangement. If the contractor/offeror/supplier does not comply with any certification or it is determined that any certification made by the contractor/offeror/supplier is untrue, whether knowingly or unknowingly, then Canada may terminate the contract for default, set aside the standing offer or the supply arrangement and remove the supplier from the list of qualified suppliers. Consult the following SACC Manual documents: MC, HC, RFSO and RFSA for the certification clause.

4.70.65 Defence Contract and Defence Supplies

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  1. Any contract constituting a " defence supplies", as defined in the Defence Production Act (DPA), must contain Standard Acquisition Clauses and Conditions(SACC) Manual clause A9006C.
  2. A contract awarded on behalf of the Department of National Defence (DND) is not necessarily a defence contract. For example, a contract for goods purchased for DND's day-to-day operations is not a defence contract. Furthermore, it is also possible for a defence contract to be awarded on behalf of a department other than DND. The client department, as the technical authority, will determine whether a particular requirement will result in a defence contract, as defined in the DPA.
  3. Solicitations and contracts for defence supplies valued at $250,000 or more, which involve importation of defence supplies, and require the contractor to be the importer, must contain SACC Manual clause C2611C. This clause specifies that the contractor will be responsible for pre-arranging remission on importation or for paying customs duties on importation and applying to the Canada Border Services Agency (CRA) for a refund. Use SACC Manual clause C2610C when DND is the importer. DND is responsible for applying to Public Works and Government Services Canada in good time for the certification required by the Customs Tariff.
  4. According to CRA, " defence supplies" include only those specified goods that are, or may be, used directly or indirectly in the defence of Canada. Goods purchased for DND's day-to-day operations are not eligible.

4.70.70 Services - Non-permanent Residents

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  1. The Immigration and Refugee Protection Act and Regulations set out the conditions under which non-permanent residents obtain employment authorization before receiving permission to enter Canada for temporary work. This includes temporary entry to perform work under contract to the federal government.
  2. For the procurement of goods and services that may result in the need for the services of non-permanent residents to be performed in Canada, the following appropriate SACC Manual clauses must be included:
    1. A2000C when the contract is to be with a Canadian-based supplier; and
    2. A2001C when the contract is to be with a foreign-based supplier.

4.70.75 Insurance

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  1. When there are specific insurance requirements for a requirement, SACC Manual clause G1001C may be used in the contract. Alternatively, when insurance provisions do not apply to a specific requirement, clause G1005C may be used in the contract.
  2. Contracting officers must insert the applicable insurance clauses contained in subsection 5-G of the SACC Manual. For more information, see Annex 4.7: Insurance Clauses for insurance clauses, Annex 4.8: Insurance of Government-owned or Leased Vehicles for insurance of government-owned or leased vehicles, and Annex 4.9: Insurance of Government-owned or Leased Equipment for insurance of government-owned or leased equipment. Also consult the Risk Management This link is available only to clients with access to The Source, the PWGSC intranet.Web site. For any additional information related to insurance, contracting officers may contact the Risk Management Advisory Services, PWGSC, by e-mail at rcnscgra.ncrrmias@tpsgc-pwgsc.gc.ca.

4.70.80 Contract Financial Security

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  1. When the decision to obtain contract financial security has been taken, the contracting officer must stipulate in the solicitation documents that contract financial security will be required. SACC Manual clause E0007C must be used in conjunction with E0008C when the contractor is required to provide contract financial security after contract award. The clause E0005C must be used in conjunction with E0008C when the successful supplier must provide a security deposit as contract financial security.
  2. Any letter of credit received by Canada must have an appropriate expiry date. The letter of credit should not have its expiry date coincide with the projected cessation of the risk it covers. For instance, the expiry date stated in the letter of credit should not be the same date as that projected for the completion of the work. The expiry date should allow for a comfortable turn-around time from the estimated date of completion of the work to ensure that the contracting officer is satisfied that the contractor has discharged its obligations for which the letter of credit was provided. If the contractor has not met its obligations, the contracting officer must have sufficient time to prepare and present the required demand for payment under the letter of credit.
  3. When financial security in the form of a performance bond is required in the contract, clause E5000C must be used.
  4. When a contract financial security in the form of labour and material payment bond is required, clause E8000C must be used.

4.70.85 Controlled Goods

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Whenever the controlled goods program applies to a requirement, SACC Manual clause A9131C must be used in contracts to inform the contractor of its obligations under the controlled goods program. When the contract is for the Department of National Defense, clause B4060C must be used in the contract.

4.70.90 Limitation of Liability

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When limitation of liability applies to a requirement, SACC Manual limitation of liability clauses may be included in the contract.

  1. For Information Management/Information Technology (IM/IT) requirements where special authority was granted by the Treasury Board to allocate risk, SACC Manual clause N0000C must be used only for IM/IT contracts. The applicable dollar amount in the clause is to be determined from the appropriate commodity grouping (usually "the Contract Price at the time the damage occurs" or a pre-determined dollar amount established by the commodity grouping), or in consultation with Risk Management Advisory Services (RMAS).
  2. When limiting a contractor's liability to Canada, but not limiting each party's liability for damages to third parties, clause N0001C must be used. Typically, this clause would be used when a commodity grouping exists (other than IM/IT or satellite services, which have their own clauses) or after a risk assessment has been performed to determine the risk exposure and amount of protection required by Canada. Limiting a contractor's liability should be an exception to the normal practice of using the standard conditions. When the decision is made to limit a contractor's liability to Canada, contracting officers, in conjunction with client departments, must be able to demonstrate that the risks associated with the procurement have been analyzed and that the limitation of liability provides adequate protection to Canada. Decisions with respect to limiting a contractor's liability should be made before the solicitation release or, in instances of non-competitive contracts, before the start of negotiations. The applicable dollar amount in the clause must be determined using the amount from the appropriate commodity grouping, or in consultation with RMAS.
  3. When limiting a contractor's liability to Canada and requiring the contractor to indemnify Canada against third party claims, clause N0002C must be used. Limiting a contractor's liability should be an exception to the normal practice of using the standard conditions. When the decision is made to limit a contractor's liability to Canada, contracting officers, in conjunction with client departments, must be able to demonstrate that the risks associated with the procurement have been analyzed and that the limitation of liability provides adequate protection to Canada. Decisions with respect to limiting a contractor's liability should be made before solicitation release or, in instances of non-competitive contracts, before the start of negotiations. The applicable dollar amount in the clause is to be determined using the amount from the appropriate commodity grouping, or in consultation with RMAS.
  4. Clauses N0001C and N0002C are similar, in that both create a limit on the contractor's liability for damages to Canada. However, the two clauses deal with the contractor's liability for claims made by third parties in different ways. N0001C essentially provides that the parties agree to allow the laws in the jurisdiction of the contract to determine who is responsible for any damages to third parties. It then goes on to provide that, if Canada must pay the third party for damages caused by the contractor because of joint and several liability, the contractor must reimburse Canada for that amount. In short, under clause N0001C, each party is responsible for any damages that it causes to third parties. On the other hand, clause N0002C states that the contractor must indemnify Canada against any third party claims that relate to the contract.
  5. When limiting a contractor's liability to Canada for first and third party claims, clause N0003C must be used. Limiting a contractor's liability to Canada should be an exception to the normal practice of using the standard conditions. Limiting a contractor's liability to Canada for third party claims should be avoided at all costs, as the exposure of risk to Canada could be extensive. Limiting a contractor's third party liability can only be done under a very limited number of circumstances, the main one being non-competitive contracts. When the decision is made to limit a contractor's liability to Canada, contracting officers, in conjunction with client departments, must be able to demonstrate that the risks associated with the procurement have been analyzed and that the limitation of liability provides adequate protection to Canada or, if there is a substantive transfer of risk to Canada, that appropriate approvals have been sought. Decisions with respect to limiting a contractor's liability should be made before the start of negotiations. The applicable dollar amount in the clause is to be determined using the amount from the appropriate commodity grouping, or in consultation with RMAS.
  6. For the satellite services requirements where special authority was granted by the Treasury Board to allocate risk, clause N0008C must be used. The applicable dollar amount in the clause is to be determined in consultation with RMAS or in accordance with published commodity groupings approved by RMAS.
  7. For more information on risk management, consult Chapter 3 - Procurement Strategy.

4.70.95 Fair Wages

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  1. The purpose of this policy is to make provision for ensuring that, on federal government construction contracts, contractors will pay their employees at least the minimum wages as and where established by the federal government across Canada and described in the applicable fair wages schedule(s). The applicable fair wage schedule is the one that is in effect in the area in which the work, the majority of the work or the largest component of the work is located.
  2. For requirements involving fair wages, contracting officers must include SACC Manual clause R2940D in their documents. The clause requires the prime contractor to pay its employees at least the minimum wage rates as established by the relevant federal authority. The contractor is also required to flow down this commitment to any subcontractor. The clause provides the right to audit to ensure compliance with the requirement of the labour conditions and Schedule of Wage Rates.
  3. When the wages quoted are below those in the schedule published by the federal authority, contracting officers should, before the award of the contract or issuance of the standing offer or arrangement, exercise due diligence by:
    1. challenging the validity of the quoted wages,
    2. requesting the supplier to confirm its intention to comply with the policy and/or regulations and to explain how it intends to comply, and
    3. providing that supplier with the opportunity to withdraw (not correct / fix) its bid/offer/arrangement.

4.70.100 Transportation Costs Information

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  1. All goods requirements with an estimated expenditure of $25,000 or more, including the Goods and Services Tax or Harmonized Sales Tax, as applicable, and with transportation costs exceeding $7,500, must be submitted to the Traffic Management Directorate, with the following exceptions:
    1. requirements 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 client departments retain control of all or part of the 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 that 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 the North American Free Trade Agreement (NAFTA) or the World Trade Organization Agreement on Government Procurement (WTO-AGP), unless a non-competitive process under one of the limited tendering reasons in the agreement is used.
  2. The Incoterms 2000 " FCA Free Carrier (...named place)" must be used in all Department of National Defence (DND) sole source contracts, all repair and overhaul contracts where transportation is not part of the competitive bid, and in all United States (U.S.) Foreign Military Sales contracts (not all U.S. contracts). DND will manage the inbound logistics (coordinate, arrange and pay for all inbound transportation) for these contracts. For these contracts, the contractor must deliver these goods " FCA Free Carrier", and the named place will always be the contractor's facility, unless specified otherwise by DND. The contracting officer must include in the contract either Standard Acquisition Clauses and Conditions (SACC) Manual transportation clause D0035C or D0037C. These clauses direct the contractor to obtain shipping instructions from DND and how to do so.
  3. If the contractor is not located in Canada, and the goods are to be imported into Canada by DND, the contracting officer must include clause C2608C and, when applicable, clause C2610C. If the goods are to be imported into Canada by the contractor, include clause C2611C, if applicable.
  4. To assist contracting officers in determining which shipping clause is applicable for use in their procurement, the following list of clauses and their application is provided for consideration:
    1. DND contracts:
      1. D0035C: for foreign-based contractors and U.S. Foreign Military Sales contracts (clauses C2608C and C2610C may apply);
      2. D0037C: for Canadian contractors;
      3. D4001C: for delivery FOB destination.
    2. All other government departments:
      1. D4000C: for delivery FOB origin (use clauses C5200T in bid solicitations and C5200C or C5201C in contracts);
      2. D4001C: for delivery FOB destination (use clauses C5200T in bid solicitations and C5200C in contracts).

4.70.105 Ontario Labour Legislation

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For contracts for janitorial, food catering and security services when the contractor must keep its employees' records up to date and provide, upon request, information to the contracting officer in accordance with Ontario labour legislation, SACC Manual clause A0075C must be used. See Annex 4.6: Ontario Labour Legislation.

4.75 Issuance of the Solicitation

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4.75.1 Client Department Review of Elements of a Solicitation

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  1. For sensitive or high-risk procurements, before issuing the solicitation, the contracting officer must clearly explain to the client department their responsibilities with respect to the solicitation and obtain written confirmation from the client department via e-mail, facsimile or mail, the following:
    1. that the Statement of Work, Statement of Requirement and/or the technical specifications, which will be included in the solicitation, accurately represent their requirements; and
    2. that the client department concurs with the evaluation criteria and contractor selection methodology detailed in the solicitation, and that the ratio of percentages with respect to the technical evaluation in relation to the price evaluation represents value for money.
  2. Contracting officers should refer their client departments to any formal agreements between PWGSC and the client department concerning the division of responsibilities relating to the procurement process (see Annex 1.1: Matrix of Responsibilities between PWGSC and Client Departments for the Procurement of Goods and Services (Generic)). The contracting officer must record on file all significant decisions made in consultation with the client department, regarding requirement definition and technical evaluation. For more information on evaluation criteria, see 4.35 Evaluation Criteria.
  3. It is the client department's responsibility to determine the required level of authority of the personnel authorized to provide the client department confirmation detailed above.

4.75.5 Determining the Solicitation Period

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  1. The setting of a solicitation closing date must take into account the level of complexity of the procurement, the extent of subcontracting anticipated. Sufficient time must be allowed for a supplier to obtain the solicitation, and any additional material, if applicable, and to prepare and submit a response.
  2. For procurements that are not subject to North American Free Trade Agreement (NAFTA) or the World Trade Organization Agreement on Government Procurement (WTO-AGP), the solicitation period (whether publicly advertised or not), unless there are pressing circumstances, should not be less than 15 calendar days either from the date the requirement is posted publicly, or, in the case of procurements not publicly advertised, from the date the solicitation is released. Low dollar value procurements below $25,000, including all applicable taxes, may be for less than 15 days, as appropriate for efficiency and cost effectiveness.
  3. For procurements that are subject to NAFTA and/or WTO-AGP, the following periods apply:
    1. For open tendering procedures, the solicitation period must not be less than 40 calendar days from the date that the Notice of Proposed Procurement (NPP) is published on Government Electronic Tendering Service (GETS).
    2. For selective tendering procedures not involving the use of a permanent list of qualified suppliers, an invitation to qualify must be published for a minimum of 25 days on GETS. Following the 25-day period, a NPP can then be published on GETS for a period of no less than 40 days.
    3. When conducting procurement using selective tendering from a permanent list of qualified suppliers, in addition to sending solicitations to the selected suppliers from the list, a NPP must be published. The NPP should be published at the same time as the initial issuance of the solicitations. When this is done, the period for receipt of solicitation must be no less than 40 days from the date of the publication of the NPP.
    4. any time period for publication noted above may be reduced in certain circumstances:
      1. in the case of recurring contracts where the original NPP provided an estimate of when the subsequent notices will be published, the solicitation period for subsequent procurements may be reduced, but not to less than 24 calendar days; and
      2. where a state of urgency can be duly substantiated, the solicitation period may be reduced, but not less than 10 calendar days.
  4. NAFTA and the WTO-AGP specify minimum publication periods. At that point, the contracting officer must make a business decision on how much the solicitation period need to be reduced.
  5. Notices with closing dates only appear as “Expired” on GETS the next business day.. The expired notice and and the associated documents remain available on GETS.

4.75.10 Public Advertisement

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Public advertisement using the Government Electronic Tendering Service (GETS) is Public Works and Government Services Canada's (PWGSC) preferred notification process for competitive procurement.

GETS is where the Government of Canada posts procurement opportunities and allows suppliers to search for them on-line. Buyandsell.gc.ca/tenders is the official site for Canada to meet its trade agreement obligations and is the authoritative and first source for Government of Canada tenders. For more information about GETS visit the Buyandsell.gc.ca Tenders or contact the InfoLine at 1-800-811-1148.

4.75.15 Notice of Proposed Procurement

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  1. Notification that a solicitation opportunity is available occurs through the posting of a Notice of Proposed Procurement (NPP) on GETS.
  2. A NPP is a summary of the solicitation that briefly describes the requirement, and provides pertinent information that will assist suppliers to determine their interest in fulfilling the requirement and their ability to successfully meet any key conditions for participating. If applicable, contracting officers must indicate in the NPP which trade agreement or agreements apply or if Canadian content restrictions apply. (For example, solicitations may specify that the requirement has been set aside under the Procurement Strategy for Aboriginal Business or restricted to Canadian-based suppliers as a result of a National Security Exception. In these cases only aboriginal suppliers or Canadian-based suppliers respectively would be eligible to bid.)
  3. The NPP must indicate whether additional material will be sent or is available separately.
  4. Many procurement units have developed templates to assist contracting officers to develop NPP s. Contracting officers should consult with their managers to determine if templates are routinely used in that procurement unit.
  5. The NPP should advise the suppliers of their option to request a debriefing. For samples of suggested text, refer to the Standard Procurement Templates (Simple, MC, HC, RFSO and RFSA) of the SACC Manual. Any other notices (i.e. newspapers) should contain the same statement.
  6. When entering the point of delivery information on the NPP within the Automated Buyer Environment (ABE) for a standing offer or supply arrangement, the contracting officer must select only those provinces or territories where potential deliveries may occur. The "Canadian flag button" in the NPP must only be selected if it is for a National (Master or Individual) Standing Offer and potential deliveries may take place in all of the provinces and territories.

4.75.15.1 Official Language Policy Applicable to a Notice of Proposed Procurement

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  1. All NPP s must be prepared and posted in both official languages and are to specify the language of service of the issuing office. Suggested wording is:

    "This PWGSC office provides procurement services to the public in their ___(insert one of the following: "official languages"; "English" or "French")".

    This notice is not automatically generated by the system.

  2. Contracting officers who are identified in NPP s issued by bilingual offices, must be able to deal with inquiries equally well in both official languages. This may require identifying different officers in each language version of the NPP. Contracting officers who are identified in NPP s issued by unilingual offices will provide service in the language of that office. Contacting officers identified in the NPP should be familiar with the requirements associated with the NPP s.

4.75.15.5 Language Designation of Offices

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  1. PWGSC offices designated as being bilingual offices:

    Moncton, N.B.
    Montreal, Que.
    Saint John, N.B.
    Quebec, Que.
    National Capital Region
    Bagotville, Que.

  2. PWGSC offices designated as being unilingual offices:

    St. John's, N.L.
    Winnipeg, Man.
    Calgary, Alta.
    Halifax, N.S.
    Brandon, Man.
    Vancouver, B.C.
    Pembroke, Ont.
    Saskatoon, Sask.
    Victoria, B.C.
    Willowdale, Ont.
    Regina, Sask.
    Whitehorse, Y.T.
    Mississauga, Ont.
    Edmonton, Alta.

4.75.20 Procedure for Posting of Notice of Proposed Procurement on Government Electronic Tendering Service

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  1. For procurements subject to NAFTA, WTO-AGP and AIT, posting on GETS is required when using:
    1. open tendering; and,
    2. selective tendering:
      1. subject to NAFTA and WTO-AGP (or these agreements in combination with other agreements, including the Agreement on Internal Trade [AIT]);
      2. when using a one-time source list, notice must be published to invite suppliers to qualify for inclusion on the list. Notice must also be given to solicit bids/offers/arrangements. This would normally require the publishing of two separate notices;
      3. when using a permanent source list, a notice must be published annually, identifying the existence of the source list, and how to qualify. Notice must also be published for each bid solicitation, involving the use of the list; and
      4. covered by AIT only when using a one-time or permanent source list: a notice must be published annually, identifying the existence of the source list and how to qualify.
  2. Contracting officers can create and transmit NPPs, as well as the solicitation document to GETS, through the Automated Buyer Environment (ABE).
  3. ABE sends the NPP and solicitation documents for posting on GETS
  4. To ensure that solicitation packages are posted to GETS the next business day, contracting officers must issue their ABE-generated notices and solicitation documents no later than 4:00 p.m. (ET). Extra time for posting to GETS is required if there is a Drawings and Specifications Package (DSP) or a native file attachment requirement external to ABE. The required files are attached using the Tender Management Application (TMA) prior to posting on GETS. For more information about file attachment through TMA, please contact the InfoLine at: 1-800-811-1148.
  5. The regular daily posting schedule to ABE is after midnight (ET).
  6. Contracting officers are responsible for preparing and posting procurement notices on GETS, and, in the case of selective tendering procedures, any annual notices, which establish and maintain a permanent list of qualified suppliers.

4.75.25 Procedures for Posting Solicitation Documents on Government Electronic Tendering Service

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  1. PWGSC Contracting officers use ABE or TMA to create their solicitations for each publicly advertised competitive solicitation that are then posted on GETS.
  2. The ABE Support Team - Acquisitions Services Support Desk (ASSD), Business Operations Service Management Directorate, acts as a focal point between GETS and the contracting officers to facilitate corrections.
  3. Contracting officers should check GETS the day after issuing the notice from ABE. If there are discrepancies, or the notice has not been posted, the contracting officer should notify ASSD. The ASSD Team may be contacted either by telephone at 819-956-3325, or by e-mail at: basa-assd@tpsgc-pwgsc.gc.ca.
  4. The contracting officer must ensure that the notice and solicitation(s) (including all attachments) are accurate, complete and have been successfully posted on GETS. Corrections required on solicitations remain the responsibility of the contracting officer.

4.75.30 Distribution of Material Not Electronically Available

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  1. When the solicitation or additional material cannot be posted on GETS, contracting officers must ensure the solicitations, in a physical format (such as paper, CD or DVD), or the additional materials (for example, samples, technical drawings and specifications) are available and are distributed to others.
  2. Contracting officers should confirm that documents are not protected by any ownership restrictions and that they can be copied and distributed.
  3. To obtain the required copies of non-electronic solicitations, contracting officers may make the copies themselves or request the required copies from the client department. The client department initiating the requisition will be responsible for the duplication costs associated with ensuring that sufficient copies of a procurement package are available.
  4. When additional materials associated with a solicitation (for example, samples or protected documents) are being sent directly to suppliers, the originating PWGSC office is responsible for selecting an appropriate method to ensure that this documentation or material is sent to each supplier that requests a solicitation.
  5. If technical data must be sent to suppliers from a different source, for example, distributed by the client department), the solicitation should not be posted until the data is available from that source. The solicitation must identify the source.
  6. Suppliers are responsible for obtaining copies of the necessary technical data if they are available to the trade through normal business channels.

4.75.35 Contacting Suppliers Directly During the Solicitation Period

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  1. On occasion, based on commodity/market knowledge, a contracting officer may conclude that suppliers of a good or service will not see or respond to a solicitation if it appears only on the GETS. In such cases, in order to stimulate effective competition and seek best value for Canadian taxpayers, the contracting officer may contact all such known suppliers to inform them that the solicitation opportunity has been posted.
  2. This contact must only take place after the Notice of Proposed Procurement has appeared on the GETS, and it should take place as quickly as possible so that the suppliers contacted do not lose time. To ensure that there will be no question of preferential treatment, this communication should be in writing so that it can be shown that all suppliers had access to the same information at the same time.
  3. The specific purpose of this contact is to ensure that the suppliers know that there is an opportunity available and to direct them to GETS. For that reason, the contact will be limited to giving brief information about the good or service being procured and to providing the appropriate reference (one or more of reference number, Source ID and solicitation number). It must not include any information that will not be available to suppliers who find out about the opportunity directly through GETS.
  4. Contracting officers must document on the file, the date and name of each supplier that was contacted. The recommended method of notification is the provision of a copy of the NPP.

4.75.40 Distribution of Solicitation Material to Invited Suppliers

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  1. When procurement is not going to be advertised on GETS, the contracting officer must ensure the distribution of solicitations to invited suppliers.
  2. For requirements not subject to public advertising, the list of suppliers being invited must be released automatically to all suppliers on that list at the time of solicitation. Lists should be updated as new suppliers request the solicitation.
  3. When the client department is responsible for distributing additional technical documentation that may accompany the solicitation, the contracting officer must forward the name and address of the invited suppliers to the client department. Client departments should be requested to document that the technical material was distributed to the appropriate recipients.
  4. When dealing with sensitive (designated/classified) requirements, the source list or solicitation and contract information are not generally released. Requests for the List of Suppliers should be referred to the Access to Information and Privacy Office at 819-956-1820.

4.75.45 Use of Source Lists

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4.75.45.1 Solicitation by Direct Invitation

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  1. Source lists are generally the basis for requesting suppliers to bid/provide an offer or arrangement when a competitive procurement is not publicly advertised.
  2. Normally, where source lists are used, other than rotational source lists:
    1. Any other supplier making a request may be provided with a bid solicitation and be considered for evaluation.
    2. These lists may be supplemented by a contracting officer's knowledge of potential sources and recommendations made by the client.

4.75.45.5 Requirements Subject to Trade Agreements

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  1. For requirements subject to the international trade agreements, source lists may be established for particular goods and services, where it is appropriate to establish a list of pre-qualified suppliers. Such lists should be refreshed at a minimum annually.
  2. Open tendering procedures, using GETS, should be used to invite suppliers to submit their expressions of qualifications for evaluation and placement on the list, if they meet the selection criteria. Suppliers will be allowed to qualify at any time between the refreshment of the list.
  3. Selective tendering procedures can then be used to invite the suppliers on the list to submit bids/offers/arrangements for a particular requirement for the specific good or service for which the list was created. See Article 1010 and Article 1011 of NAFTA and Article VIII of WTO-AGP.

4.75.45.10 Requirements Not Subject to Trade Agreements

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  1. For requirements, which are not subject to the international trade agreements and where open competition is not appropriate, due to the nature of the requirement, bids/offers/arrangements may be solicited directly from a list of suppliers. If a source list for the particular good or service does not exist, contracting officers should consider using the Supplier Registration Information service to identify potential sources of supply, especially for low dollar value goods and services.

    In preparing the source list, the contracting officer may include suppliers suggested by the client department.

  2. Automated Source Lists such as the Automated Vendor Rotation System (AVRS)and SELECT, provide a systematic rotation of vendors in order to ensure equity of opportunity for suppliers, and must be used where they apply.
  3. Whenever a supplier requests an opportunity to submit a bid/offer/arrangement on a specific requirement, that supplier must be given the opportunity, provided that it is not necessary to cancel the existing solicitation and issue a new one. This provision does not generally apply to rotational source lists such as SELECT, which typically limits the solicitation to those suppliers selected for a particular requirement.
  4. Contracting officers are reminded that an effort should be made to ensure best value to Canada in terms of who is invited, and also that the principle of "fairness and access" be displayed in a practical manner by rotating opportunities to submit a bid/offer/arrangement within the suppliers on any given list.

4.80 Solicitation Period

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The following information is in relation to activities that may occur during the solicitation period. For more information on setting the solicitation period, see Chapter 3 - Procurement Strategy.

4.80.1 Communications during the Solicitation Period

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  1. To ensure the integrity of the competitive solicitation process, enquiries and other communications, regarding the solicitation, must be directed onlyto the contracting officer that is identified in the solicitation, not to the client department, or other government officials. See Standard Acquisition Clauses and Conditions Manual standard instructions and clause A0012T.
  2. Contracting officers should avoid one-on-one contact or meetings with suppliers during the solicitation period. All communications should be in writing, to the extent possible.

4.80.5 Handling Questions during the Solicitation Period

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  1. Questions from suppliers should be submitted in writing to the contracting officer before the date indicated in the solicitation document.
  2. Simple questions where the answer does not affect other suppliers and how they will respond to the solicitation, may be answered directly to the supplier asking the question.
  3. More complex questions or questions concerning the requirement itself should be forwarded to the client department for response back to the contracting officer. Technical questions and answers, together with questions and answers that can be addressed by the contracting officer, should be accumulated and posted as an addendum/amendment to the solicitation, in the case of public advertisement, or issued directly as an addendum/amendment to the suppliers. When posting questions during the solicitation period, care should be taken to protect the identity of the supplier asking the question(s).
  4. Changes to the solicitation itself, to reflect clarifications resulting from the questions, including extensions to the solicitation period, if granted, must be released as an amendment to the solicitation.

4.80.10 Changes to the Solicitation

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  1. Any significant change in the information provided in the Notice of Proposed Procurement (NPP) or solicitation documents before the solicitation closing date, requires an amendment to the NPP and/or solicitation document. All amendments must be given the same circulation as the original NPP and/or solicitation documents.
  2. Contracting officers must ensure that the amendments to the NPP and/or solicitation documents are complete. The supplier may then view the actual solicitation amendment document on GETS and/or download it electronically. The update will then form part of the solicitation document.
  3. When a solicitation document is cancelled and reissued, a new NPP must be submitted for posting on GETS.
  4. Any significant information given to one supplier with respect to a proposed procurement must be given to all other interested suppliers in adequate time to permit the suppliers to consider such information and respond to the solicitation. In providing this information, contracting officers must take into consideration the time required to post amendments on GETS.
  5. If there is insufficient time to ensure that all suppliers can consider the information and respond accordingly, contracting officers may consider extending the solicitation period or cancelling and reissuing the solicitation.
  6. The contracting officer must inform the Bid Receiving Unit (BRU) of any change to solicitation closing dates or times and must ensure that such notification has been received by the BRU.
  7. A decision to extend the solicitation period beyond the initially established closing date is a business decision that can be made by the contracting officer, based on the circumstances of the particular procurement. It may be possible to process an extension of the bidding period in a relatively short time frame (more or less 24 hours) when the solicitation of bids has been done using source lists or when the publicly advertised procurement is posted on GETS.

4.80.15 Assistance to Suppliers

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  1. For general information on doing business with the federal government, contracting officers should direct suppliers to Buyandsell.gc.ca.
  2. Suppliers interested in doing business with the federal government are encouraged to register in the Supplier Registration Information system to be assigned a Procurement Business Number (PBN).
  3. Suppliers are encouraged to check the Government Electronic Tendering Service (GETS) to search for government procurement opportunities.
    • For general procurement enquiries, suppliers should contact the InfoLine at 1-800-811-1148.
  4. Questions about a particular solicitation must be addressed to the contracting officer identified in the solicitation.

4.85 Closing Procedures

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In the National Capital Region, bids/offers/arrangements are received and processed centrally at the Bid Receiving Unit (BRU) located in Place du Portage, Gatineau, Quebec. In the regions, operating procedures may be adapted to suit local conditions.

4.85.1 Late Bids/Offers/Arrangements

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  1. For all solicitations, except requests for quotations sent directly to the contracting officer, the solicitation closing date and time stipulated in the solicitation are firm. It is the responsibility of suppliers to ensure that the bid/offer/arrangement is delivered on time to the BRU that is specified in the solicitation. The only acceptable evidence to show timely receipt of the bid/offer/arrangement is the receipt issued by the specified BRU.
  2. Late bids/offers/arrangements will not to be accepted and will be returned. Records will be kept of all returned bids/offer/arrangements.
  3. Contracting officers should consult the applicable Standard Acquisition Clauses and Conditions (SACC) Manual standard instructions for late bids/offers/arrangements.

4.85.5 Delayed Bids/Offers/Arrangements

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  1. Contracting officers should consult the applicable SACC Manual standard instructions for delayed bids/offers/arrangements.
  2. However, when dealing with bids submissions for construction contracts, contracting officers should refer to section 9.10.15 Construction Services.

4.85.10 Transmission by Facsimile

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  1. Contracting officers should consult the applicable SACC Manual standard instructions on transmission by facsimile for bids/offers/arrangements.
  2. To ensure that official receipt time-keeping equipment represents the correct time, the specified Bid Receiving Unit must calibrate this equipment and other official time pieces against the official National Research Council (NRC) time standard, at least once every two working days.

    The NRC time standard can be checked 24 hours a day at 613-745-1576 (English) or 613-745-9426 (French).

4.90 Receipt of Bids/Offers/Arrangements

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  1. Contracting officers should consult the section on submission of the bid or offer or arrangement contained in the applicable SACC Manual standard instructions.
  2. Bids, offers and arrangements received by the specified BRU will be logged and kept unopened in a locked receptacle until after the closing date and time.
  3. If the envelope or the package containing the bid/offer/arrangement does not provide sufficient information for identification, that is, the solicitation number, the name of the supplier, return address and solicitation closing date and time, it will be necessary to open the envelope or the package. The specified BRU staff will, in these instances, transfer the necessary information to the envelope or the package, reseal and initial the envelope or the package before it is placed in the bid box.
  4. Bids/offers/arrangements received after the solicitation closing date and time, or any solicitations that have been cancelled, are returned to the suppliers unopened, if possible, with a covering letter, explaining why the bid/offer/arrangement is being returned. If the envelope or the package does not contain sufficient information to identify the supplier and/or the solicitation number, the specified BRU staff will open the envelope or the package for identification purposes, and return the bid/offer/arrangement with the appropriate letter explaining the reason for opening the bid/offer/arrangement.
  5. In the NCR, bids/offers/arrangements received by the mailroom are time and date stamped and delivered unopened to the BRU.
  6. After the solicitation closing date and time, bids/offers/arrangements are removed from the locked receptacle and opened by a designated official, in the presence of at least one witness.
  7. The specified BRU will screen bids/offers/arrangements to ensure that they are complete. Where penciled in or corrected information is shown, a photocopy of the bid/offers/ arrangements is made and kept for audit purposes. This is to ensure that a bid/offer/arrangement cannot be altered. As evidence that the documents were processed and verified, all financial security documents are perforated, and the front page of each technical documentation volume is hand-stamped. The bids/offers/arrangements are then verified and certified against the source list, which is kept on the procurement file.
  8. When a need is identified to receive bids/offers/arrangements at a location other than the specified BRU (for example, a large number of bulky bids/offers/arrangements are expected), contracting officers must make arrangements with the bid receiving personnel before establishing a solicitation closing date.
  9. An assessment of this other location will be carried out by bid receiving personnel, in consultation with departmental security personnel, to ensure the complete physical security of bids/offers/arrangements from the time of receipt to the time of opening. The personnel of the bid receiving location are responsible for recording bids/offers/arrangements received at these locations.
  10. When bids/offers/arrangements are solicited by telephone, the contracting officer must accurately transcribe the information taken, enter the time and date, and initial the written record on file immediately.

4.90.1 Secure Handling of Bids/Offers/Arrangements

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  1. The specified BRU will follow the instructions given by the contracting officer regarding security of bids/offers/arrangements.
  2. If a bid/offer/arrangement is marked as "protected", "confidential", "secret" or "top secret", the government procedures for the transmittal of "Protected/Classified" information or assets must be followed. All bids/offers/arrangements and other information or assets concerning a sensitive bid/offer/arrangement must be hand-delivered to the contracting officer that originated the solicitation, and a receipt must be obtained.

    Information about security procedures is available from the Canadian Industrial Security Directorate Web site.

4.90.5 Public Opening

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  1. When bids are opened publicly, they are removed from the locked receptacle, transported to the place of public opening and opened in the presence of a witness. The name and address of each bidder and the amount of each bid are read out.
  2. If there are multi-items listed in the bid but there is no total bid price, the bid price on each item is read out. It is also confirmed that bid security (if required) is included in the bid.

4.90.10 Receipt of Quotations

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  1. Written bids (quotations) submitted in response to a Request for Quotations, which are sent directly to the contracting officer, will be declared non-responsive if received after the closing date and time, regardless of the date of mailing.
  2. To ensure that all responsive quotations are considered and to accommodate internal mail delivery schedules, contracting officers may need to delay the award of a purchase order until after delivery of the first morning mail on the day following the closing date.
  3. Quotations must be signed and dated by the contracting officer upon receipt. Sectors/regions must ensure that the receipt, custody and handling of quotations submitted directly to the contracting officer are conducted in a manner that reflects the principle of fairness to all suppliers.

4.95 Modification and Withdrawal of Bids

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  1. Bids/offers/arrangements may normally be modified, withdrawn or resubmitted before the solicitation closing date if it is done in writing. This includes electronically transmitted responses.
  2. For quotations directed to the contracting officer only, to maintain the integrity of the bidding system, no modification will be considered after receipt of the quotation, unless negotiated by PWGSC. Negotiations must be held with all suppliers that submitted responsive quotations.
  3. If the solicitation conditions permit and a supplier increases a price before closing, any additional financial security required must be received within a reasonable period of time ( normally within five working days).
  4. A bid/offer/arrangement withdrawn after solicitation closing cannot be resubmitted.
  5. Bids submitted with bid security may be withdrawn without compensation to Canada if there is a significant error on the face of the bid. Approval at the director level is required before an error can be declared significant on the face of the bid. Examples of such errors include a missing page.
  6. If a supplier wishes to withdraw a bid/offer/arrangement for any reason other than a significant error on the face of the bid/offer/arrangement, Legal Services must be consulted.
  7. If PWGSC allows a supplier to withdraw a bid submitted with bid security without a penalty due to a significant error on the face of the bid, and there was a public opening, an advice notice to that effect, signed by a director, must be sent to all suppliers.

4.100 Canceling and Reissuing a Solicitation

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  1. If a solicitation is cancelled before the closing date, contracting officers must issue a cancellation notice through the Automated Buyer Environment (ABE) for transmission to the Government Electronic Tendering Service (GETS). The Notice of Proposed Procurement (NPP) will then be marked as "cancelled" on GETS. Contracting officers can no longer cancel solicitations directly on GETS.
  2. Contracting officers must notify the Bid Receiving Unit of the cancellation and provide instructions regarding the disposal of any responses to the original solicitation.
  3. Contracting officers are responsible for internal distribution of solicitations and updates within PWGSC and to the client departments.
  4. If the cancellation takes place after the closing date, suppliers should be advised within 10 calendar days of the cancellation of the solicitation.
  5. Contracting officers may reissue a solicitation, where:
    1. a significant change has occurred in a requirement before a contract is awarded or a standing offer or supply arrangement is issued. For Basic and Standard procurements, another Procurement Risk Assessment must be performed if the procurement strategy changes, e.g. original strategy was to compete electronically, revised strategy is to sole source. The new risk assessment is required to determine any change to the risks already identified as well as the appropriate approval authority for the revised requirement or strategy. Approval of the revised procurement strategy is required even if the risk assessment indicates the same approval level as was originally sought. The approval document (Contract Planning and Advance Approval) must include the details about the retender.;
    2. all bids/offers/arrangements are non-responsive or do not represent fair value or where no bids/offers/arrangements were received in response to a competitive solicitation. The North American Free Trade Agreement (NAFTA), the World Trade Organization Agreement on Government Procurement (WTO-AGP) and the Agreement on Internal Trade (AIT) permit limited tendering procedure in such circumstances; ; or
    3. the acceptance period for the bid or offer or arrangement has expired before a contract is awarded or a standing offer or supply arrangement is issued.
  6. For the following procurements, authorization from the appropriate approval authority must be obtained prior to reissuing a solicitation with no change to the requirement or strategy:
    1. Basic Procurements: Contracting Officer
    2. Standard Procurements: Manager
    3. Complex Procurements: Director (Headquarters)/Manager(Regions)
  7. Whenever a solicitation is issued to replace an earlier one, the contracting officers must insert Standard Acquisition Clauses and Conditions Manual clause A9043T as the first statement in the reissued solicitation and new Notice of Proposed Procurement (NPP).
  8. For procurements that are subject to the international trade agreements, a new NPP should be published when a solicitation is cancelled and reissued. If there were no responsive bids/offers/arrangements received in response to the original competitive solicitation and the requirement is not being changed significantly, contracting officers may send solicitations directly to suppliers without publishing a new NPP. However, when following this approach, it is strongly recommended that contracting officers consider reposting the NPP in the interests of openness and transparency, and include in the notice that some suppliers will be invited directly.

Annex 4.1: General Conditions and Supplemental General Conditions

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4011
Annex 4.1: General Conditions and Supplemental General Conditions
General Conditions and Supplemental General Conditions General Conditions Supplemental General Conditions
General Conditions - Standing Offers - Goods or Services 2005  
General Conditions - Goods (Medium Complexity) 2010A 4009
General Conditions - Professional Services (Medium Complexity) 2010B
General Conditions - Services (Medium Complexity) 2010C  
General Conditions - Supply Arrangement - Goods or Services 2020  
General Conditions - Goods or Services (Low Dollar Value) 2029  
General Conditions - Higher Complexity - Goods 2030 4010
Goods with some research and development, contractor to own intellectual property rights in foreground information 2030 4006
Goods with some R&D, Canada to own intellectual property rights in foreground information 2030 4007
General Conditions - Research & Development (contractor to own intellectual property rights) 2040  
General Conditions - Higher Complexity -Services (except those listed below) 2035 4012
Electronic Data Processing (EDP) Requirements General Conditions Supplemental General Conditions
Hardware Purchase, Lease and Maintenance All general conditions except 2010C and 2029 4001
Software Development and Modification Services All general conditions except 2010C and 2029 4002
Licensed Software All general conditions except 2010C, and 2029 4003
Maintenance and Support Services for Licensed Software All general conditions except 2010C, and 2029 4004
Ships General Conditions Supplemental General Conditions
General Conditions – Higher Complexity - Goods 2030 1028 or 4006 or 4007
General Conditions – Higher Complexity - Goods 2030 1029
Construction Subsection 5-R LAB 180
Procurement for the Canadian Commercial Corporation General Conditions Supplemental General Conditions
Defence requirements (other than US Government) 2030  
Defence requirements (US Government) 2030 (See CCC-6 for exceptions)  
Non-defence requirements CCC50  
  1. If any software must be delivered under the contract, including any software necessary to run the hardware, supplemental general conditions 4003 must form part of the contract. Other supplemental general conditions must also be incorporated, if applicable.
  2. General conditions and supplemental general conditions must be used as complete sets. Do not include two sets of general conditions. A clause can be taken from a set of general conditions and added to the Articles of Agreement (i.e. a warranty provision in a contract mainly for services but that includes the delivery of some equipment).
  3. A specific procurement may require the modification or deletion of individual conditions. These changes must be discussed with the client department before inclusion in the solicitation or contract, to ensure that complete understanding exists as to the extent of the client department's rights and responsibilities. Modifications may be discussed with Legal services to ensure that the rights of Canada are protected.

Annex 4.2: Intellectual Property

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Structure for Use of Intellectual Property Terms
General Conditions, Supplemental General Conditions, Clauses
1: Research and Development Contracts
1A: Client Department Decision: CONTRACTOR to own Foreground Intellectual Property (IP)
Number Title Comments
General Conditions & Supplemental General Conditions
2040 General Conditions - Research & Development Broader background license
Optional Clauses:
K3015C Confidentiality of Foreground Information  
K3020C License to Canada's Information  
K3415C Commercialization in Canada  
K3420C Liquidated Damages - Commercial Exploitation To enforce K3415C

1: Research and Development Contracts - 1B: Client Department Decision: CANADA to own Foreground IP
1B: Client Department Decision: CANADA to own Foreground IP
Number Title Comments
General Conditions & Supplemental General Conditions
2040 General Conditions - Research & Development IP terms replaced by K3410C
K3410C Canada to Own Intellectual Property Rights in Foreground Information Broader background license
Mandatory Fill-in Clause
K3200T Basis for Canada's Ownership of Intellectual Property  
Optional Clauses
K3305C License to Intellectual Property Rights in Foreground Information  
K3310C No Right for Contractor to Sub-license  
K3315C License to Intellectual Property Rights in Canada-owned Information  

2: Goods Contract with associated Research and Development
2A: Client Department Decision: CONTRACTOR to own Foreground IP
Number Title Comments
General Conditions & Supplemental General Conditions
2030 General Conditions - Higher Complexity - Goods IP terms replaced by 4006
4006 Contractor to Own Intellectual Property Rights in Foreground Information Narrower background license
Optional Clauses
K3015C Confidentiality of Foreground Information  
K3020C Licence to Canada's Information  
K3415C Commercialization in Canada  
K3420C Liquidated Damages - Commercial Exploitation To enforce K3415C

2. Goods Contract with associated Research and Development - 2B: Client Department Decision: CANADA to own Foreground
2B: Client Department Decision: CANADA to own Foreground IP
Number Title Comments
General Conditions & Supplemental General Conditions
2030 General Conditions - Higher Complexity - Goods IP terms replaced by 4007
4007 Canada to Own Intellectual Property Rights in Foreground Information Narrower background license
Mandatory Fill-in Clause
K3200T Basis for Canada's Ownership of Intellectual Property  
Optional Clauses
K3305C License to Intellectual Property Rights in Foreground Information  
K3310C No Right for Contractor to Sub-license  
K3315C License to Intellectual Property Rights in Canada-owned information  

3: Goods Contract with no Research and Development Expected
3A: Client Department Decision: CONTRACTOR to own all Foreground IP, including Copyright
Number Title Comments
General Conditions & Supplemental General Conditions (Alternatives)
2030 General Conditions - Higher Complexity - Goods Copyright (Re: Treasury Board Policy on IP, Section 6.5, Exceptions to Contractor Ownership)
2010A General Conditions - Goods (Medium Complexity)
Clause Needed to effect Client Department Decision
K3002C Contractor to Own IP: No Explicit License Rights for Canada  
Optional Clause
K3030C License to Material Subject to Copyright For use with K3002C

4: Services Contract with no Research and Development Expected
4A: Client Department Decision: CONTRACTOR to own all Foreground IP, including Copyright
Number Title Comments
General Conditions & Supplemental General Conditions (Alternatives)
2035 General Conditions - Higher Complexity - Services Copyright (Re: Treasury Board Policy on IP, Section 6.5, Exceptions to Contractor Ownership)
Clause Needed to effect Client Department Decision
K3002C Contractor to Own IP: No Explicit License Rights for Canada  
Optional Clause
K3030C License to Material Subject to Copyright For use with K3002C

4: Services Contract with no Research and Development Expected - 4B: Client Department Decision: CONTRACTOR to own all Foreground IP, including Copyright
4B: Client Department Decision: CANADA to own Foreground IP(Copyright)
Number Title Comments
General Conditions & Supplemental General Conditions (Alternatives)
2035 General Conditions - Services Copyright (Re: Treasury Board Policy on IP, Section 6.5, Exceptions to Contractor Ownership)
Note: The above terms provide Canada with ownership of Foreground IP that is subject to copyright, other than software and its associated documentation. Contract is silent on other IP.
Mandatory Clause
K3200T Basis for Canada's Ownership of Intellectual Property  

Annex 4.3: Taxes and Duties

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  1. Goods and Services Tax or Harmonized Sales Tax

    Suppliers must show the Goods and Services Tax/Harmonized Sales Tax (GST/HST) separately in the bid/offer/arrangement. They must also indicate whether their items are fully taxable, zero-rated, or exempt (see Annex 4.4: Supplies Exempt from GST/HST), and must show into which category each item falls.

  2. Customs Duties
    1. Solicitations must contain all customs duties information necessary to permit suppliers to submit responsive bids/offers/arrangements.
    2. Canadian-based suppliers must include all applicable customs duties in their prices, unless otherwise specified. In resulting contracts, all applicable customs duties and taxes must be included in the price and the total estimated price.
    3. Foreign-based suppliers must not include Canadian customs duties, except when it is specifically requested that the prices include the customs duties and taxes in Canadian dollars. In resulting contracts, customs duties must not be included in the price, but will be paid by the client department, upon the importation of goods. However, a foreign-based supplier who subcontracts in Canada for the manufacture and delivery of goods in Canada will include all customs duties applicable to the subcontract.
    4. For the purpose of the solicitation, suppliers with an address in Canada are considered Canadian-based suppliers and suppliers with an address outside of Canada are considered foreign-based suppliers.
  3. Customs Duties and Excise Taxes
    1. Suppliers located in Canada must include all applicable excise taxes in the solicitations. In resulting contracts, the applicable taxes must be included in the total estimated price. Suppliers located outside Canada must not include excise taxes. In resulting contracts, the applicable taxes must not be included in the total estimated price.
    2. When foreign-based suppliers are requested to submit firm prices in their bids/offers, in Canadian dollars, Canadian customs duties and excise taxes and GST/HST must be excluded from those prices. See Standard Acquisition Clauses and Conditions (SACC) Manual clause A0222T for bid solicitations and M0222T for standing offers.
    3. In resulting contracts, customs duties must not be included in the price, but will be paid, upon the importation of goods, by the client department. However, a foreign-based supplier who subcontracts in Canada for manufacture and delivery of goods in Canada will include all acceptable customs duties, applicable to the subcontract.
    4. Occasionally, it may be appropriate to request foreign-based suppliers to respond on prices, in Canadian dollars, inclusive of these customs duties and excise taxes. (See SACC Manual clause A0220T.) However, this may have an effect on the number of suppliers, many of who are accustomed to bidding FOB plant, and who are not prepared to take the time to gather the required information and make the necessary calculations. Note: it is the importer of record who is responsible for paying these customs duties and excise taxes, so a foreign-based supplier has no direct interest in the calculations unless the requirement is to be FOB destination.
    5. For contracts awarded on behalf of Department of National Defence (DND), the GST/HST must be reimbursed for non-GST/HST registrants. DND will reimburse prime contractors only the actual GST/HST that is paid to the Canada Revenue Agency.
  4. Goods and Services Tax/Harmonized Sales Tax

    This section provides information on GST/HST and the application of GST/HST to the federal government.

    1. GST/HST, as applicable, is payable on the invoiced amount, before any discount for prompt payment or penalty for late payment.
    2. GST/HST is payable when the progress payment, milestone payment or advance payment becomes due, or the client department pays it.
    3. Canada Revenue Agency (CRA) considers advance payments to be progress payments.
    4. GST/HST is normally paid on the total amount claimed before any holdback is deducted. No GST/HST is paid when the holdback is released.
    5. The exception is a holdback under legislation or under a contract for the construction, renovation or repair of a marine vessel or real property. GST/HST calculated on the holdback amount becomes payable on the earlier part of the day on which the holdback is paid or the day on which the holdback period expires.
    6. The GST/HST applies to supplies made in Canada of real property, tangible personal property (that is, goods), intangible personal property (such as intellectual property) and services. "Supply" means provision of property or service in any manner.
    7. The GST/HST on a supply made in Canada is payable by the recipient of the supply to a supplier who is registered for GST/HST. The supplier is responsible to remit the tax to CRA.
    8. A supply is declared to be made in Canada if:
      1. for a supply of goods, the goods are made available or delivered in Canada to the recipient of the supply. This means the goods are in Canada when they are sold and transferred from the supplier to the purchaser, or they are imported into Canada for the delivery to the purchaser;
      2. for a supply of intangible personal property, the property may be used in Canada or relate to real property situated in Canada, to tangible personal property situated in Canada or to a service to be performed in Canada;
      3. for a supply of real property or a service in respect of real property when the property is situated in Canada;
      4. for a supply of other services, the service is performed in whole, or in part, in Canada;
      5. for a supply of a telecommunications service consisting of making available telecommunication facilities when the facilities, or any part thereof, are located in Canada.
    9. The GST/HST applies also to goods imported into Canada. The GST/HST on the importation of goods is payable on the duty paid value of the goods (determined under the Customs Act) and is payable by the importer of the goods directly to Canada Border Services Agency. It is payable at the time of importation or when the goods are taken out of bond for use.
    10. Goods imported into Canada for supply are subject to GST at the time of importation and are subject to GST/HST when supplied in Canada by a supplier who is registered for GST/HST.
    11. The GST/HST also applies to supplies of services and intangible personal properties made outside Canada (generally by a non-resident supplier) to a person who is resident in Canada, if the person acquires the supply for use in Canada, but not exclusively in the course of commercial activities. These supplies are referred to as "imported taxable supplies". The GST/HST on imported taxable supplies is determined by the Canadian recipient of the supply (self-assessment) and remitted directly to Canada Revenue Agency (CRA).
    12. Lease payments on tangible goods under a lease entered into before August 8, 1989, are not subject to GST. If a lease for tangible goods is amended to alter its term, or the property is leased on or after August 8, 1989, then the payments become subject to GST/HST, as applicable.
    13. The trade-in of a used good on the purchase of a new good constitutes two separate transactions for the purposes of the GST/HST. The GST/HST applies to the full sale price of the new good, regardless of the allowance for the trade-in. Each party must collect GST/HST on the fair market value of the supply to the other, and both pay the GST/HST. This treatment applies where the person trading in the used goods on the purchase of new goods is a GST/HST registrant.
    14. If the person trading in the used goods is not required to charge tax on the supply (for example, non-registrant supplier, or goods not used in commercial activities), then the supplier of the new goods deducts the value of the old goods accepted as a trade-in from the value of the new goods when determining the GST/HST on the supply.
    15. The GST/HST does not apply to: exempt supplies; zero-rated supplies; or certain imports. These areas are covered in Annex 4.4: Supplies Exempt from GST/HST. Also, it generally does not apply to Indian, Indian Bands and Band-empowered Entities; this is also covered in Annex 4.4: Supplies Exempt from GST/HST.
    16. The GST/HST does not apply to transactions between parts of the same organization. As the federal government has registered its departments (those entities listed in Schedule I, Schedule I.I and Schedule II of the Financial Administration Act), as a single person, the GST/HST does not apply to transactions between departments. However, the GST/HST will apply to taxable transactions between departments and Crown corporations.
    17. Government-supplied Materiel (GSM) is not subject to additional GST/HST costs, as the owner/end-user has already paid it. Contractors should not charge GST/HST against the value of GSM used in the performance of a contract. Foreign-based contractors must identify the GST separately on Canada Border Services Agency's Form CI1 - Canada Customs Invoice (PDF 429 KB) - (Help on File Formats), describing them as Canadian goods returned and providing a value. Should GSM be provided from one foreign-based contractor directly to another, this value should be included in the value of the item for customs clearance purposes, as this GSM would not have had GST paid yet.
    18. The federal government does not pay GST/HST on imported taxable supplies, as the federal government is not required to self-assess tax. Imported taxable supplies include services performed wholly outside Canada for use in Canada, or services performed in Canada and supplied by a non-resident supplier who is not registered for GST/HST purposes. They also include intangible personal property supplied by a non-resident supplier who is not registered for GST/HST purposes.
    19. The federal government is required to pay tax on importation of goods if it is the importer of record, unless the goods qualify as non-taxable importations.
  5. Taxes and Duties Associated with Payments

    This section provides information on the taxes and duties associated with progress and final payments made to the contractor.

    1. After-imposed and after-relieved taxes
      1. A contract price will be increased by the actual amount of any after-imposed taxes, provided the contractor forwards to the contracting officer a certified statement, showing that the increase in cost is directly attributable to the after-imposed taxes, and that no amount for such newly imposed taxes was included in the contract price.
      2. A contract price will be decreased by the actual amount of any after-relieved taxes.
    2. After-imposed and after-relieved duties – firm price contract
      1. Provision for price adjustments, upward or downward, may be made in firm price contracts, in the event that changes in duties, which affect the cost of the work to the contractor, are made after the contract date.
      2. The contract price must be increased by the actual amount of any after-imposed duties, provided the contractor forwards to the contracting officer a certified statement, showing that the increase in cost is directly attributed to the after-imposed duties, and that no amount for such newly imposed duties was included in the contract price.
      3. The contract price must be decreased by the actual amount of any after-relieved duties.
    3. Excise taxes: the general conditions provide for contract price, in the event of changes in duties, excise taxes, charges and impositions after the contract date.
  6. Taxes and Duties Associated with Customs and Imports/Exports

    This section provides information relevant to customs, imports/exports, drawbacks and taxes and duties.

    1. Excise taxes, duties and GST/HST
      1. Excise taxes are payable on certain goods (see Annex 4.5: Goods Subject to Excise Tax.)
        1. When goods are manufactured or produced and sold in Canada, the excise tax is payable by the manufacturer or producer, at the time of delivery of such goods.
        2. When goods are imported, the excise tax is payable by the importer or transferee, who takes the goods out of bond, at the time of importation or when taken out of bond for consumption.
      2. Federal government contract enquiries regarding excise taxes and duties; including those relating to rates, exemptions, refunds, other methods of valuation, prohibited items, and other applications of legislation concerning excise taxes and duties, should be referred to the nearest Canada Border Services Agency (CBSA) office.
      3. Federal government contract enquiries related to the GST/HST, Defence Supplies Remission of Customs Duty and Federal/Provincial Reciprocal Tax Agreements should be referred to the Acquisition Policy and Process Directorate.
    2. Customs duty
      1. Imported goods are charged with duties from the time of importation. The rates of duties on imported goods will be the rates applicable to the goods at the time when the documentation is presented to obtain release of the goods from CBSA.
      2. The primary basis for determining the value of duty on imported goods is the Transaction Value System of Valuation, which is generally the invoice price (see Memorandum D13-3-1 from CBSA). For assistance, contact the CBSA Business Enquiry and Registration.
      3. If this method cannot be used, contact the nearest CBSA office.
    3. Drawbacks and duties relief
      1. Drawbacks and duties relief programs are intended to help exporters become and remain more competitive in foreign markets, by granting them relief from the duties and taxes paid in respect of:
        1. goods imported and then exported before any use is made of those goods;
        2. goods imported and used in the manufacture in Canada of goods that are exported; or
        3. materials imported and consumed or expended in the manufacture in Canada of exported goods.
      2. The Duty Deferral Program grants relief from duties on imported goods that are exported either in the same condition or after having been manufactured. Those goods qualify for relief from the customs duties, anti-dumping and countervailing duties, and excise duties and taxes other than the GST. Relief is granted at the time the goods are imported. For more information, see Memorandum D7-4-1.
      3. The Duty Drawback Program has similar characteristics and advantages as the Duties Relief Program, with the exception that duties and taxes must be paid at the time of importation and are refunded after the goods have been exported. For more information, see Memorandum D7-4-2.
  7. Remission of Customs Duty for Defence Supplies
    1. Remission of customs duty payable (for more information, see Memorandum D13-3-1) is granted under the Tariff Item No. 9982.00.00 when:
      1. the total contract value of the defence supplies is $250,000 or more. This reflects the import value of the goods plus the duty that would be applicable in the absence of the customs tariff;
      2. the goods are certified by Public Works and Government Services Canada ( PWGSC) to be defence supplies;
      3. for more information, see Memorandum D8-9-3.
    2. Since duty rates vary depending on the type of product, country of origin and mix of imported components, it may be difficult to decide whether the defence supply is subject to the tariff. Where there is uncertainty as to whether the total estimated expenditure would exceed the $250,000 threshold, contracting officers should request prices with customs duty identified as a separate item.
    3. When the party responsible for importation is other than the Department of National Defence (DND), a copy of the following certification must be attached to the contract.

      CERTIFICATE FOR DEFENCE SUPPLIES

      I certify that the items purchased under contract number____________ are "defence supplies", as defined in the Defence Production Act, pursuant to Tariff Item No. 9982.00.00.

      Approved by Authorized Officer:

      Signature ___________________

      Date _______________________

      Title _______________________

      The only proof acceptable to the Canada Border Services Agency (CBSA) from the contractor that the import is a defence supply is a copy of the certification.

    4. A copy of the certification may be requested by the DND Director Supply Chain Operations / Customs, or by the investigating Regional Compliance Verification Division of the CBSA. These parties investigate claims for remission and may contact the contracting officer to verify the claim.
    5. When DND is the party responsible for importation, a copy of the contract for defence supplies is accepted by the CBSA, as sufficient proof for remission. A copy of the certification for defence supplies does NOT need to be attached to the awarded contract.
    6. When the total estimated value of a standing offer exceeds $250,000, each call-up is subject to the Tariff Item No. 9982.00.00.
  8. Duty and the GST/HST on Tools, Equipment or Spare Parts in Contracts for Services by Non-residents
    1. Customs duty and the GST/HST, as applicable, may be imposed on any tools, equipment or spare parts that are brought into Canada by non-resident personnel performing certain services under a PWGSC contract. When assessed, such duties and the GST/HST are payable to the CBSA.
    2. The following interpretation of applicable regulations is intended as background information only. If necessary, specific questions relating to actual cases should be directed to the nearest regional CBSA Office. The application or relief of customs duty and the GST/HST is stated in each item below in italics:
      1. a non-resident worker entering Canada with personal tools or other equipment to erect, install or repair machinery or other plant equipment, the said worker being sent here by the foreign manufacturer of the machinery or plant equipment, may import the tools or other equipment under authority of the Temporary Importation (Tariff Item no. 9993.00.00) Regulations. For more information, see CBSA Memorandum D8-1-1;

        (Full relief of customs duty. The GST/HST is payable on 1/60 thof the value of the tools and/or equipment for each month the goods remain in Canada.)

      2. a non-resident worker entering Canada with tools or other equipment supplied by the manufacturer of the machine to be erected, installed or repaired may bring the tools or other equipment into Canada on a 1/60 th basis under the Temporary Importation (Tariff Item No. 9993.00.00) Regulations. For more information, see Memorandum D8-1-1;
      3. a non-resident worker entering Canada with tools or other equipment to repair, erect or install machinery or other equipment, when the contract is with a foreign-based supplier, which is not the manufacturer of the machinery or other equipment;

        (Full customs duty will apply. The GST/HST is also payable on full value where there is no relief available under any other provision ([for example, Canadian Goods Returned])

      4. duty and the GST/HST are levied on all spare parts at the time of entry. Following the export from Canada of the balance of the unused spare parts under CBSA supervision, a drawback claim may be filed for return of the customs duty applicable to the unused spare parts under authority of the Goods Imported and Exported Drawback Regulations.

        (The GST is not refundable.)

    3. Contracts for the services in Canada of a non-resident must contain a provision, which instructs the non-resident contractor, its employees or a subcontractor and its employees, to comply with CBSA's requirements and to pay customs duties, excess taxes and the GST/HST, as applicable.
    4. If it is anticipated that a non-resident may be required to import tools, equipment or spare parts to perform services in Canada, Standard Acquisition Clauses and Conditions(SACC) Manual clause C2604C must be used.
    5. When customs duties, excise taxes and GST/HST associated with payment or customs and imports/exports apply, see Chapter 8 - Contract Management.
  9. Duty and GST/HST on the Repair and Overhaul of Canadian Goods Abroad
    1. The treatment of Canadian goods returning to Canada, having been repaired or overhauled abroad, varies depending on the country where the repair or overhaul is done. Where the country is a free trade partner country, the goods return to Canada under the provisions of Tariff Item No. 9992.00.00; or in the case of vessels, Tariff Item No. 9971.00.00. The policy and procedures relating to the administration of these tariff items are outlined in CBSA Memorandum D8-2-26 and Memorandum D8-2-25, respectively. When the country is not a free trade partner country, the goods may be entitled to the provisions of the Canadian Goods Abroad Program contained in sections 101-105 of the Customs Tariff. Under certain conditions, subsection 101(1) of the Customs Tariff provides full customs duties and GST/HST relief on the Canadian export value of goods when the goods are returned to Canada. The policy and procedures relating to the administration of this program are outlined in CBSA Memorandum D8-2-1.
    2. Goods imported under Tariff Item Nos. 9992.00.00 and 9971.00.00 are customs duty free. Under the Canadian Goods Abroad Program, customs duties are owed on the value of the repair or overhaul. Whichever provision is used to account for the customs duties, GST is owed on the value of the repair or overhaul, unless it is done under a warranty arrangement.
    3. The goods qualify for Tariff Item Nos. 9992.00.00 and 9971.00.00 if the following conditions are met:
      1. the required documents are submitted according to the Tariff Item Nos. 9971.00.00 and 9992.00.00 Accounting Regulations (see CBSA Memorandum D8-2-25 and Memorandum D8-2-26), including an invoice and proof of export;
      2. the invoice or written statement from the foreign processor should include the value of the repair or alteration;
      3. proof of export can be a customs or transportation document, an exporter declaration, or other documents, set out in the Regulations, which describe the goods sufficiently, to establish that the re-imported goods are the same goods that were exported. Records of the make, model, and serial numbers help identify the goods.
    4. The goods qualify under the Canadian Goods Abroad Program where:
      1. the goods are documented in a manner acceptable to the CBSA;
      2. the CBSA is satisfied that the repair or overhaul could not have been done in Canada; and
      3. the goods are returned to Canada within 12 months from the day on which they are exported.
    5. Contracting officers should verify:
      1. that no claim for drawback has been paid in respect of the goods temporarily exported; and
      2. in the case of the Canadian Goods Abroad Program, that repair facilities are not available within a reasonable distance in Canada.
    6. The CBSA imposes different requirements, depending upon the type of work carried out abroad, and may accept a verbal declaration from the consignee, or PWGSC, that proper facilities are not available to do the repairs or overhaul within a reasonable distance in Canada.
    7. In addition, Canadian and U.S. government agencies establish lists of approved repair suppliers for certain articles for use at defence establishments that are manufactured to rigid specifications. In such cases, if no Canadian-based supplier is approved to perform the repairs, this will be accepted as satisfactory evidence that the repairs could not be made in Canada.
    8. When calculating duty and the GST/HST on the service performed abroad, the pricing factors to be taken into consideration are: the cost of the material used; the cost of labour; factory overhead; and a normal profit mark-up. The value for duty remains the same, even where the repair is done under a warranty arrangement, and there is no charge made for the repair or overhaul.
    9. Where it is not possible to repair the goods, and they are replaced under a warranty arrangement, the replacement goods are subject to full customs duties, but under Section 5 of Schedule VII to the Excise Tax Act are non-taxable for GST purposes.
    10. There is no GST/HST payable on goods imported after having been exported for warranty repair work. This is provided for under paragraph 3.(j) of the Non-Taxable Imported Goods (GST/HST) Regulations.
  10. Duty and GST/HST on Canadian Goods Returned
    1. The following paragraphs discuss the application of duty and GST/HST for goods that are re-imported into Canada after having been exported for reasons other than for repairs, equipment additions, or work done abroad.
      1. Customs duty does not apply to Canadian goods returned from abroad without having been advanced in value or improved in condition by any process of manufacture or other means, or combined with any other article abroad. For more information, see CBSA Memorandum D10-14-11.

        For more information on the application of the GST/HST, see CBSA Customs Notice CN-118.

      2. Articles to be tested only and not adjusted, altered or enhanced in value in any way in conjunction with, or as a result of, a test regardless of whether a charge is made for the test.
      3. Customs duty and the GST/HST do not apply to Canadian government-owned munitions and supplies of war, on their return from abroad to a department or agency of the government. This is not intended for the remission of the duty and the GST/HST on goods that have been purchased by government departments and agencies, specifically for import into Canada. It applies only to munitions and military stores being shipped to departments or agencies of the government from a Canadian Armed Forces Establishment abroad. For more information, consult section 27 of the CBSA Memorandum D10-14-11.
  11. Reciprocal Taxation Agreements and Comprehensive Integrated Tax Coordination Agreements
    1. The federal government has agreed to pay, directly or indirectly, most provincial and territorial taxes on the goods and/or services it purchases, as set out in the general conditions of the Standard Acquisition Clauses and Conditions Manual. The federal government does not pay the general Provincial Sales Tax (PST). In addition, when the department or agency is a supplier, it must collect and remit PST to the province.
    2. The Treasury Board (TB) Policy on the Collection and Remittance of Provincial Sales Taxes includes all the information that may be required by contracting officers to comply with the Application of Reciprocal Taxation Agreements (RTAs) and Comprehensive Integrated Tax Coordination Agreements (CITCA). Appendix C - Details of the Reciprocal Taxation Agreements and CITCA by Province and Territory, of the same policy, also provides details of the RTA and CITCA by province and territory. Contracting officers should also consult the TB Policy on the Application of the Goods and Services Tax and Harmonized Sales Tax in the Departments and Agencies of the Government of Canada.

      Provinces and territories are grouped as follows:

      1. the provinces that have not entered into a RTA are considered "non-partaking" and at the present time, the only non-partaking provinces are Alberta and New Brunswick;
      2. a non-participating province is a province that did not enter into a CITCA and at the present time, the non-participating provinces include all provinces and territories, except New Brunswick, Nova Scotia and Newfoundland and Labrador (the participating provinces);
      3. the PST is paid in non-participating provinces by Crown corporations, except in Alberta, Northwest Territories, Yukon and Nunavut, where there is no PST;
      4. federal departments pay the Harmonized Sales Tax (HST), ancillary taxes and reimburse tax on third party purchases in the participating provinces;
      5. when federal departments and Crown corporations are suppliers, they must charge, collect and remit HST when the goods or services are delivered or rendered in a participating province.
    3. Crown corporations are not covered by the RTA s, and are required to pay PST on their purchases, for delivery to or consumption in the partaking provinces, on the same basis as companies in the private sector. Crown corporations may not use the license numbers or certificates in the RTAs. HST is paid in the participating provinces.

      Some Crown corporations hold their own special PST licences, which enable them to purchase goods and services, for their own use, free of PST at the time of purchase.

    4. Persons selling to federal departments may not quote the federal government's license numbers to their own suppliers.
    5. Contracting officers should take special care when dealing with the following:
      1. ancillary taxes: The federal government has agreed to pay certain ancillary provincial taxes. These taxes apply to specific goods and services, and their applicability varies from province to province. In addition, departments will reimburse third parties for PST paid for goods or services purchased on behalf of a department or during work-related travel.
      2. fuel taxes: Liquid fuels may be taxed in certain provinces under the provincial fuel tax or under provincial retail sales tax, depending on the end use. Under certain circumstances, liquid fuel may be exempt from provincial tax;
      3. construction contracts: In all contracts for the construction or repair of a building or structure, the contractor is declared to be the consumer of any materials used. The contractor usually is not registered as a supplier, and must pay tax on purchases of materials. PST is an element of cost to the contractor, and as such is included in the price to PWGSC. No further PST is imposed on the transaction between the contractor and PWGSC.
    6. Construction contracts should not contain a mix of "real property" and "tangible personal property". If unavoidable, the use of the license numbers applies only to the acquisition of the "tangible personal property" component of the requirement.
    7. In contracts for the supply and installation of equipment that remains free standing, and is affixed to a building or structure for purposes other than providing a direct service to such building or structure, the PST is not to be included in the contract price, and the license number or certificate should be quoted in the contract. In New Brunswick, such contracts are treated as real property contracts and, therefore, are subject to the procedure, outlined in the preceding paragraph.
  12. United States Sales Tax, Use Tax and Personal Property Tax
    1. When there is a possibility that United States-based suppliers may be submitting responses, contracting officers must specify in the solicitation that prices do not include any United States Sales Tax or Use Tax, from which exports are exempted. Any resulting contract awarded to a foreign-based contractor must include SACC Manual clause C2000C.
    2. Items exported from the United States of America (U.S.A.) by the purchaser, are entitled to exemption from state Sales and Use Taxes. Care should be taken to ensure that such procurements are not taxed in error.
    3. Particular care is required in dealing with the State of California, which has Sales, Use and Personal Property taxes that may affect PWGSC procurement.
    4. In these procedures, the State of California is highlighted because of its stringent tax requirements. Similar precautions should be taken to deal with requirements in the other states.
    5. California Sales and Use taxes (Cal Tax) are collected by the seller from the purchaser and, if applicable, will require the contract to provide for payment of the tax. The Use Tax is not payable on items for which Sales Tax is payable.
    6. Items exported outside the State by the purchaser are exempt from Cal Tax but, as California law is very precise about what constitutes an export, contracting officers should ensure that procurement in California is considered an export by the State.
    7. For example, goods may not be subject to Cal Tax if:
      1. they are delivered California FCA Free Carrier (...named place) with title passing upon such delivery, and are shipped to a point outside California; or
      2. title passes at time of delivery, and the goods are delivered by the seller to a conveyance furnished by the purchaser (for example, where they are picked up by the Canadian Armed Forces), and are shipped to a point outside the U.S.A.
    8. California Personal Property tax is assessed against work-in-process, finished work and baled items, title to which is vested in either PWGSC or the contractor, which are located in California at 12:00 o'clock noon on the first Monday in March on an annual basis. It is immaterial whether such items relate to a fixed price or cost reimbursable type of contract.
    9. Contracting officers should confirm the manner in which California contractors charge the Personal Property Tax on PWGSC contracts. If the tax is charged as a direct charge to the PWGSC contract, there should not also be an indirect charge, and overhead should not be applied to the direct charge.
    10. Another area for particular attention is the use of progress payments or advance payments. California taxes may be payable when ownership is transferred to the purchaser - and this transfer of ownership may be declared by the State to take place when the progress payment or advance payment is made. Contracting officers should ensure that ownership is not transferred until the goods are delivered.
  13. Purchases from the State of California
    1. The State of California has a sales and use tax, which a supplier must apply to goods when title to the goods is transferred to the purchaser in the State and the goods will be used in the State. However, imports and exports are not taxed. The use tax is the same as the sales tax but the use tax is the one that applies when the goods are purchased by an out-of-state entity for use in the state.
    2. To be exempt as an export, the good sold must be intended for a destination in a foreign country and actually delivered to the foreign country before making any use of the property. This means that the sales and use tax will not apply when the good pursuant to the contract is shipped to Canada. Therefore, if Canada desires to have title to the goods transferred in California, the contract must state that the goods are to be shipped to Canada and are for use in Canada only. Canada can still take title in California and also be responsible for loss of goods during transport.
    3. If the contract provides for progress or advance payments or if the goods are to be left in California for a period of time, Canada's normal contract provisions would cause the sales and use tax to be payable since ownership would be transferred to Canada before delivery of the goods. Therefore, in order for Canada to avoid paying this sales tax, it must ensure that ownership will not be transferred until delivery of the goods.
    4. To avoid paying the use tax inappropriately, the following SACC Manual clauses should be included in the contract: D4003C, C2002C and K9010C.

Annex 4.4: Supplies Exempt from Goods and Services Tax/Harmonized Sales Tax

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  1. Overview

    An exempt supply is not taxable. Thus, a supplier does not collect the Goods and Services Tax or the Harmonized Sales Tax (GST/HST) on sales of exempt supplies. The supplier is not eligible for any input tax credits on purchases related to the exempt supply. As a result, the supplier passes on to the consumer the GST/HST that the supplier has paid, as part of the overhead. This is where exempt supplies differ from zero-rated supplies. The following are exempt supplies.

    1. Health and dental services (only services performed for medical or reconstructive purposes are exempt. Services performed for cosmetic reasons are not exempt.) This includes:
      1. hospital and nursing home services;
      2. medical devices prescribed by a medical practitioner **;
      3. diagnostics, treatments and other health care services prescribed by a medical practitioner;
      4. ambulance services;
      5. nursing services;
      6. dental hygienist services.

        ** (A medical practitioner is a person who is entitled under the laws of a province to practise the profession of medicine or dentistry.)

    2. Day care services for children less than 15 years old.
    3. Personal care services in an institution for children or disabled or underprivileged persons.
    4. Legal aid services. That is, the person receiving the services pays no GST/HST. The lawyer performing the service bills the legal aid plan and charges GST/HST.
    5. Most educational services. This includes virtually everything associated with primary or secondary education, including tutoring. Most other educational services are exempt, except for those that are purely recreational in nature. University and college meal plans are also exempt.
    6. Most supplies by charities and many supplies of a public service nature by public service bodies. These are exempt except for exclusions given in Schedule V, Part VI, section 2 of the Excise Tax Act. Example: The sale by a charity of property acquired for resale and any service in connection with it are not exempt (2(e)). Most universities in Canada are charities for the purposes of the GST/HST, and therefore their supplies are generally exempt.
    7. Most financial services provided in Canada.
    8. Long-term residential rents and sales of used housing.
  2. Zero-Rated Supplies
    1. Zero-rated supplies are taxable supplies on which the tax rate is 0 percent. Persons involved in the production of zero-rated supplies can claim input tax credits on the supplies they use. This ensures that there is no GST/HST paid by the consumer. The following are zero-rated supplies.
      1. Goods and services supplied or to be supplied to a purchaser outside of Canada.
      2. Basic groceries, except soft drinks, candies and confections and snack foods.
      3. Agriculture and fisheries products, except the following:
        1. cut flowers, foliage or trees;
        2. bedding plants;
        3. sod;
        4. soil and soil additives;
        5. seeds, in quantity ordinarily sold or offered to consumers;
        6. natural fertilizer, unless sold in bulk;
        7. wood;
        8. horses;
        9. wool other than in an unprocessed state;
        10. fur and animal hide.
    2. Prescription drugs for human use, dispensed by a medical practitioner or on the prescriptions of a medical practitioner for the personal use of the recipient or a related individual.
    3. Medical devices (includes replacement parts and charges for installation and repair).
    4. International freight services. This includes freight outbound from Canada and freight into Canada from outside. Freight from one part of Canada to another is included if it is part of a continuous movement into or from Canada.
  3. Non-taxable Importations
    1. Non-taxable importations under the GST/HST refers to certain imports listed in Schedule VII of the Excise Tax Act. No tax is paid on the importation of these supplies.
    2. Certain goods, which are exempt from customs duties; for example, foreign-based conveyances coming into Canada, settler's effects, foreign diplomat's effects, tourist's baggage, foreign purchases brought back by returning residents.
    3. Prizes and trophies won abroad (other than saleable goods, such as an automobile).
    4. Tourist literature supplies by foreign governments or like organizations, which is to be distributed for free.
    5. Goods donated to charities.
    6. Warranty replacement parts.
    7. Zero-rated supplies in Section 2 of Part I or in parts Il, Ill, IV, or VIII of Schedule VI of the Excise Tax Act.
    8. Imported goods valued at under $40 when delivered by mail or courier. This parallels current customs remission orders and like them does not cover alcohol, tobacco, etc.
    9. Prescribed imports. Provision is made for granting relief from GST/HST on importation of goods by way of regulations of the Governor in Council.
  4. Indians, Indian Bands and Band-empowered Entities
    1. Canada Revenue Agency Technical Information Bulletin B-039R3, GST/HST Administrative Policy - Application of GST/HST to Indians, sets out Canada Revenue Agency's (CRA) guidelines concerning the treatment of purchases made by Indians, Indian bands and band-empowered entities (BEEs). The conditions described therein must be satisfied for tax relief to apply (e.g., an Indian must present proof of registration under the Indian Actto a vendor in order to acquire goods or services on reserve without the payment of GST/HST.
    2. Generally, GST/HST does not apply to:
      1. goods acquired on reserve by Indians, Indian bands or BEEs;
      2. goods acquired off reserve by Indians, Indian bands or BEEs, where the vendor or the vendor's agent delivers the goods to the reserve;
      3. services performed totally on reserve where they are acquired by Indians;
      4. services performed on or off reserve, such as legal or accounting services, where they are acquired by Indian bands or BEEs for band management activities or for real property on reserve (exception: Indian bands or BEEs pay GST/HST on off-reserve purchases of transportation, short-term accommodation, meals and entertainment and recover the GST/HST paid through a rebate mechanism if the purchases are for band management activities or for real property on reserve);
      5. services acquired by Indians for real property interests on a reserve.
    3. Unincorporated Indian-owned businesses receive the same tax relief on the acquisition of goods and services as that of their Indian owner. Indian-owned corporations are treated like all other businesses and are required to pay GST/HST on their purchases unless they qualify as BEEs and the conditions set out in Technical Information Bulletin B-039R3, are met.
    4. Indian bands and BEEs (e.g., band-run schools and hospitals) may also be entitled to file the applicable Public Service Body Rebate to recover a partial rebate on any remaining GST/HST paid. Funding provided by Indian bands to non-profit organizations is the same as government funding to qualify for the 50 percent GST/HST rebate to non-profit organizations.

      Note: Indian-owned businesses are required to collect and remit GST/HST on the supply of taxable goods and services to non Indians on or off a reserve.

Annex 4.5: Goods Subject to Excise Tax

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  1. Petroleum Products
    1. gasoline: gasoline, aviation, unleaded aviation, and unleaded
    2. fuel: diesel and aviation
  2. Automobiles
    1. automobiles (not including ambulances) in excess of 2,007 kg; station wagons and vans in excess of 2,268 kg
    2. air conditioners designed for use in automobiles, station wagons, vans or trucks
  3. Jewellery, Watches
    1. jewellery, real or imitation; certain goldsmiths' and silversmiths' products
    2. clocks and watches, which the duty paid value exceeds $50
  4. Others
    1. amusement devices: coins, discs or token operated games
    2. cigarettes and manufactured tobacco
    3. cigars
    4. lighters (cigarette)
    5. matches
    6. playing cards (per pack)
    7. wines

    Insurance premiums on policies placed with unlicensed insurers or through non-resident brokers or agents.

Annex 4.6: Ontario Labour Legislation

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  1. Overview
    1. On November 5, 1992, Ontario Bill 40 received royal assent. Included in the legislation were certain amendments to the Employment Standards Act (ESA) intended to protect the jobs and the level of benefits of workers who work primarily at one specific site to provide building cleaning, food and security services.
    2. Although the federal government is not bound by provincial legislation, contractors bidding on federal government work are subject to the Act and any amendments. Canada, as building owner, has an information-handling role under this legislation.
    3. Treasury Board Contracting Policy requires departmental contracting authorities to observe the intent of the Ontario labour legislation, and, in practice, to follow its provisions.
    4. On November 1995, Ontario Bill 7 received royal assent. It amended Ontario Bill 40 by repealing Part XIII.2, "Successor Employers", of the ESA and adding section 13.1 'Successor Employers'. The Ontario Regulation 138/96 sets out successor employer exemptions from compliance with Part XIV of the ESA(termination and severance provisions) and the type of information that building owners or managers may obtain from incumbent contractors and provide to prospective bidders or successor employers. The Employment Standards Act (R.S.O. 1990, c. E14) was repealed and replaced by the Employment Standards Act, 2000 ( ESA 2000) and the Ontario Regulation 138/96 was superseded by Ontario Regulation 287/01. ESA 2000 came into force on September 4, 2001, and governs employment standards entitlements arising out on or after that date.
    5. ESA 2000 Section 77(1) applies to contracts for building cleaning, food catering and security services which are provided at a specific premise directly or indirectly by or to a building owner manager in the province of Ontario, and which commenced on or after 31 October 1995. Not included are construction, maintenance, such as snow removal, lawn care, window cleaning, and the production of goods, other than goods related to the provision of food services at the premises for consumption on the premises.
  2. Expiry of Existing Contract
    1. Contracting officers must obtain from the outgoing contractor the following information as set out in Ontario Regulation287/01 for each employee providing services at the premises, preferably four months before the completion date of the existing contract:
      1. the employee's name, residential address, and telephone number;
      2. the employee's job classification or job description, wage rate, benefits, average weekly hours and initial hire date;
      3. the number of weeks worked in the preceding 26 weeks (or a longer period if services were temporarily discontinued or an employee was on pregnancy or parental leave);
      4. a statement indicating whether the employee was not primarily employed at the premises during the 13 weeks before the request date or during the most recent 13 weeks of active employment.

      In addition to the above information, the contractor must provide, within seven days following a request from the contracting officer, an up-to-date copy of the collective agreement, or a copy of the union certificate or a copy of any pending union application if it exists.

    2. The information should be obtained by filling out form PWGSC- TPSGC 5116, Information on Incumbent Employees. Copies of the form could be attached to the letter proposed for obtaining information from the outgoing contractor. When contracts contain a provision for obtaining information, a suggested letter is provided for this purpose at Exhibit A: Proposed Letter - Requesting Information from Outgoing Contractor (WITH a clause). If contracts do not contain a provision for obtaining this information, the suggested letter at Exhibit B: Proposed Letter - Requesting Information from Outgoing Contractor (NO clause)should be used.
  3. Bid Solicitation
    1. In accordance with the Ontario labour legislation, information concerning each employee of the previous supplier, with the exception of his/her name, residential address and telephone number, must be provided to potential bidders in the bid solicitation for building cleaning, food catering and security services.
    2. Contracting officers must include Standard Acquisition Clauses and Conditions (SACC) Manual clause A0075T in their bid solicitation. The clause informs the bidder of the requirements of Bill 7 and the purpose to which information required under Bill 7 should be used.
  4. Contract Award
    1. After contract award, the name, residential address and telephone number of each employee as they appear in the previous employer's records must be provided to the successful bidder.
    2. Contracting officers must include SACC Manual clause A0075C in their contract. The clause informs the contractor of its obligation to keep employee's records up to date and to provide the information, upon request, to the contracting officer, in accordance with the Ontario labour legislation.
    3. It is important to remember that there is no onus on the PWGSC to mediate between the outgoing and incoming contractors in the event that the information provided is incomplete or erroneous. If there are any difficulties, enquiries should be referred to the local Ontario Ministry of Labour offices for resolution.
    4. Performance problems require prompt follow up action and reporting, preferably in writing, to the contractor. Written reports should identify the location, date, situation or circumstances surrounding the performance difficulties. The contractor is responsible for remedying the situation or improving the performance as required.

Exhibit A 4.6.1: Proposed Letter - Requesting Information from Outgoing Contractor (with a clause)

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Dear _______________( insert name of contractor),

As you are aware, contract ___________( insert contract no .) for the provision of ____________( insert type of building-related services) will expire on ____________( insert date).

Pursuant to the clause included in the above-noted contract, you are hereby required to provide, within seven days of the date of this letter, the following information with respect to your current employees at these premises and providing the services performed under this contract:

  1. the employee's name, residential address and telephone number;
  2. the employee's job classification or job description;
  3. the wage rate actually paid to the employee;
  4. a description of the benefits, if any, provided to the employee including the cost of each benefit and the benefit period to which the cost relates;
  5. the number of hours that the employee works in a regular work day and in a regular work week; or if the employee's hours of work vary from week to week, the number of the employee's non-overtime hours for each week that the employee worked during the thirteen (13) weeks before the date of the request for information;
  6. the date on which the employer hired the employee;
  7. any period of employment attributed to the employer under section 10 of the Act;
  8. the number of weeks that the employee worked at the premises during the twenty-six (26) weeks before the request date. The 26-week period must be calculated without including any period during which the provision of services at the premises was temporarily discontinued, or during which the employee was on leave of absence under Part XIV of the Act;
  9. a statement indicating whether:
    1. the employee's work, before the request date, included the provision of services at the premises, but the employee did not perform his or her job duties primarily at those premises during the 13 weeks before the request date; or
    2. the employee's work included the provision of services at the premises, but the employee was not actively at work immediately before the request date, and did not perform his or her job duties primarily at the premises during the most recent 13 weeks of active employment.

In addition to the above information, you are required to provide an up-to-date copy of the collective agreement regarding the employees at the premises, or, if no collective agreement exists for these premises, a copy of the union certificate regarding these employees or, if no union certificate was issued, a copy of any pending union application, if it exists.

You are also required to provide to the Contracting Authority with updated information if changes occur between the date the requested information to the Contracting Authority is provided and the expiry date of the contract.

All information must be provided using form PWGSC- TPSGC 5116 or any other form as directed by the contracting authority. With the exception of (a), this information will be provided to potential bidders for a future contract for these services relating to the premises. The name, residential address and telephone number of each employee must only be given to the successful bidder.

Signed by:

________________________
Contracting Authority

Exhibit B 4.6.2: Proposed Letter - Requesting Information from Outgoing Contractor (no clause)

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Dear _______________( insert name of contractor),

As you are aware, contract ___________( insert contract no.) for the provision of ____________( insert type of building-related services) will expire on ____________( insert date).

Pursuant to the laws of the province of Ontario, you are hereby requested to provide the following information with respect to your current employees at these premises and providing the services performed under this contract:

  1. the employee's name, residential address and telephone number;
  2. the employee's job classification or job description;
  3. the wage rate actually paid to the employee;
  4. a description of the benefits, if any, provided to the employee including the cost of each benefit and the benefit period to which the cost relates;
  5. the number of hours that the employee works in a regular work day and in a regular work week, or if the employee's hours of work vary from week to week, the number of the employee's non-overtime hours for each week that the employee worked during the thirteen (13) weeks before the date of the request for information;
  6. the date on which the employer hired the employee;
  7. any period of employment attributed to the employer under section 10 of the Act;
  8. the number of weeks that the employee worked at the premises during the twenty-six (26) weeks before the request date. The 26-week period must be calculated without including any period during which the provision of services at the premises was temporarily discontinued, or during which the employee was on leave of absence under Part XIV of the Act;
  9. a statement indicating whether:
    1. the employee's work, before the request date, included the provision of services at the premises, but the employee did not perform his or her job duties primarily at those premises during the thirteen (13) weeks before the request date; or
    2. the employee's work included the provision of services at the premises, but the employee was not actively at work immediately before the request date, and did not perform his or her job duties primarily at the premises during the most recent thirteen (13) weeks of active employment.

In addition to the above information, you are required to provide an up-to-date copy of the collective agreement regarding the employees at the premises or, if no collective agreement exits for these premises, a copy of the union certificate regarding these employees or, if no union certificate was issued, a copy of any pending union application, if it exists.

With the exception of (a), this information will be provided to potential bidders for a future contract for these services relating to the premises. The name, residential address and telephone number of each employee must only be given to the successful bidder.

Your reply is requested no later than _____________( insert date).

Signed by:

________________________
Contracting Authority

Annex 4.7: Insurance Clauses

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A. Type of Risk - Lease of motor vehicles by Canada

A. Type of Risk - Lease of motor vehicles by Canada
Number Description
G6001C Vehicles - Long Term Lease
G6005C Short Term Lease

B. Clauses below must be used in all contracts as applicable

B. Clauses below must be used in all contracts as applicable
Number Description
G1001C Insurance Requirements - when there are insurance requirements in the contract
G1005C Insurance - when there are no insurance requirements in the contract
G1007T Insurance Requirements - when proof of insurance is required either at solicitation closing or upon request from the contracting officer

Risk concerning

B.1. Loss or Damage to Government Property

B.1. Loss or Damage to Government Property
Number Description
G3001C All Risk Property Insurance
G3002C Marine Hull Insurance
G3003C Aircraft Hull Insurance
G3005C Comprehensive Crime Insurance
G3010C All Risk in Transit Insurance

B.2. Third Party Liability

B.2. Third Party Liability
Number Description
G2001C Commercial General Liability Insurance

Depending on the requirement, one or more of the following clauses may also need to be included in the bid solicitation and contract.

Third Party Liability - Special Risks

Third Party Liability - Special Risks
Number Description
G2002C Errors and Omissions Liability Insurance
G2004C Medical Malpractice Liability Insurance
G2020C Automobile Liability Insurance
G2030C Aviation Liability Insurance
G2040C Environmental Impairment Liability Insurance
G2050C Bailee's Customer's Goods Insurance
G2052C Warehouseman's Legal Liability Insurance
G4001C Aircraft Charter Insurance
G5001C Ship Repairers' Liability Insurance
G5003C Marine Liability Insurance
G6002C Garage Automobile Liability Insurance

Annex 4.8: Insurance of Government-owned or Leased Vehicles

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  1. Government-owned Vehicles
    I. Government-owned Vehicles
    Country Period Policy Requirement
    CANADA Long-term Self-underwriting option
    UNITED STATES Long-term OR for trips to the United States

    (1) Third party liability and collision: commercial insurance
    (2) Damage to vehicle: self-underwriting option


  2. Other Vehicles, Including those leased by the Government
    Other Vehicles, Including those leased by the Government
    Type of Vehicle Country Term of Lease Policy Requirement
    executive CANADA long-term

    Comprehensive commercial insurance, including collision and third party liability;

    - self-underwrite the deductible -

    executive CANADA short-term

    - ditto -

    executive U.S. long-term

    - ditto -

    executive U.S. short-term

    Purchase additional commercial insurance to cover third party liability and collision for the U.S. risks;

    - self-underwrite the deductibles -

    non-executive CANADA long-term

    Self-underwrite except if provincial legislation applies

    non-executive CANADA short-term

    Comprehensive commercial insurance, including collision and third party liability;

    - self-underwrite the deductible -

    non-executive U.S. long-term

    Purchase additional commercial insurance to cover third party liability and collision for the U.S. risks;

    - self-underwrite any damage to government vehicle -

    non-executive U.S. short-term

    Utilize commercial insurance coverage (third party liability and collision for the U.S. risks) administered by Services and Specialized Acquisitions Management Sector, PWGSC;

    - self-underwrite the deductible -

Annex 4.9: Insurance of Government-owned or Leased Equipment

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  1. Government-owned equipment
    1. Operated by government employees
      Self-underwriting option must be utilized.
    2. Leased to contractor
      1. Without operator or driver: equipment floater insurance or any equivalent insurance coverage must respond to any loss or damage to government equipment.
      2. With operator or driver:
        Government owned equipment
        Control of Work Policy Requirement
        Work of operator or driver controlled by government Self-underwriting option is applicable concerning any loss or damage to government equipment while being driven or operated by government employees. However, contractor's insurance must respond to any loss or damage to the equipment while property is in the care, custody and control of the contractor.
        Work of driver controlled by contractor Contractor's insurance must respond to any loss or damage to government equipment (contractor's responsibility because the property is in the care, custody and control of the contractor).
  2. Leased from dealer
    1. Operated by government employees
      Self-underwriting option must be utilized.
    2. Operator or driver being employees of the contractor
    Leased from dealer
    Control of Their Work Policy Requirement
    By government: - employer-employee relationship Self-underwriting option must be utilized for any damage or loss to equipment while being operated or driven by government employees
    Work of driver controlled by dealer Contractor's insurance must respond to any loss or damage to government equipment

1Because use of a credit card results in immediate payment to the contractor, the normal payment period and interest on overdue accounts provisions do not apply. (See SACC Manual template RFSO, Part 6B, article 2.) (Back to Original note 1)

2Contracting officers should verify if the client(s) need such a service and include appropriate details in the standing offers. In such cases a call-up form may, or may not, be warranted. (Back to Original note 2)

3The percentages shown apply to incurred costs (incurred hours for fixed time rate contracts). (Back to Original note 3)

4The percentages shown apply to the previous year's rates. (Back to Original note 4)

5 Chapter 5 - Evaluation and Selecting the Contractor

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5.1 Overview

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  1. This chapter contains information concerning the evaluation process, which includes both the evaluation of bids and the selection of a successful bidder. The chapter further addresses negotiations with the bidder(s) before contract award.
  2. For more information on bid evaluation, consult the Basic Guide for Bid Evaluation Process (available on GCpedia - Acquisitions Program Policy Suite - Procurement ProcessThis information is only accessible to federal government employees.).
  3. It is recommended that contracting officers also familiarize themselves with the Basic Guidelines for Bid Evaluation Process - Contractor Selection MethodsThis information is only accessible to federal government employees..

5.5 Evaluation Procedures

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  1. The main purpose of bid evaluation is to determine the best responsive bid, in accordance with the evaluation and selection methodology specified in the solicitation document, among the bids submitted before the bid closing time on the date specified in the bid solicitation.
  2. The responsive bid offering the best value to Canada may or may not necessarily be the one with the lowest price. In order to accurately determine best value, a logical systematic evaluation procedure covering all aspects of the evaluation process must be followed.
  3. Before starting the actual technical and financial evaluation of bids, it is necessary to ensure that all the information required at bid closing is available and ready to be transmitted to the evaluators. It is the responsibility of Public Works and Government Services Canada (PWGSC) to determine whether the bids received are complete, as specified in the bid solicitation, before further detailed evaluation of the bids. This means, for example, verifying:
    1. that required certifications or required securities are included;
    2. that bids are properly signed;
    3. that the bidder is properly identified (particularly important in the case of joint ventures);
    4. acceptance of the terms and conditions of the bid solicitation and resulting contract, such as bid validity period;
    5. ability to meet a clearly specified critical delivery schedule;
    6. whether the bid is conditional (e.g. limitation of liability), or
    7. that all supporting documents, required by the bid solicitation to determine technical responsiveness, have been submitted.

    Note: It is recommended that the contracting officer creates and uses a check list of all requirements, which can be used throughout the evaluation of each bid.

  4. Evaluation of bids must be in accordance with the procedures stipulated in the bid solicitation. They must be checked for responsiveness to the contractual, technical and financial requirements of the bid solicitation. Fair, accurate and transparent evaluation of bids is an important aspect of procurement process. Generally, financial bids should not be sent to the technical evaluators until after completion of the technical evaluation.

5.10 Confidentiality of Bids

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  1. The contracting officer must treat all information in a secure and confidential manner to ensure the integrity of the contracting process.
  2. When referring bids to the client (or technical evaluators) during the evaluation process, the following cautionary note must be provided to the client:
    • "Bid information must be divulged only to individuals authorized to participate in this contracting process. Information must not be divulged to, or discussed with, the private industry."
  3. During the period from bid closing to contract award, (including the contract approval process), contracting officers receiving requests from suppliers for the names of bidders must not release this information. Contracting officers may, however, release information on the number of bids received. Contracting officers may also inform suppliers that they can consult the Government Electronic Tendering Service (GETS) to view the suppliers who had requested a copy of the bid documents. For more information, suppliers should contact the Access to Information and Privacy Office.
  4. After contract award, the names of bidders and other information may be released in accordance with departmental policy. (See 7.30 Procurement Reporting and Posting of Award Notices.)

5.15 Verifying Compliance with Security Requirements

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  1. Before contract award, the contracting officer must verify with the Canadian Industrial Security Directorate (CISD) that the proposed contractor meets the security requirements of the bid solicitation. This verification can be done by contacting the CISD call centre and requesting a security status sheet for the successful bidder. The contracting officer shall not rely on the security indicator in the Vendor Information Management (VIM) system as it may not always be up to date. The request to CISD for a security status sheet should include the proposed contract number, the full name and address of the proposed contractor, if applicable, the address of location of the work performance, as well as the required security levels stipulated in the proposed contract. If the supplier has the appropriate security clearance, the contracting officer must sign the Security Requirements Check List (SRCL) at block 16 and include the fully signed SRCL as an annex in the resulting contract. In the case of call-ups against a standing offer or contracts against a supply arrangement, it is the responsibility of the user to verify that the contractor meets the security requirements.

    IMPORTANT: When security clearances such as IT, Production and/or COMSEC are required, seek assurance of these specific security types from CISD as they are contract specific and not blanket clearances held by the organizations.

  2. During the period of the contract, the client must ensure that all contractor or subcontractor personnel who will have access to any classified or protected information, assets or sensitive work sites, or to government systems are identified as working under the contract and that their security status has been verified with CISD. The contracting officer will assist in this process as required.
  3. When security clearances are mandatory, they must be obtained before the commencement of any work. However, it is recognized that there may be circumstances under which, for reasons of urgency, the contractor, or the contractor’s employee(s) must begin the work before the completion of the security process. In these cases, consult with CISD for options. However, in a competitive solicitation, the method of selection must be followed; therefore, any delay must be in accordance with the solicitation procedures.
  4. If, at any time during the period of the contract, the contracting officer becomes aware that a subcontractor, whose security status has not been verified with CISD, will require access to any classified or protected information, assets or sensitive work sites, the contracting officer must consult with CISD to ensure the necessary subcontract SRCLs are submitted and as well verify that the subcontractor meets the security requirements.

5.16 Integrity Compliance

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  1. Before contract award, issuance of a standing offer (SO) or supply arrangement (SA), or publishing of a pre-qualified supplier list, contracting officers must first verify with the Departmental Oversight Branch (DOB), Special Investigations Directorate if there are certain acts or convictions associated with the supplier or the supplier’s affiliates. Acts or convictions are defined as those indicated in section 01 of Standard Instructions 2003, 2004, 2006, 2007 or 2008. Certain acts or convictions will render the bidder or proposed contractor ineligible to be awarded a contract.
  2. The Special Investigations Directorate (SID) verification process is not required for call-ups against an SO nor is it required for contracts pursuant to an SA.
  3. Verification Process
    1. Before awarding a contract, issuing an SO or an SA, or publishing a pre-qualified supplier list, contracting officers must submit the complete legal name, address and Procurement Business Number (PBN) of the successful bidder/offeror/supplier, along with the solicitation number (or proposed contract number) to the Special Investigations Directorate. Contracting officers must also submit the list of names that was provided by the bidder/offeror/supplier.
      Format for email:
      • To: Surveillancedelintegrite.IntegrityCheck@tpsgc-pwgsc.gc.ca
      • Subject: supplier name
      • Content:
        • Name of the Contracting Officer:
        • Branch:
        • Email address of the Contracting Officer:
        • Complete Legal Name of Supplier
        • Supplier Corporate Address:
        • Supplier Address (if different from corporate address above):
        • Supplier PBN:
        • Solicitation Number: OR Proposed Contract Number:
        • Pre-Qualification List: _Yes _No
        • Transaction Value ($):
        • List of Directors: Insert the list of names (including middle names, listed directly in the body of your e-mail message or as an attachment)
        • Signature Block of the Contracting Officer

        Note: All information should be submitted electronically to SID, in text format. Scanned information or PDF format will not be acceptable

    2. A confirmation e-mail that a review was conducted will be provided to the contracting officer by SID within 2 hours.
    3. Contracting officers are not required to verify whether or not suppliers should have provided a list of directors, but are simply to submit to SID the information as received from the supplier. Where bidders have not provided a list of directors with their bid, contracting officers must submit the complete legal name, address and PBN of the successful bidder/offeror/supplier, along with the solicitation number (or proposed contract number) to SID.
    4. DOB will assess if a bidder should or should not have provided a list of directors.
  4. Verification Responses

    Four responses are possible, as described below. The contracting officer is to keep a copy of the confirmation e-mail from SID in the procurement file. This process and the estimated timelines will be delayed if additional information is required, such as consent forms to a criminal record verification or further proof of identity such as fingerprints.

    1. "No Match"

      This response confirms that the contracting officer may award the contract, issue the standing offer/supply arrangement or publish the list of pre-qualified suppliers.

    2. "Alert"

      This response indicates that there is a confirmed conviction with the supplier or the supplier’s affiliates, so the supplier is not eligible to be awarded/issued a contract/standing offer/supply arrangement or to be included in a list of pre-qualified suppliers. In exceptional circumstances, contracting officers may be required to follow the instructions in section 3.51 Integrity Overview.

    3. "Additional Information Required"

      In such instances, at the request and at the discretion of SID, the contracting officer may require the bidder or proposed contractor to consent to a criminal record verification, and to submit further proof of identity such as fingerprints. If the bidder or proposed contractor refuses, its bid will be declared non-responsive.

      Note: In circumstances where fingerprints are required, SID will prepare a letter, signed by Assistant Deputy Minister, Department Oversight Branch (ADM/DOB), and send it to the President of the supplier, providing them with instructions to obtain the fingerprints. Based on the results of the criminal record check, a "No match" or an "Alert" email will be sent to the contracting officer.

    4. "Caution"

      This response advises the contracting officer that Director General or Regional Director General approval is required. In some cases, Assistant Deputy Minister, Acquisitions Branch (ADM/AB) approval will be required.

  5. Verification Process for Amendments

    The verification process as outlined above must also be followed for contract amendments, where the file does not already contain a record of a previous verification. Where a previous verification has been done, the contracting officer must verify in the Vendor Information Management (VIM) system that the supplier remains free of any relevant convictions or other impediments, prior to amending the contract.

  6. VIM check for Supply Arrangements, Call-ups, and Administrative Amendments
    1. For contracts awarded under the Acquisitions Program (schedule 3 authority) under Supply Arrangements, call-ups against Standing offers, and administrative contract amendments, contracting officers must verify in VIM that the supplier remains free of convictions or other impediments, prior to awarding or amending the contract. Contracting officers are not required to complete an SID verification process for such transactions.
    2. If a new conviction is identified, SID will notify all contracting officers who have requested verifications for that supplier in the past. SID will also inform the Acquisition Program Integrity Secretariat (APIS) in order to update the status of the supplier in VIM.
  7. Senior Management Approval

    Senior management approval is required before completing a transaction where the supplier has a relevant conviction or is suspected of potential wrongdoing. See Annex 6.4.1. Approval Authorities and Additional Signing Authorities in Support of Clients' Programs Only – Other than for Canadian Commercial Corporation for details.

  8. Awareness and Prevention

    Before seeking approval for competitive requirements, the successful bid or offer must be reviewed by a contracting officer who has attended the training on Bid Rigging Awareness and Prevention. This can be the same contracting officer assigned to the procurement file.

  9. For further details on Integrity, see sections 3.51 Integrity Overview, 4.21 Integrity Provisions, 8.70.2 Compliance with the Integrity Provisions and 8.90 Assignment of Contracts.

5.20 Use of Subject Matter Experts/Specialists

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  1. Contracting officers should take advantage of the knowledge of specialists or subject matter experts. They are available to provide guidance in their areas of expertise, whenever it would be helpful and/or appropriate in making a recommendation or confirming a decision.
  2. Subject matter experts/specialists include: legal services, Access to Information and Privacy officers, contract quality control officers, cost analysts and risk management advisors, auditors, policy authorities, green procurement specialists, ethics officers, Human Resources authorities, commodity team leaders, client engagement officers, experienced contracting officers, industry/association representatives, etc.

5.25 Use of Fairness Monitors

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  1. When a fairness monitor has been engaged to support a procurement process, he/she will provide written reports to the Departmental Oversight Branch (DOB), in accordance with the statement of work included in the fairness monitor's contract, attesting to the fairness of the procurement process.
  2. If a fairness monitor observes a situation that constitutes, or has the potential to create, fairness deficiencies, the fairness monitor will inform the project team of its concerns and seek a resolution. If a resolution cannot be reached, the fairness monitor will immediately advise DOB.
  3. The fairness monitor will submit a final report to DOB, which includes among other things, the fairness monitor's overall attestation of assurance on the fairness of the monitored activity and any unresolved fairness deficiencies observed. This report will be made public after tabling with senior management.

5.30 Clarifications

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  1. To be considered for contract award, a bid must, at closing date meet all mandatory requirements stipulated in the bid solicitation. Bidders are responsible to meet the criteria stipulated in the bid solicitation as well as request clarification before submitting a bid if they are not sure they understand a requirement. The instructions to bidders clearly provide that PWGSC may request clarification from bidders, but it is under no obligation to do so.
  2. If PWGSC decides to request clarifications or additional supporting data from the bidders, the contracting officer must ensure that this process does not give any bidder an advantage over the others. In no event can this clarification alter the price quoted or any substantive element of a bid.
  3. Only clarifications which do not change the substance or price of a bid may be requested and accepted. The request for clarifications and response must be in writing. Any response, which leads to a substantial change in the bid is considered bid repair and must not be considered in the bid evaluation. Pursuant to the Canadian International Trade Tribunal (CITT), a clarification is acceptable only if it is an explanation of some existing aspect of the bid that does not amount to a substantive revision or modification of the bid. Bidders cannot be allowed to repair their bid through a clarification process.
  4. In conducting its evaluation of the bids, Canada may, but has no obligation to correct any error in the extended pricing of bids by using unit pricing and any error in quantities in bids to reflect the quantities stated in the bid solicitation. In the case of error in the extension of prices, the unit price will govern.
  5. If an unusually low price is identified, the bidder must be given the opportunity to either confirm or withdraw its bid in writing. Once confirmed, the supplier must accept the price in any resulting contract. The contracting officer must not divulge the difference in price between that bid and the next lowest bid. In no event will the bidder be permitted to increase the price. In solicitations with bid security, this provision may not apply.
  6. The contracting officer will specify in the request the number of days the bidders will have to comply with any request. Failure to comply with the request may result in the bid being declared non-responsive.

5.35 Evaluating the Bids

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  1. The client is responsible for the evaluation of the technical portion of the bids, and, where applicable, the management portion. PWGSC is responsible for the evaluation of the contractual terms and conditions and the financial portion of the bids. Bids must meet all the mandatory requirements and criteria set out in the bid solicitation. Bids that fail to meet a mandatory requirement (such as a bid bond or any information or document) or any other mandatory evaluation criteria (technical, financial or other) will be declared non-responsive.
  2. In some cases, third parties may be invited to assist in evaluating bids, for example, scholars and other experts. When third parties will be involved, bidders must be advised in the bid solicitation. In general, third parties participating in the evaluation, or in the bid preparation, must sign a non-disclosure agreement and a conflict of interest agreement before such participation.
  3. Bids must be evaluated in accordance with the evaluation criteria established in the bid solicitation. Even though the onus is on bidders to submit clear and well-organized bids, bids must be reviewed with diligence and thoroughness to ensure that no essential information is missed. The evaluators must not use criteria or factors not included in the bid solicitation or derive conclusions from information contained in bids that may prove wrong. Whenever possible, the same evaluators should evaluate all bids. When evaluating bids, evaluators must consider all vital information provided in the bid, and must not base their evaluation on undisclosed criteria.
  4. Documents pertaining to the evaluation of bids must be retained. Evaluators must provide the original or a copy of all evaluation notes and communications to the contracting officer for filing on the procurement file. All such information is subject to the Access to Information Act. For example, evaluators' worksheets must not be destroyed even if the information contained in the worksheets is recorded in other evaluation documents. Following a relevant Canadian International Trade Tribunal decision, it was found that evaluators' worksheets are an integral part of the evaluation process and constitute part of the complete record regarding the procurement and part of the written record of all communications substantially affecting the procurement within the meaning of the international trade agreements. Destroying the evaluators' worksheets is a breach of the international trade agreements. Although no similar provision exists in the Agreement on Internal Trade (AIT), the maintenance of complete documentation is also essential under the AIT to promote fair and open procurement procedures. Contracting officers can also refer to the Treasury Board Directive on Recordkeeping.

5.40 Technical Evaluation of Bids

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  1. The client department is responsible for the technical evaluation of the bids.
  2. Following the completion of the technical evaluation, the client department must provide a report to the contracting officer detailing the results of the evaluation, including details on all non-responsive bids and the reasons for declaring them non-responsive. Each person who participated in the technical evaluation as an evaluator must sign the report.
  3. Complete documentation, including all notes, worksheets, etc. made during the processing or evaluation of the bids must be retained, for future reference, on the PWGSC procurement file.

5.40.1 Evaluation of Technical Mandatory Criteria

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  1. Mandatory criteria are assessed on a simple pass/fail basis. Bids that fail to meet any of the mandatory criteria will be considered non-responsive.
  2. The reasons for declaring a bid non-responsive must be clearly documented by the contracting officer in the procurement file.

5.40.5 Evaluation of Technical Rated Criteria

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  1. Only bids that meet the mandatory criteria will be subject to point rating, as applicable. Rated criteria are used to assess various elements of the technical bid so that the relative merits of each bid can be determined. The maximum points that can be achieved for each rated criterion must be specified in the bid solicitation.
  2. When point rating is used, bids may have to achieve a minimum number of points overall to be considered responsive, and often they must also achieve a minimum number of points for certain individual criteria. Bid solicitations must clearly identify any mandatory minimum thresholds.
  3. Over the years, there have been numerous complaints to the CITT alleging that the scoring against individual criteria was unfair. In the majority of cases however, the CITT has said that it cannot undertake a re-weighting of the points assigned unless the treatment of the bid under review amounts to a denial of fair treatment. In the absence of evidence that the evaluation was not conducted in a fair manner, the CITT will generally defer to the judgment of the evaluators who are best qualified to assess the merits of the bids. The CITT will intervene however if it feels that the evaluators improperly applied the evaluation criteria and methodology set out in the bid solicitation.

5.45 Financial Evaluation of Bids

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  1. PWGSC is responsible for the evaluation of the financial portion of the bids. PWGSC does not provide client departments with price information during the technical evaluation process to ensure its integrity. Pricing information should only be provided to the client following the completion of the technical evaluation.
  2. Under the following circumstances, more than one PWGSC employee must be involved in the evaluation of the bid prices to ensure an appropriate level of checks and balances, and to ensure that, in terms of price, the bids are ranked properly, in accordance with the bid solicitation:
    1. for any competitive procurement requiring contract entry approval of the Minister, the Assistant Deputy Minister or Treasury Board; and
    2. for any procurement which is considered to be sensitive or high-risk.
  3. Contracting officers should also consider having more than one PWGSC employee involved in the evaluation of the bid prices, under the following circumstances:
    1. when the evaluation involves extensive computation or is mathematically complex; and
    2. for standing offers (SO) and supply arrangements (SA) requiring the approval of the Assistant Deputy Minister.
  4. All PWGSC employees involved in evaluating the bid prices must sign the financial evaluation report.

5.45.1 Formal Peer Review Process

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  1. The peer review is intended to provide an oversight and risk management role within the Standard procurement process, for competitive requirements only, as determined by the results of the Procurement Risk Assessment. This review is to ensure that the evaluation and contractor selection were conducted in accordance with the solicitation, and to confirm no anomalies or potential issues exist which could impede the principles of fairness, openness and transparency of the procurement process.
  2. Peer reviewers must initial and date the evaluation report to confirm that such a review has taken place.
  3. The accountability of the procurement remains with the contracting officer responsible for the requirement; there is no transfer of responsibility.
  4. The decision of who will conduct the peer review will be determined at the procurement strategy phase when seeking approval in accordance with the risk assessment tool or at the discretion of the approval authority.
  5. Should issues arise during the peer review process, the contracting officer and the peer reviewer(s) should make every effort to resolve them. In the event that a resolution cannot be achieved, the matter will be escalated to one level above the contracting officer for resolution.
  6. The time required to conduct a peer review will be determined between the contracting officer and the peer reviewer(s); however, such review should not exceed two business days.
  7. Informal peer reviews may also take place at the discretion of the contracting officer or the applicable approval authority.

5.45.2 Provincial Taxes

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Except as provided by law, departments and agencies are not required to pay any provincial sales tax (PST) payable to the province in which the taxable goods or services are delivered, except for reimbursement of actual costs which include PST (e.g. PST on actual travel and living expenses incurred during the performance of the contract). Federal departments are required to pay the Harmonized Sales Tax (HST). For further details, consult the relevant section of the Standard Acquisition and Clauses (SACC) Manual general conditions (e.g. section 11 of 2010A or section 13 of 2035).

5.45.5 Foreign Taxes and Canadian Customs Duties

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  1. Customs duties must be considered in the evaluation of bids when bids are received from both Canadian-based and foreign-based bidders, since foreign-based bidders exclude duties in their bids. When rates of duties or exemption status need to be verified, the contracting officer may:
    1. obtain from the client department the information on the rate of duty applicable to the goods being imported, and add the estimated amount of duties to the price quoted by the foreign-based bidder; or
    2. verify with the Canada Border Services Agency (CBSA) the application of customs duty to the goods being imported.

    The tariff and value administrator at the CBSA will provide a written ruling to any request for rate of duty, tariff classification, or customs value. Importers or their agents who wish a written ruling must send their request to the nearest CBSA office.

  2. Contracting officers are responsible for verifying the application of excise taxes and the amount and specific rate(s) set out in bids. Contracting officers must evaluate bids exclusive of the Goods and Services Tax (GST) or the HST, as applicable. For the list of goods on which excise tax is payable, see Annex 4.5: Goods Subject to Excise Tax.
  3. Clients may be entitled to exemption from taxes or duties. They should, in such cases, refer to a certificate of exemption or remission or drawback Order in Council. Issues relating to such remissions should be resolved between the client department and CBSA.

5.45.10 Transportation Costs

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All goods requirements with an estimated value of $25,000 or more, including Goods and Services Tax/Harmonized Sales Tax (GST/HST), and with transportation costs exceeding $7,500 must be submitted to the Traffic Management Directorate (TMD) for a detailed analysis of the charges subject to the exceptions of 4.60 Transportation Costs. TMD will provide an analysis and recommendations regarding the proposed transportation method(s) and costs within two working days or advise the contracting officer of any delay.

5.45.15 Bids in Foreign Currency

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Unless the bid solicitation specifically requires bids to be made in Canadian currency, bids that are made in a foreign currency must be converted to Canadian currency for evaluation. The noon rate given by the Bank of Canada in effect on the bid closing date, or on another date specified in the bid solicitation, must be applied as a conversion factor to the bids made in foreign currency.

5.45.20 Exchange Rate Fluctuation

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This section has been removed in Version 2013-7 of the Supply Manual to be incorporated within section 4.65 Exchange Rate Fluctuation Risk Mitigation.

5.50 Selecting the Successful Bidder

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The successful bidder must be selected in accordance with the methodology specified in the bid solicitation.

5.55 Rejection of Bids/Offers/Arrangements

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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. Therefore, it is up to the contracting officer to verify whether the vendor is 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), 1.(d), 1.(f)(i), and 1.(f)(ii), 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 applicable sections mentioned in 5.55.5 Authority to Reject a Bid/Offer/Arrangement 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 in order to grant more 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 must be informed of the results, in writing.

5.60 Financial Capabilities of Contractor

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5.60.1 Financial Capability

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  1. The bidder must have the financial capability to fulfill the requirement.
  2. Treasury Board (TB) Policy states "firms considered qualified are those which have the technical, financial and managerial competence to discharge the contract. Contracting officers are responsible for verifying this information, prior to entering into a contract".
  3. Contracting officers must consult with the Cost and Price Analysis Group in the Policy, Risk, Integrity and Strategic Management Sector, during the evaluation of bids/offers/arrangements, to determine what financial information may be required from the Bidder/Offeror/Supplier.
    1. When a financial opinion is required, the following Standard Acquisition Clauses and Conditions (SACC) clauses should be used, A9033T for bid solicitations, M9033T for request for standing offers (RFSO) and S0030T for request for supply arrangements (RFSAs).”
    2. Supply arrangement authorities should note that since the statement of work or requirement cannot be adequately defined in advance, only a preliminary review of the supplier's financial viability will be conducted for the sole purpose of pre-qualifying suppliers for supply arrangements. A complete review of the bidder's financial capability may be required for subsequent requirements issued under the supply arrangement, therefore, supply arrangement authorities must include clause A9033T in all bid solicitation documents. For more details on supply arrangements, see 4.10.25 Request for Supply Arrangements.
  4. If the selection of the bidder is competitive and the contract is for commercially available goods or services, the risks of financial loss to Canada are minimized because of the ability to find alternate sourcing. However, under any other circumstance, re-sourcing can be costly both in terms of performance delays and monetary risk.
  5. Assessing the financial capability of potential and existing suppliers is not normally required for:
    1. assistance contracts on behalf of Industry Canada (IC), (determination of a contractor's financial capability in these cases is the responsibility of IC);
    2. contracts with universities and colleges, Crown corporations, government departments and agencies;
    3. contracts for the services of individuals; and
    4. contracts for generally available commercial goods or services from bidders selected by competition.
  6. A financial analysis of a potential supplier may be warranted at the time of sourcing.
  7. A financial review of a supplier can be initiated at any stage of the contracting process when considered necessary by the contracting officer. The contracting officer should arrange for ongoing financial capability analysis by a cost analyst during contract performance, when necessary.
  8. When PWGSC must deal with a financially weak supplier, the risk to Canada must be reduced as much as possible through contract financial security, based on recommendations by a cost analyst.
  9. Request for Financial Reviews must be submitted by completing form PWGSC-TPSGC 603 (PDF Version 40 KB)This information is only accessible to federal government employees. - (Help on File Formats).

5.60.5 Bid Security (Financial)

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  1. If bid security is obtained, it must be held until the terms of the security are fulfilled, including award of a contract and/or expiration of the bid validity period.
  2. If a bidder submits a bid, which includes insufficient security, that is, less than the exact financial security stipulated, or none at all, the bid will be considered non-responsive.
  3. Security deposits in the form of government guaranteed bonds with coupons are not acceptable unless all coupons that are not matured at the time the security deposit is provided are attached to the bonds.
  4. Surety bonds provided by bidders must be examined by the contracting officer, with advice from Legal Services, as necessary, to ensure that they are correct, original, and legally enforceable in all respects; including the bidder's legal name and address, the date of the contract, the contract serial number, and the description of the "Obligee", which is "Her Majesty the Queen in right of Canada". Surety bonds requiring correction are returned to the bidder and not to the surety company.
  5. PWGSC will hold any bid bond, payment bond, performance bond, non-negotiable security deposit (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit) until the terms of the security are fulfilled. For detailed instructions on the safekeeping of these instruments, see Annex 5.2: Handling, Custody and Safekeeping of Financial Security/Handling of Bills of Exchange.
  6. The contracting officer must request written instructions from the bidder concerning the action to be taken with respect to any coupons attached to the bonds that will mature while the bond is pledged as security, and the instructions must be forwarded to the Financial Operations Sector.
  7. The contracting officer must examine the letters of credit submitted by bidders and obtain advice from Legal Services, as necessary, to ensure that each letter is correct in all respects, including:
    1. the face amount that may be drawn against it;
    2. its expiry date;
    3. provision for sight payment to the Receiver General for Canada by way of the financial institution's draft against presentation of a written demand for payment signed by the authorized departmental representative, and identified in the letter of credit by their office;
    4. provision that more than one written demand for payment may be presented subject to the sum of those demands, not exceeding the face amount of the letter of credit;
    5. provision that it is subject to the International Chamber of Commerce (ICC) Uniform Customs and Practice for Documentary Credits , 2007 Revision, ICC Publication No. 600;
    6. clear specification that it is irrevocable or deemed to be irrevocable, pursuant to the ICC Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication No. 600;
    7. it has been issued or confirmed, in either official language, by a financial institution, which is a member of the Canadian Payments Association and must be on the letterhead of the Issuer or Confirmer. The format is left to the discretion of the Issuer or Confirmer.

5.60.10 Business Credit Services

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  1. Business credit services companies provide both general credit ratings and comprehensive credit reports on individual firms. Their comprehensive reports generally include: simplified financial statements; details of maximum credit obtained from the firm; promptness of payments made; banking information; firm's history and some information into the firm's operations.
  2. Contracting officers are not to contact a business credit services company directly. They must send all requirements for business credit services to the Policy, Risk, Integrity and Strategic Management Sector (PRISMS).
  3. Business credit services reports are considered commercially confidential. The information is not to be disclosed outside the government, and is only disclosed within the government on a "need to know" basis.
  4. Copies of these reports are available for use only within PWGSC. The reports are retained by PRISMS.

5.60.15 Statement of Cost Accounting Practices

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  1. PRISMS has a comprehensive program to ensure that contractors' cost accounting practices comply with the Contract Cost Principles 1031-2 and related Cost Interpretation Bulletins.
  2. The general principle of Contract Cost Principles is that the total cost of the contract must be the sum of the applicable direct and indirect costs, which may be reasonably and properly incurred and/or allocated during the performance of the contract, less any applicable credits. These costs must be determined in accordance with the contractor's cost accounting practices, as accepted by Canada and applied consistently over time.
  3. Contracting officers should inform PRISMS when a contractor or subcontractor has negotiated contracts with Canada and meets the following criteria:
    1. the supplier's divisions/entities previous fiscal year and/or current fiscal year forecasted negotiated Canada business volume exceeds $5,000,000 or
    2. the supplier's divisions/entities previous fiscal year and/or current fiscal year forecasted negotiated Canada business volume exceeds $2,000,000 and represents more than half of that division's/entities total business volume.
  4. The Statement of Cost Accounting Practices (SCAP) is a form used as a management representation describing the cost accounting practices of a supplier. The Cost, Policy and Financial Review Division will determine whether the supplier must complete a SCAP.

5.65 Identical Low Bids - Best Value

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  1. If identical low bids are received, the Treasury Board Contracting Policy ( subsection 10.8.17) provides that the contract should be awarded on the basis of best value. The factors below should be used, subject to directives on national policies and objectives that may be issued from time to time. These criteria may be weighted as considered appropriate by the contracting officer:
    1. a bidder with an overall satisfactory performance record is given preference over a bidder known to have a less satisfactory performance record;
    2. a bidder in a position to provide adequate after-sales service, with a good record in this regard, will be given preference over a bidder who is less able to provide adequate service or who has a poor record;
    3. when delivery is an important factor, the bidder offering the best delivery date should be given preference;
    4. when there are several items included in the bid and only some items are priced identically, the bid offering the greatest dollar value should be given preference; and
    5. when there are several items included in the bid and one or more bidders bid lower on one or more of the items, the lowest bidder with the greatest dollar value should be given preference both for the items on which it bid equal prices and for the items on which it bid lower.
  2. If there are two (or more) identical bids, and provided that the bid selected would still be considered the most advantageous to Canada, preference should be given to the bidder who assumes all or part of the exchange rate adjustment risk over a bidder who does not assume any of this risk. Furthermore, preference should be given to the bidder who assumes all of the exchange rate adjustment risk over a bidder who assumes only part of this risk.
  3. If none of the above applies, a method of tie breaking that is mutually acceptable to Canada and the bidders with identical bids can be used. As an example, a simple coin toss could be agreed upon. The mutually agreed solution should involve legal advice.

5.70 One Responsive Bid

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  1. When only one responsive bid is received in response to a competitive bid solicitation, if the contracting officer is satisfied that Canada is obtaining fair value, the contract may be awarded using competitive authorities to the single responsive bidder, without obtaining additional price support.
  2. If the contracting officer is not satisfied that the bid represents fair value, price justification must 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.

5.75 No Responsive Bids

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When no responsive bid is received as a result of a competitive bid solicitation, the bid solicitation must be cancelled. For more information on reissuing a solicitation, see 4.100 Cancelling and Reissuing a Solicitation.

5.80 Bid Rigging/Collusion/Fraud

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The contracting officer must notify Legal Services and his or her immediate director whenever there is an indication of possible bid-rigging activities, collusion or fraud. When it is considered necessary, Legal Services will assist in subsequent discussions with Competition Bureau Canada,a federal independent law enforcement agency responsible for the administration and enforcement of the Competition Act. Bid rigging is addressed in section 47 of the Act.

The following are examples of possible bid-rigging activities:

  1. bid rates/prices are much higher than published price lists, engineering cost estimates, or previous bid rates/prices by the same suppliers, for no apparent reason;
  2. the successful bidder subcontracts work to suppliers who submit higher bids on the same project;
  3. bidders use identical wording to describe non-standard items, or submit identical bids for non-standard items;
  4. there are indications of unusual communications among suppliers, before submitting the bids with regards to bid prices, or allocation of clients, or references to "standard industry prices", "industry self-regulation", etc.;
  5. the same supplier wins bids for specific clients, or in specific geographic locations, or for specific sizes or types of work, and loses most other bids on a regular basis; or
  6. a recognizable pattern of systematic or random low bid rotation exists.

5.85 Negotiations

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  1. 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.
  2. Subsection 10.6.6 of the Treasury Board Contracting Policy states: "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 bids in the light of information about the position of other firms. The confidentiality of each firm's negotiating position is to be assured".
  3. The contracting officer must conduct all negotiations. If it is of a technical nature, the contracting officer and the client should conduct the negotiations. A negotiation report must be placed on the procurement file.
  4. For procurements subject to the international trade agreements contracting officers must conduct negotiations in accordance with the conditions of these agreements. See Article 1014: Negotiation Disciplines of the North American Free Trade Agreement or Article XIV: Negotiation of the World Trade Organization Agreement on Government Procurement. The various bilateral free trade agreements have similar rules to NAFTA.
  5. For procurements not subject to NAFTA or WTO-AGP,
    1. when a bid solicitation was used, negotiations may be entered into:
      1. before the completion of bid evaluation, provided that they are held with all bidders that submitted responsive bids; or
      2. after the bid evaluation, with only one bidder, provided that the bidder submitted the only responsive bid. Or, the bidder was selected after evaluating more than one responsive bid, but it can be demonstrated that if the negotiations had been held with all of the bidders that submitted responsive bids, there would have been no change in the bidder selected;

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

    2. when an Invitation to Tender (ITT) was used and there is more than one responsive bid, but neither 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 method of supply. 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; and
    3. when a Request For Quotation was used, negotiations should be avoided.

5.90 Extending the Bid Validity Period

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  1. Bids will remain open for acceptance for a period of 60 days (30 days for construction), from the closing date of the bid solicitation, unless otherwise indicated in the bid solicitation (see Standard Acquisition Clauses and Conditions Manual, (SACC) Standard Instructions 2003, 2006, and 2008). Contracting officers must carefully assess the potential for extended bid evaluation periods and indicate in the bid solicitation the modified period for bid acceptance. Contracting officers must also carefully monitor events during the bid evaluation period and contract approval process in order to award the contract before the bid acceptance period has expired. Expiry of bid acceptance periods before contract award should thus become an exceptional circumstance.
  2. If the bid acceptance period has expired, and the contract has not been awarded, the bid solicitation must be reissued.
  3. Any contract awarded to a bidder after the bid expiry date is considered a sole-source contract, and must be justified accordingly.
  4. If the evaluation is incomplete and is unlikely to be completed within a reasonable period of time, and the bid acceptance period will expire before the evaluation is complete, the process should be halted and an assessment made to identify the cause of the delay. Any necessary corrections to the solicitation or evaluation methodology may then be made and the bid solicitation reissued.
  5. As stated in the standard instructions, Canada may seek an extension of the bid validity period from all responsive bidders in writing within a minimum of three (3) days before the end of the bid validity period. If all responsive bidders accept the extension, Canada will continue with the evaluation of the bids. If all responsive bidders do not accept the extension, Canada will, at its sole discretion, either continue with the evaluation of the bids of those who have accepted the extension or cancel the solicitation.
  6. Where a bidder does not agree to the extension and it is clear that this particular bidder has no chance of being recommended for award, then it may be appropriate to exercise Canada's right to proceed with the evaluation of only those bids submitted by the bidders that have agreed to an extension. Legal Services may be consulted in instances where a bidder does not agree to the extension, particularly in the case of procurements subject to the trade agreements.

5.95 Evaluating Joint Venture Bids

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  1. Joint ventures may respond to bid solicitations in accordance with the applicable conditions contained in the solicitation. The relevant section of standard instructions 2003, 2006 and 2008 of the SACC Manual permits joint venture bids and provide further details.
  2. If a contract is awarded to a joint venture, all members of the joint venture will be severally liable for the performance of any resulting contract. (See standard instructions referenced above.)
  3. If a financial capability assessment is done, then all members of the joint venture will be assessed.

5.100 Special Program Considerations

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In the evaluation of bids, consideration must, as applicable, be given to various programs such as Canadian content, green procurement and the Federal Contractors Program for employment equity. Employment equity requirements are described in Annex 5.1: Federal Contractors Program for Employment Equity.

5.105 Evaluation Report

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  1. An evaluation report must be prepared outlining in detail the review of the bids, including any clarifications requested and how the final decision was taken to rank and select the bidders.
  2. The evaluation report should include the evaluation criteria, the rationale of mandatory and point-rating for each criterion, as well as the names and contact information of all evaluators.
  3. All persons involved in evaluating the bids must sign the evaluation report.
  4. All notes taken during the evaluation must be kept in their original form and retained on the procurement file for audit purposes.

Some sectors/regions have developed checklists to assist contracting officers in the tabulation of bids. They should be used where available.

5.110 Communications before Contract Award

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  1. Before contract award, contracting officers must advise suppliers that, if they are non compliant to the requirements of the Federal Contractors Program for employment equity, they will not be awarded a contract except in limited circumstances. See Annex 5.1: Federal Contractors Program for Employment Equity for specific exemptions on ship construction and refit.
  2. Particular care is required where bid validity period may require extension. (See 5.90 Extending the Bid Validity Period.)

    Note: No information about other bids may be released. Disclosure of information after contract award is covered in 7.45 Disclosure of Information.

5.110.1 Early Notification for Ship Construction and Refit

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  1. For new ship construction and ship refit contracts awarded by Public Works and Government Services Canada headquarters, contracting officers will notify bidders whether their bid is among the two most favorable and responsive when:
    1. there are more than two responsive bidders;
    2. a lengthy approval process is anticipated (generally for contracts requiring approval above the director general level); and,
    3. none of the following circumstances apply:
      1. all bids received are extremely close; or
      2. the manager feels that notifying bidders of bid status would not be in the best interests of Canada.
  2. For shipbuilding or ship refit contracts that do not fall within the normal criteria, contracting officers should consult with the Senior Director, Marine Systems Directorate (SD/MSD), Defence and Major Projects Sector.
  3. Early notification before contract award can only be made after the SD/ MSD has recommended the "Contract Request" form PWGSC- TPSGC 1151-2 (PDF Version 9 KB)This information is only accessible to federal government employees. - (Help on File Formats).
  4. Bidders will be advised of the circumstances under which notification of their status may be withheld.
  5. Bidders whose bids are clearly not the two most favourable responsive bids will be permitted to withdraw their bids upon written application to the contracting officer.

Annex 5.1:  Federal Contractors Program for Employment Equity

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1. Background

The Federal Contractors Program (FCP) for employment equity is intended to address employment disadvantages for the four designated groups: women, Aboriginal peoples, persons with disabilities and members of visible minorities. Its goal is to achieve equality so that no person is denied employment opportunities for reasons unrelated to ability.

In June 2013, a streamlined FCP was introduced with a focus on results and enables contractors to determine which initiatives best suit their organization in their efforts to achieve employment equity objectives. The Program threshold is $1,000,000 and the ineligibility sanctions apply to all contracts for the acquisition of goods and services.

The requirements of the FCP are set out in the Treasury Board Contracting Policy (sections 4.2.5 and 8.3.1, and Appendix D).

General information on the FCP is available on the Human Resources and Skills Development (HRSDC)-Labour website.

2. Application
  1. The FCP for employment equity applies to:

    1. procurements made on behalf of a federal department or agency listed under Schedule I, column I of Schedule I.1 or Schedule II of the Financial Administration Act (FAA) (for example, the Canadian Commercial Corporation, being listed in Schedule III, is not subject to the FCP) and who are covered by the Treasury Board Contracting Policy; and
    2. all contracts and standing offers for the acquisition of goods and services, with the exception of those for:
      1. the purchase or lease of real property;
      2. construction (construction does not include architecture and engineering which are subject to the FCP).
  2. The FCP imposes particular obligations onto Contracting/Standing Offer Authorities and Contractors when:

    1. contractors are to be awarded contracts estimated at $1,000,000 or more (including all applicable taxes and not including options) or issued a Standing Offer (SO) where the call-up limitation is $1,000,000 or more (including all applicable taxes);
    2. a bidder/offeror:
      1. is not regulated by the Employment Equity Act (for example, provincially regulated entities, entities registered in foreign countries, etc.);
      2. has a combined workforce in Canada of 100 or more permanent full-time, permanent part-time and temporary employees (temporary employees includes only those employees who have worked 12 weeks or more during a calendar year and are not in full-time attendance at an education institution);
      3. is doing business directly with Canada (being the prime contractor with Canada and not a subcontractor).
3. Obligations of Contractors subject to the FCP for Employment Equity
  1. A bidder/offeror who is subject to the FCP, must have an Agreement to Implement Employment Equity (AIEE) in place with HRSDC-Labour or must complete and sign an AIEE form and send to HRSDC-Labour before contract award or issuance of a standing offer.
  2. If the bidder/offeror is a joint venture, each member of the joint venture must determine if it is subject to the FCP and if so, comply with the requirements to have an AIEE in place as per subsection a. above.
  3. Once a bidder/offeror subject to the FCP is awarded a contract or issued a standing offer for call-ups estimated at $1,000,000 or more, the contractor/offeror is required to honour its AIEE commitment to implement employment equity. This commitment is ongoing and not simply for the period of the contract or the standing offer for which it was initially signed.
4. Obligations of Contracting/Standing Offer Authorities

Once it has been determined that the client department or agency and the nature of the requirement are subject to the FCP, Contracting/Standing Offer Authorities have, under the FCP for employment equity, different sets of obligations depending on the nature of the procurement document and the estimated value of the resulting contracts or call-ups against a standing offer (including all applicable taxes).

  1. Request for Supply Arrangement (RFSA)

    For an RFSA, the standard procurement templateThis information is only accessible to federal government employees. should include an advance notice (Part 6 B – Resulting contract clauses) to inform suppliers of the possibility that the FCP may eventually apply to the procurement documents to be issued from the Supply Arrangements.

  2. Contracts estimated at under $1,000,000

    For contracts estimated at under $1,000,000 (including all applicable taxes and not including options) and Standing Offers with a call-up limitation for either PWGSC or a client department under $1,000,000 (including all applicable taxes):

    1. In Standing Offers, the "Limitation of Call-ups" clause of Part 7A– Standing Offer is to indicate an amount under $1,000,000.
    2. All bid solicitation documents and Requests for Standing Offers are to include a certification by the bidder/offeror, as proposed in Part 5 of the standard procurement templates, declaring that the bidder/offeror is not listed on the "FCP "Limited Eligibility to Bid" list. (For exceptions, see article 5 of this Annex.)
    3. At the time of contract award/issuing of a Standing Offer, the Contracting/Standing Offer Authority is to verify the accuracy of such certification using HRSDC-Labour’s FCP "Limited Eligibility to Bid" list based on the names appearing on the bid/offer. If the name of the bidder/offeror, or even only one name within a bidder’s/offeror’s list of members if the bidder/offeror is a joint venture, appears on the list then the bid/offer is non-responsive.
    4. In Standing Offers, the "Certifications" clause of Part 7A– Standing Offer, is to indicate that if the offeror gets listed by HRSDC-Labour on the "FCP Limited Eligibility to Bid" list for not complying with employment equity requirements during the period of the Standing Offer, the standing offer may be set-aside. The Policy, Risk, Integrity and Strategic Management Sector will inform Standing Offer Authorities if any offeror gets added to the "FCP Limited Eligibility to Bid" list. In such circumstances, the Standing Offer Authorities will follow the usual PWGSC’s setting-aside assessment procedures which include consideration of the elements listed under article 5 of this Annex.
    5. In a competitive process, where multiple bids/offers have been received, the bidders/offerors will be considered non-compliant if the bidder's/offeror's name is on the "FCP Limited Eligibility to Bid" list. In such a competitive process, Contracting/Standing Offer Authorities should consider verifying if the bidder’s/offeror’s name is on the list prior to beginning the evaluation process so as to avoid unnecessary work for themselves and their clients. There is no requirement to evaluate bids that are non-responsive.
  3. Contracts estimated at $1,000,000 or above

    For contracts estimated at $1,000,000 or above (including all applicable taxes and not including options) and Standing Offers with a call-up limitation for either PWGSC or a client department at $1,000,000 or above (including all applicable taxes):

    1. The obligations mentioned at paragraphs i. to iv. of subsection b. above are also applicable to contracts estimated to be at $1,000,000 and above (including all applicable taxes and not including options) and Standing Offers with call-up limitations at $1,000,000 and above (including all applicable taxes);
    2. Contracting/Standing Offer Authorities are to include a second certification, this time regarding factual information on the bidders/offerors, as shown in Part 5 - Certifications of the standard procurement templates and in the titled Federal Contractors Program for Employment Equity - Certification. This second certification is also required at the time of contract award/issuing of a Standing Offer. The information collected is to be used by the Contracting/Standing Offer Authority to determine if the bidders/offerors are subject or not to the FCP and consequently to determine which clauses to include or not into the procurement document.
      1. When the bidder/offeror is not subject to the FCP, there will be no other clauses to add to the procurement document.
      2. When the bidder is subject to the FCP, a clause allowing for the termination of the contract in the event that the bidder would become in breach to the AIEE and be added to the "FCP Limited Eligibility to Bid" list, is to be inserted, as indicated in the standard procurement templates. If such event was to occur, the Contracting Authorities would then follow the usual PWGSC’s termination assessment procedures, which includes consideration of the elements listed under article 5 of this Annex.
      3. As indicated in paragraph iv. of subsection b. above, all Standing offers are to include a clause allowing for the set-aside of a Standing Offer in the event that the offeror would become in breach of the AIEE and be added to the "FCP Limited Eligibility to Bid" list. When the offeror is subject to the FCP and call-ups are estimated to be at $1,000,000 and above, an additional clause allowing for the termination of the call-up is also to be inserted as indicated in the standard procurement templates. For call-ups at $1,000,000 or above if a breach was to occur, the Standing Offer Authorities would then follow the usual PWGSC’s termination assessment procedures, which includes consideration of the elements listed under article 5 of this Annex. There is no such requirement for call-ups under $1,000,000 (including all applicable taxes).
5. Exceptions
  1. In a non-competitive situation, if a bidder’s/offeror's name appears on the "FCP Limited Eligibility to Bid" list, such bidder/offeror should not be awarded a contract or issued a standing offer unless required to do so by law or legal proceedings, or when Canada considers it necessary to the public interest for reasons which include, but are not limited to:

    1. Only one person is capable of performing the contract/standing offer
    2. Emergency
    3. National security
    4. Health and safety
    5. Economic harm
  2. The Contracting/Standing Offer Authority is to obtain prior approval from its Director General or its Regional Director General and document its file. The Contracting/Standing Offer Authority should communicate an exception to HRSDC-Labour at ee-eme@hrsdc-rhdsc.gc.ca.

Annex 5.2: Handling, Custody and Safekeeping of Financial Security/Handling of Bills of Exchange

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  1. A bill of exchange tendered as a security deposit in connection with a bid for a contract must be held uncashed in a secure and fireproof place until the successful bid is selected or for up to one year, whichever occurs first. (If at the end of one year the contract still has not been awarded, the contracting officer must exchange the bill of exchange for a current-dated one.) The Bid Receiving Unit (BRU) sends security deposits received with headquarters bids to the Finance Sector, Public Works and Government Services Canada ( PWGSC), for safekeeping. The BRU sends three copies of the list together with the deposits to the Finance Sector, showing beside the name of each bidder, the amount and nature of the deposit (for example, certified cheque, bonds). The Finance Sector signs and returns two copies of the list to the BRU, who sends one copy to the contracting officer.
  2. When a bid is accepted and the bill of exchange is then required as security until completion of the contract, a contractor may request PWGSC to hold and not cash the bill of exchange. It should be stored in approved security equipment by the directorate. If the directorate does not have adequate facilities, it should be sent to the Financial Operations Directorate (FOD), which will arrange for storage. If the contractor makes no such request, the bill of exchange must be forwarded to the FOD for deposit in the Consolidated Revenue Fund (CRF).
  3. When a bid is rejected or accepted and the bill of exchange submitted in connection with the bid is not required as security until completion of the contract, the bill of exchange is returned to the contractor.
  4. Bills of exchange received as contract security must be forwarded immediately to FOD for deposit in the CRF, in accordance with the Receipt and Deposit of Public Money Regulations.
  5. A security deposit provided as collateral for the return of plans and specifications will be forfeited if those plans and specifications are not returned in time and in satisfactory condition. Furthermore, the contracting officer must so inform the Manager, FOD.
1. Government Guaranteed Bonds, Bills of Exchange and Letters of Credit

The Finance Sector must ensure that the receipt of bills of exchange and/or government guaranteed bonds and/or irrevocable standby letters of credit is recorded in the accounting records of PWGSC and that it is also appropriately recorded in the Accounts of Canada, as an asset and a liability. Directorates must promptly notify the Finance Sector of all such receipts, regardless of whether they are held by the directorate.

2. Safekeeping of Bonds, Negotiable Instruments and Letters of Credit
  1. There are three acceptable methods for the safekeeping of government bonds, negotiable instruments and letters of credit:
    1. custody by FOD, which was established to provide a safekeeping service for securities and any other valuable assets requiring theft-proof storage;
    2. storage by the directorate in approved security equipment, in accordance with Part II of the Government Contracts Regulations; or
    3. storage by the Security Deposit Division, 350 King Edward Ave, Ottawa.
  2. The adequacy of departmental security equipment can be assessed by referring to the PWGSC Security Equipment Catalogue, which lists equipment that is approved for the storage of negotiable instruments.  Canadian Industrial Security Directorate assistance is also available on this subject.
  3. Where proper security equipment is not available, all security deposits (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit) must be forwarded to FOD for safekeeping using a PWGSC deposit form entitled "Contractor's Security Deposit".
  4. To lessen the risk of loss, bonds should be transmitted directly to FOD from wherever the contracting authority first receives the security (for example, if a bond is received in a regional office, it should not be routed to Headquarters but sent directly to FOD).
  5. When transmitting bonds from PWGSC to FOD(or to the owner when the securities are held by directorates), registered and hypothecated bonds must be transmitted by registered mail. Bearer bonds may be transmitted by "money packet" or bonded courier, armoured car service or a courier provided from within departmental resources.
  6. When bearer bonds are transmitted by the "money packet" system, the maximum indemnity from Canada Post is $100; therefore, appropriate additional insurance should be considered. (For the examination and management of risks, directorates should refer to the Treasury Board Policy Risk Management - Policies and Publications.)
  7. While coupon-bearer bonds are in its custody, FOD is responsible for their security and for clipping matured coupons and remitting them, as directed by the contracting officer.

6 Chapter 6 - Approvals and Authorities

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6.1 General

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  1. This chapter addresses the various types of plans, reviews and approval processes associated with procurement based on the different authority levels. These forms and approval processes apply to contracts/standing offers and supply arrangements. It also contains the authorities for approving and signing procurement documents and details special approval considerations and exceptions to approval authorities. Contracting officers will also find information for interpreting and using the authorities.
  2. Contracts are entered into by Her Majesty the Queen as represented by a minister. The authority to enter into contracts is generally in the legislation constituting the department and conferring certain powers on the minister. The Department of Public Works and Government Services Act confers the Minister's contracting authority. The Minister's authority is delegated to officers throughout the Department in order to carry out the internal contract process.
  3. The financial limits are established by Treasury Board pursuant to the Financial Administration Act and are set out in the Treasury Board Contracts Directive.
  4. Contracting officers are delegated authorities to enter into contracts and to sign and amend contracts in accordance with the level of responsibility of the position they occupy. Details of the delegated authorities and obligations are provided in 6.20 Contract Approval and Signing Authorities.
  5. Contracting officers must not split contracts or contract amendments in order to avoid obtaining either the approval required by statute, the Treasury Board Contract Directives or appropriate management approval. Furthermore, contracts must not be split to avoid Canada's obligations under national or international trade agreements, or the application of Public Works and Government Services Canada (PWGSC) procurement policies.

6.5 Procurement Approval Documents

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  1. The commodity, the dollar value of a procurement and other factors such as an emergency or the stage in the procurement process will determine the level of approval that contracting officers will need to seek, as well as the associated process that will be followed. To determine the appropriate approval level and approval document required, contracting officers must refer to the approval authorities for various commodities and other considerations outlined in 6.20 Contract Approval and Signing Authorities.
  2. The different types of approval processes or forms are listed below:
    1. Procurement Plan;
    2. Contract Planning and Advance Approval (CPAA);
    3. CPAA Resubmission;
    4. Contract Summary;
    5. Contract Request;
    6. Treasury Board Submission;
    7. Contract Amendment Request.
  3. The sections below describe these documents. The approval documents may require additional reviews as detailed in 6.10 Additional Reviews.
  4. Before the contracting officer takes any significant procurement actions, the procurement strategy must be approved. Significant procurement actions include, but are not limited to, publishing an Advance Contract Award Notice (ACAN), a Notice of Proposed Procurement (NPP), the solicitation or the commencement of negotiations.
  5. When invoking 6.(d) of the Government Contracts Regulations (GCRs), all procurements must have appended to all approval documents, and documented on file, answers to the seven questions at Annex 3.1: Treasury Board Questions for Sole Source.

6.5.1 Procurement Plan

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  1. The Procurement Plan is a document that sets out the intended strategy for how a procurement will be carried out before any significant procurement actions are performed, such as the posting of an ACAN or the commencement of negotiations. The procurement plan is a key point for discussing and reviewing such matters as competition or sole source and industrial and regional benefits.
  2. Before issuing a solicitation for any procurement, contracting officers must obtain approval for the procurement plan at the appropriate level. The appropriate approval document must be used depending on the approval authority level required, as indicated in 6.5.1.1 Procurement Plan for Procurements below Director General Level and 6.5.1.5 Formal Procurement Plan. Before issuance of the resulting contract, the contracting officer will also need to seek contract approval.
  3. There are two forms available for procurement plans:
    1. the Procurement Plan for procurements at or below director general approval level; and,
    2. the Formal Procurement Plan template.

6.5.1.1 Procurement Plan for Procurements below Director General Level

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  1. The Procurement Plan form is used for procurements estimated to be at or below director general level when there is insufficient information to obtain advance approval for contract entry.
  2. If a Procurement Plan is used for Basic and Standard Procurements, a procurement risk assessment must be performed prior to completing the Procurement Plan and be attached to it. The Procurement Plan must provide details surrounding the high risks with proposed mitigation strategies, as necessary.
  3. The procurement plans are prepared for the signature of the appropriate approval authority. Contracting officers should refer to section 3.1.1 for a list of some items that could be included in the procurement plan.

6.5.1.5 Formal Procurement Plan

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  1. The Formal Procurement Plan is required for the approval of the procurement strategy and is normally prepared for:
    1. all procurements estimated to exceed the contract approval levels of director general/regional director general (DG/RDG); and
    2. all procurements for the services of former public servants in receipt of a pension where the fee component is estimated to exceed $25,000 for non-competitive contracts or $100,000 for competitive contracts.
  2. The procurement plan is prepared for the signature of the Assistant Deputy Minister (ADM) or the DG/RDG who has full authority to approve procurement plans. Contracting officers should normally prepare the formal procurement plan in accordance with the template at Annex 6.1: Procurement Plan Instructions.
  3. The ADM will approve Formal Procurement Plans of non-competitive procurements (including non-competitive procurements where an advance contract award notice is used) exceeding DG/RDG contract approval limits.
  4. The DG/RDG will approve all other procurement plans.
  5. The ADM is to be notified of procurement plans exceeding contract approval levels of DG/RDG for sensitive procurements. A copy of the signed procurement plan is to be sent to the ADM. Examples of sensitive procurements include:
    1. The acquisition has been the subject of media attention in the past;
    2. It is anticipated that there may be media interest in the acquisition;
    3. The acquisition relates to the implementation of a significant policy decision;
    4. The acquisition creates a long-term and significant financial commitment for the Crown; or,
    5. The acquisition will or has been the subject of a Treasury Board Submission.
  6. A Formal Procurement Plan is not required for the supply of edible agricultural and fishery products purchased for foreign aid programs, and Canadian Commercial Corporation contracts.
  7. If there are significant changes to the original Procurement Plan, then a procurement plan must be resubmitted.

6.5.5 Contract Planning and Advance Approval

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  1. The Contract Planning and Advance Approval (CPAA) process allows for the approval of the Procurement Strategy and pre-approval for contract entry.
  2. The CPAA is used for approvals up to and including director general and regional director general, unless a procurement plan applies to the procurement (see 6.5.1 Procurement Plan).
  3. The CPAA should not be used if there is insufficient known information about the expected results of the procurement action.
  4. The CPAA must provide details surrounding the high risks with proposed mitigation strategies, as necessary. For Basic and Standard Procurements, a procurement risk assessment must be performed prior to completing the CPAA and accompany the CPAA document.
  5. The CPAA process allows contracting officers to issue contracts/standing offers/supply arrangements without further review by the approval authority when there are no significant changes to the procurement strategy in the approved CPAA. Following approval of the CPAA, the contracting officer will proceed with the procurement action until the contract is ready to be awarded. If the procurement action results in a significant change from the originally approved procurement strategy before the contract is awarded, the CPAA must be resubmitted in accordance with 6.5.5.5 CPAA Resubmission, or alternatively, using a Contract Request as detailed in 6.5.10 Contract Request.
  6. Contracting officers must summarize actions taken between approval of procurement strategy and contract entry through the use of the Contract Summary as detailed in 6.5.5.10 Contract Summary.

6.5.5.1 Contract Planning and Advance Approval Instructions

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  1. Contracting officers must complete the Contract Planning and Advance Approval (CPAA) form and explain the procurement strategy.
  2. Contracting officers should include the following information, as applicable:
    1. proposal/description: state the action proposed (e.g. to obtain approval to; to obtain advance approval) including all approvals being requested (e.g. approval to make advance payments, advance approval to firm up interim rates). Describe the requirement including options, if applicable;
    2. total estimated cost of the requirement (including all advance approvals, duties and taxes);
    3. under Remarks: address applicable issues such as:
      1. for competitive procurements, state whether Government Electronic Tendering Service (GETS) or other public advertising, source lists (i.e., one time, ongoing), etc. will be used. If GETS is not being utilized to compete the requirement, an explanation must be provided;
      2. when a non-competitive (sole source) procurement strategy is chosen, state the legal authority to use an exception to competitive bidding (see 3.15 Non-competitive Contracting Process);
      3. describe the risks and proposed risk mitigation strategies associated with the procurement, in accordance with current policies, procedures and practices.
    4. policy issues: identify any socio-economic considerations or deviations from policy and recommended course of action;
    5. evaluation criteria: identify the evaluation criteria and the solicitation method to be used including the pricing basis, mandatory and/or point rating criteria;
    6. contractor selection method: selection method to be used;
    7. milestones: give target dates for important milestones (e.g. bid solicitation, contract award, delivery schedule);
    8. additional remarks: indicate any additional information that should be brought to the attention of the approval authority .
  3. On receipt of the submission, the approval authority will, within two working days, review it and either grant full approval to proceed or identify concerns and direct changes to the proposed strategy. The approval authority may also approve the procurement strategy but not grant advance approval to enter into contract, in which case a Contract Request must be prepared and submitted for approval prior to contract entry. (See Annex 6.4: Conditions Imposed on the Approval Authority Limits for PWGSC Personnel relative to conditions imposed on the approval authority limits).
  4. Following approval of the CPAA, the contracting officer will proceed with the procurement action. If the procurement action results in a significant change from the originally approved plan before the contract is awarded, the CPAA must be resubmitted in accordance with 6.5.5.5 CPAA Resubmission. If there is no significant change, the contracting officer will prepare the contract.

6.5.5.5 Contract Planning and Advance Approval Resubmission

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  1. The Contract Planning and Advance Approval (CPAA) Resubmission (or Contract Request) form is used when there is significant change to the procurement strategy (e.g. non-competitive requirement has changed to competitive, or vice versa). The Resubmission/Contract Request must explain in detail the reasons why the procurement strategy has changed and identify the additional risks, or changes to the already identified risks, associated with the procurement together with the proposed mitigation strategies. For Basic and Standard Procurements, another version of the procurement risk assessment must be performed prior to completing the resubmission and must accompany the approval document. Contracting officers must submit the CPAA Resubmission/Contract Request to the appropriate approval authority in accordance with sector and region procedures.
  2. Once the approval is received, the contracting officer will proceed with the procurement action required.

6.5.5.10 Contract Summary

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The Contract Summary is used pursuant to an approved CPAA to document the actions taken from the time the CPAA was approved and prior to the issuance of a contract/standing offer/supply arrangement (including the results of the bid evaluation and contractor selection).

6.5.10 Contract Request

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The Contract Request is used pursuant to a formal procurement plan to seek approval to enter into a contract/standing offer/supply arrangement at the assistant deputy minister level. It is also used when 1) there has been a significant change to what was pre-approved in the CPAA and re-approval at the appropriate approval authority level is required, or 2) when advance approval to enter into contract has not been given by the approval authority in the CPAA. For Basic and Standard Procurements, another version of the procurement risk assessment must be performed prior to completing the Contract request and accompany the CPAA Resubmission/Contract Request document.

See Annex 6.2: Contract Request Instructions for instructions on the preparation of the contract request.

6.5.15 Treasury Board Submission

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  1. A Treasury Board (TB) submission is an official document submitted by the Minister on behalf of a department and is used to seek approval from TB ministers when there is a requirement for TB approval. TB approval is required for any contract or contract amendment exceeding the limits outlined in Annex 6.4 Conditions Imposed on the Approval Authority Limits for PWGSC Personnel.
  2. A TB submission can also be used to seek advance approval (e.g., at the stage when the procurement strategy has not been fully developed) with appropriate justification. TB ministers base their decision to approve, in this circumstance, on the information provided in the remarks section of the TB submission. Treasury Board Secretariat (TBS) analysts include in the analysis a risk assessment of the elements in the solicitation process outlined in the submission. If at any point during the bid solicitation process there is any deviation from what has been stated in the TB submission, the contracting officer must contact the TBS analyst to determine whether the change warrants further action, such as a letter to the TB President or a new TB submission. Contracting officers are to keep written advice from the TBS analyst on the procurement file.
  3. Contracting officers must prepare TB submissions in accordance with the following:
    1. the TB guidelines found in its publication: A Guide to Preparing Treasury Board Submissions and supplemented by the Acquisitions Branch (AB) "Treasury Board Submission Guide for Goods or Services Contracting", which contains the most recent requirements provided by TBS. It is recommended that contracting officers consult TB Submission Division of the Business Management Sector, Acquisitions Branch for further guidance.
    2. the following substantiation, as required, must be included in all TB submissions:
      1. submissions seeking approval of a non-competitive contract must provide an explicit and compelling rationale for not using a competitive process;
      2. submissions seeking approval for a competitive or non-competitive contract must provide an assessment of the extent to which TB approval of the proposals could limit, or encourage, the competitiveness of related procurement activities in the future; and
      3. submissions seeking Treasury Board approval of contracts should address compliance with the Federal Contractors Program (FCP) for employment equity. Consult Annex 5.1 Federal Contractors Program for Employment Equity for more information.
  4. Proposed contracts and contract amendments, which require TB approval, must be approved by TB before they are entered into and before any work has begun.
  5. Public Works and Government Services Canada (PWGSC) cannot enter into a contract, or make any contractual commitment (e.g., Letter of Intent), which constitutes the first step of a project that may subsequently require TB consideration and approval.
  6. When TB has approved an amendment, PWGSC may further amend the contract without TB approval if the cumulative value of the amendments after each issuance of an amendment pursuant to a TB approval does not exceed the non-competitive amendment level set out in Annex 6.4 Conditions Imposed on the Approval Authority Limits for PWGSC Personnel.
  7. TB approval is also required for a number of areas described in the TB directives and circulars, as well as for the making of any "extra payment," i.e., a payment where a legal liability does not exist or has not been accepted by Canada, or where there is uncertainty that a legal liability exists under the contract.

6.5.15.1 Complex Procurements requiring a Treasury Board Submission

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A Complex procurement risk assessment tool for all Acquisitions Program (i.e. Acquisitions Branch and the Regions) Treasury Board submissions must be completed prior to TB approval. This assessment toolThis information is only accessible to federal government employees. has 43 questions and is used by the AB risk management authority in a formal interview process with the procurement authority and other stakeholders (such as client departments and project authorities) to assess the risk of the procurement.

Using the TB Risk Assessment tool managed by the AB Risk Management Authority, contracting officers will follow the risk assessment process below:

  1. The contracting officer determines the requirement for Treasury Board approval and contacts the Risk Management Authority to schedule and perform the risk assessment;
  2. The risk assessment is conducted with the contracting officer, client authorities and the AB Risk Management Authority. The risk assessment is formed on a consensus and the risk assessment tool sorts results into 10 “trigger” risks. These risks are given priority consideration in preparing the narrative for the TB submission. The overall score determines the level of risk for the procurement.
  3. The contracting officer and the Risk Management Authority collaborate on the preparation of the Risk and Mitigation Strategy section in the TB submission and select up to five key risks, scoring Medium, Medium High or High that summarize the risk assessment. Each risk in the TB submission narrative must contain the following elements:
    1. The risk statement, describing what harm may occur, the likelihood of it occurring and its impact on the procurement and/or the organization;
    2. The risk response strategy, summarizing the actions, or procurement factors, that may reduce the likelihood or severity of the risk; and,
    3. The residual or remaining level of risk to the procurement after taking into account the risk response measures.
  4. The risk narrative in the TB submission is also used in and consistent with, other documents in the TB approval process.

Results of each TB submission risk assessment are maintained by the AB Risk Management Authority and are reported to AB operational sectors and regions, summarizing assessment activity and key findings.

6.5.15.2 Translation

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  1. Part 1 of the TB submissions must be prepared in both official languages, presented side by side.
  2. When translation services are required for a technical or specialized document, it is helpful to send the translators a copy of an early draft so that any required terminology research may commence in order to expedite translation. Departmental standard procurement templates or other templates that have been translated and approved must be provided as a reference guide to the Translation Bureau to ensure consistency of terminology.
  3. Contract amendment requests requiring TB approval must be prepared in a bilingual format using the form PWGSC-TPSGC 1151-1This information is only accessible to federal government employees., Contract Request/Contract Amendment Request.

6.5.15.5 Retroactive Approval of Contract

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TB ministers will entertain submissions requesting retroactive approval of a contract or contract amendment only under exceptional circumstances, e.g., urgent cases involving public safety or security, incidents or cost overruns. In such cases, TB requires certification that the minister concerned agreed to the commencement of the work before receiving TB approval including a full report on the reasons, the managerial responsibilities involved and corrective actions taken.

6.5.20 Contract Amendment

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  1. The contract amendment approval document is used to seek approval to amend a contract/standing offer/supply arrangement. The amendment approval authority required will determine the document to be used. The amendment approval documents are:
    1. the "Contract Amendment Request" form is used for director general and regional director general approval and below, at the sector's or region's discretion;
    2. the form PWGSC-TPSGC 1151-1 This link is available only to clients with access to Publiservice, the Government of Canada extranet., Contract and Contract Amendment Request, must be used for assistant deputy minister approval;
    3. the TB submission form, available in the TB publication A Guide to Preparing Treasury Board Submissions, must be used for amendments requiring TB approvals;
    4. see Annex 6.3: Preparation of Contract Amendment Approval Documents for instructions on the preparation of contract amendment approval documents listed in (i) and (ii) above. For TB submissions, see 6.5.15 Treasury Board Submission.

6.10 Additional Reviews

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The contracting officer is responsible for ensuring that the procurement document(s) receive appropriate review and approval by the proper area or authority. Below are some of the reviewing authorities that must be consulted before or during the approval process.

6.10.1 Contract Quality Control Review

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  1. For Complex Procurements within Headquarters, Contract Quality Control (CQC) within the Acquisition Program Integrity Secretariat must conduct a pre-award review of all proposed approval documents for Senior Director and above. CQC will review the accuracy and adequacy of the approval documents and provide observations on a "Comments Sheet" to the contracting officer.
  2. For Basic and Standard Procurements within Headquarters, review by Contract Quality Control (CQC) is within the discretion of the contracting officer or the approval authority.
  3. In the regions, for Complex Procurements, Regional Quality Assurance (RQA) reviews proposed approval documents for Regional Director approval level and up, and is responsible for reviewing the accuracy and adequacy of the approval documents.
  4. In the regions, for Basic and Standard Procurements, review by RQA is within the discretion of the contracting officer or the approval authority.
  5. Regardless of value, recommendations involving deviations from government contracting policies must be submitted to CQC, or RQA, as appropriate, for review, following which, the DG/RDG will recommend the approval documents to the Assistant Deputy Minister, Acquisitions Branch, for approval.

6.10.5 Legal Services Review

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  1. For Complex Procurements, a legal review must be obtained for any TB submission, contract or contract amendment requests and the Contract Planning and Advance Approval (CPAA), which either:
    1. is at or above the Senior Director/Regional Director approval level; or
    2. is in excess of $50,000,000.
  2. For Basic and Standard Procurements, review by Legal Services is within the discretion of the contracting officer or the approval authority.
  3. See section 3.110 Legal Services for situations requiring consultation with Legal Services.
  4. Legal Services must also be consulted when the contracting officer is considering a deviation from Standard Acquisition Clauses and Conditions Manual clauses or the departmental standard procurement templates. The contracting officer should also seek advice from Legal Services on sensitive requirements.
  5. Legal Services must review any requests for lessening Canada's full rights at law, a disclaimer, limitation of the contractor's liability, or decrease of the warranty time period. The proposed changes must also be acceptable to the client, and form part of the submission requesting approval.

6.10.10 Cost and Price Analysis Services

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  1. Mandatory Use of Cost and Price Analysis Services

    Contracting officers must contact a cost analyst under the following conditions:

    1. for any Treasury Board submission, contract or contract amendment requests, and Contract Planning and Advance Approval that meet any of the mandatory conditions set out in the Directive on the Use of Cost and Price Analysis Services (located under the theme of Risk ManagementThis information is only accessible to federal government employees. of the Acquisitions Program Policy Suite). The cost analyst will determine if further analysis or review is required. Refer to the Directive for specific conditions, process, contact information and roles and responsibilities;
    2. for Complex Procurements requiring senior director's or regional director's approval, a condition of exercising delegated authority is that the cost analyst must be given the opportunity to review the contractual documents and to provide comments. For all procurements above a senior director's or regional director's approval level, comments received from the cost analyst must be included as supporting data in Part 2, Section F of form PWGSC-TPSGC 1151-2, Contract Request (PDF 9 KB)This information is only accessible to federal government employees. - (Help on File Formats)
  2. Discretionary Use of Cost and Price Analysis Services

    Apart from the mandatory conditions where they must be consulted, cost analysts are always available for consultation on any procurement on a discretionary basis. Refer to the Guideline on the Use of Cost and Price Analysis Services (located under the theme of Risk ManagementThis information is only accessible to federal government employees. of the Acquisitions Program Policy Suite) for more information on available services.

6.10.15 Industrial Security

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Contracting officers should ensure that any industrial security requirement is addressed in the approval documents and that the Canadian Industrial Security Directorate (CISD) has done a review as appropriate. For more information on industrial security, see 4.30.10 Industrial Security in Contracts to 4.30.30 Foreign Ownership, Control or Influence and 5.15 Verifying Compliance with Security Requirements.

6.10.20 Client Department Review

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  1. Client departments must review and provide their written concurrence that the client’s input into the solicitation document (e.g. Statement of Work, Statement of Requirement, specification, evaluation) is accurately reflected within the solicitation document and the TB submission, in accordance with Annex 1.1: Matrix of Responsibilities between PWGSC and Client Departments for the Procurement of Goods and Services (Generic) and Annex 1.2: Specific Division of Responsibilities Agreements.
  2. For the generic division of anticipated types of responsibilities between PWGSC and client departments, consult Annex 1.1: Matrix of Responsibilities between PWGSC and Client Departments for the Procurement of Goods and Services (Generic); for the two client-specific agreements with the Department of National Defence, consult Annex 1.2: Specific Division of Responsibilities Agreements.
  3. A specific procurement may require the modification or deletion of individual conditions. These changes must be discussed with the client before inclusion in the solicitation or contract/standing offer/supply arrangement, to ensure that complete understanding exists as to the extent of the client's rights and responsibilities. For the responsibilities of the client department with respect to the solicitation, see 4.75.1 Client Department Review of Elements of a Solicitation.

6.20 Contract Approval and Signing Authorities

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  1. The internal approval and signing authorities, the conditions imposed on the approval authority limits, the exceptions to the approval authority limits and other guidelines are contained in the following annexes:
    1. Annex 6.4: Conditions Imposed on the Approval Authority Limits for PWGSC Personnel. This annex provides information on the conditions imposed on approval authority limits.
    2. Annex 6.4.1: Approval Authorities and Additional Signing Authorities in Support of Clients' Programs Only - Other than for Canadian Commercial Corporation. This annex provides a summary of the authorities and exceptions to these authorities.
    3. Annex 6.4.2: Contracting Limits
      • Annex 6.4.2.1: Contracting Limits for Basic and Standard Procurements
        1. Instructions
        2. Overall Contracting Approval and Signing Authority Limits
        3. Risk-Based Procurement Delegation Grid
        4. Contract Approval Authority Limits for Basic and Standard Procurements:
          • Goods
          • Services
          • Construction
          • Architectural and Engineering Services
          • Non-Regulated Telecommunications Services
        5. Exceptional Contracting Approval Authorities
      • Annex 6.4.2.5: Contracting Limits for Complex Procurements
        1. Instructions
        2. Goods – Contract Approval and Signing Authority Limits for Complex Procurements
        3. Services- Contract Approval and Signing Authority Limits for Complex Procurements (excluding construction, non-regulated telecommunication, and Architectural and Engineering services)
        4. Construction - Contract Approval and Signing Authority Limits for Complex Procurements
        5. Non-Regulated Telecommunication Services - Contract Approval and Signing Authority Limits for Complex Procurements
        6. Architectural and Engineering Services - Contract Approval and Signing Authority Limits for Complex Procurements
    4. Annex 6.4.3: Exceptional Contracting Limits for Complex Procurements

      Instructions relative to the following tables:

      1. Table 1 addresses: emergency contracting authority, special contracting limits (transportation services from common carriers; regulated electricity, gas, water, sewage disposal, heat and telecommunications services; deregulated electricity and natural gas); repair and overhaul of military equipment; and procurement under U.S. Foreign Military Sales Program.
      2. Table 2 addresses: procurement of ammunition under the Munitions Supply Program; agreements for the supply of edible agricultural products for foreign aid programs; agreements for the transport by ocean-going vessel of any goods shipped for CIDA; and procurement of bulk fuels.
      3. Table 3 addresses: standing offers and supply arrangements; and energy management contracts.
      4. Table 4 addresses: disposal of surplus Crown assets; sales limitations, inventory shortages, claims and discrepancies.
      5. Table 5 addresses: other authority limits (Canadian Commercial Corporation, instructions tools and equipment required by contractors for repair and overhaul of defence supplies; Certification of Defence Supplies, Seized Property Management and Disposal and Disposal of Seized Real Property).
    5. Annex 6.4.4: Notes to Exceptional Contracting Limits for Complex Procurements
    6. Annex 6.4.5: Table of Equivalent Positions
    7. Annex 6.4.6: Basic and Standard Contract Amendment Approval Instructions
    8. Annex 6.4.7: Complex Contract Amendment Approval Instructions
    9. Annex 6.4.8: Contract Amendment Approval Instructions for all Complexities
  2. Contract approval and signing authorities in support of clients' programs must be exercised in accordance with the applicable legislation and regulations, and within PWGSC policies and guidelines.
  3. The contract approval and signing authorities detailed in Annex 6.4.2: Contracting Limits and Annex 6.4.3: Exceptional Contracting Limits for Complex Procurements are applicable to procurement requirements from client departments including when PWGSC is a client.
  4. The contract approval and signing authorities in support of clients' programs apply to all contractual documents and arrangements, including the following:
    1. purchase orders;
    2. contracts;
    3. formal agreements and arrangements (e.g., Interdepartmental Memorandum of Understanding (MOU));
    4. standing offers and supply arrangements;
    5. letters of intent;
    6. go-ahead letters and go-ahead messages;
    7. Stores Transfer Orders;
    8. Supply Transfer Orders;
    9. written direction to the Agency of Record (e.g., work authorization);
    10. assignments;
    11. consents to subcontract;
    12. termination for convenience notices; and
    13. amendments to any of the above.
  5. Conditions and limits set out in Annex 6.4: Conditions Imposed on the Approval Authority Limits for PWGSC Personnel will apply to the approval and signing of all contractual documents and arrangements, including those arrangements that are not subject to the Government Contracts Regulations and TB Contracts Directive, unless approval and signing limits are set out within an existing Memorandum of Understanding. Limits must be read in conjunction with the instructions at the beginning of the annex as well as the notes contained in each table. The Deputy Minister's approval is required when the value of transfer agreements between departments (e.g., transfer orders with CORCAN) exceeds the approval limits set out in Annex 6.4: Conditions Imposed on the Approval Authority Limits for PWGSC Personnel. TB approval is required when the value of contractual arrangements with provincial or municipal governments, or provincial or federal Crown corporations exceeds the approval limits set out in Annex 6.4: Conditions Imposed on the Approval Authority Limits for PWGSC Personnel.
  6. For Complex Procurements, the positions of director general/regional director general and above have full approval authority to use a standing offer method of supply or a supply arrangement with the exception of non-competitive (including non-competitive procurements where an advance contract award notice is used) procurements exceeding the director general/regional director general limits where the Assistant Deputy Minister, Acquisitions Branch, has full approval authority, in accordance with Annex 6.4.3: Exceptional Contracting Limits for Complex Procurements, column 56.
  7. The inclusion of a limitation of expenditure in standing offers within the Complex Procurements stream is optional (see 4.10.20.1 Standing Offer Procedures). Approval authority for standing offers which do not contain a limitation of expenditure will be as set out in Annex 6.4.3: Exceptional Contracting Limits for Complex Procurements using the total estimated procurement value for the entire standing offer period to determine the appropriate approval for the standing offer
  8. For more information on standing offers, see 3.40 Standing Offers and 4.10.20 Request for Standing Offers; for more information on supply arrangements, see 3.45 Supply Arrangements and 4.10.25 Request for Supply Arrangements.
  9. Approval of contracts that include options must be sought in accordance with the total estimated cost including any options for which funds are available or expected to be provided in the future (see Annex 6.4.7: Complex Contract Amendment Approval Instructions).
  10. More than one contractual document must not be issued, under any circumstance, in order to circumvent the necessity of obtaining the proper approval authority.
  11. If an Advance Contract Award Notice (ACAN) is published when directing a requirement to a specific supplier or vendor for the purposes of contract approval authorities, the procurement is classified under the "electronic bidding" category. The electronic bidding approval levels apply whenever an ACAN has been posted and no valid Statement of Capabilities was submitted. See Annex 6.4.2: Contracting Limits.

6.20.1 Delegated Authority to Incumbents

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6.20.1.1 General Information

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All the authorities granted to and exercised by contracting officers in PWGSC are provided subject to the following:

  1. if a contracting officer's responsibilities do not require the officer to exercise a particular authority (for any type of authority or above a particular dollar level) then that contracting officer does not, in fact, have that authority. Any and all authority granted to an incumbent of a position must be commensurate with, but not greater than, the level required to carry out the responsibilities assigned to the incumbent; and
  2. it is a requirement that the relationship between responsibilities and authorities for each designated contracting officer be recognized on individual delegation forms. See PWGSC Delegation of Authorities Manual (PDF 45 KB)This information is only accessible to federal government employees. - (Help on File Formats)

6.20.1.5 Incumbent

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  1. Limits to the contract approval and signing authorities granted by the Minister and Deputy Minister to incumbents of designated positions are as set out in Annex 6.4: Conditions Imposed on the Approval Authority Limits for PWGSC Personnel. These are maximum limits which may be reduced at the discretion of the appropriate managers.
  2. A person is normally designated the incumbent of a position following staffing action. Supervisors must inform new incumbents of the levels of contract approval and signing authority to be exercised, by signing an individual delegation form PWGSC-TPSGC 524, Delegation of Common Service Acquisition Authorities – Schedule 3 (PDF 156 KB)This information is only accessible to federal government employees. - (Help on File Formats).
  3. Contracting officers who have previously exercised contract approval and signing authorities in another position may exercise, upon promotion, the authorities delegated to incumbents at the new level once a new individual delegation form is completed and signed. General information on Delegation of Authority Instruments is available to PWGSC employees on-line at Delegation of Authorities. Further information on the principles of delegation of authority and proper use of the authorities is available at Delegation Principles This link is available only to clients with access to The Source, the PWGSC intranet..
  4. Directors general must withhold full contract approval and signing authorities from anyone who has had no PWGSC purchasing/contracting experience until competence has been demonstrated at a lower level of authority for at least six months.
  5. To facilitate audit requirements, the signed original of the individual delegation form must be forwarded to the office of the Director General, Policy, Risk, Integrity and Strategic Management Sector/Acquisition Policy and Process Directorate. Regional offices are requested to send a copy of the signed form. A signed copy should be kept on file in the procurement area or central location.

6.20.1.10 Acting Incumbent

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  1. Designation of an acting incumbent for a position, to which a level of authority has been granted, must be made by an authority level no less than that of the incumbent's supervisor.
  2. The acting incumbent should normally be given the full contract approval and signing authorities of the position. However, the acting incumbent must not exercise these authorities on a procurement file for which the acting incumbent was responsible in the incumbent's normal position.
  3. If an incumbent is to perform the duties of a position in an acting capacity for an indeterminate period, then the incumbent's supervisor will delegate authorities by signing the individual delegation form PWGSC-TPSGC 524 (PDF 156 KB)This information is only accessible to federal government employees. - (Help on File Formats), indicating the period that these authorities are to be in effect.
  4. In those situations where an incumbent must perform the duties of a position in an acting capacity for a short period (e.g. vacation replacement), then the incumbent's supervisor will delegate authorities by email, indicating the period that these authorities are to be in effect. An example of an email is as follows:

    Objet/ Subject: Absence de______________ / Absence of ______________

    Par la présente je vous avise que l'employé(e) sous nommé(e) sera absent(e) pendant la période spécifiée. Pour assurer la continuité des opérations, les pouvoirs contractuels seront délégués au(à la) candidat(e) nommé(e) ci-dessous.

    This is to advise that the individual named below will be absent for the specified period. To ensure continuity of operations, acting contractual authorities have been delegated to the following appointee.

    Personne absente/
    Person Absent : ___________________

    Titre du poste comblé/
    Position Title occupied: ___________________

    Période/ Period: ___________________

    Candidat(e) nommé(e)/
    Appointee's name: ___________________

    Approuvé par/
    Approved by: ___________________

  5. The e-mail must be sent to the acting incumbent, with a copy to all contracting officers reporting to that position, and the Senior Purchasing Assistant of the supervisor's immediate superior. In addition, a copy of the e-mail must be placed on the file of any contractual document approved/signed by the incumbent while exercising the acting authority.

6.25 Special Approval Considerations

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6.25.1 Go-Ahead Letters

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Go-ahead Letters may be issued after obtaining final approval of the contract submission, provided all appropriate terms and conditions of the proposed contract are known and acceptable to the potential contractor. Go-ahead Letters are subject to the appropriate signing authorities.

6.25.5 Forgiveness of Debts

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No PWGSC employee, without the appropriate delegated authority, is authorized to forgive debts arising out of contractual actions and which are owed to Canada. For the authority to write-off debts refer to "Debt Write-Off" in the departmental Delegation of Authorities Instrument This link is available only to clients with access to The Source, the PWGSC intranet.. For more information regarding debt write-off, see Debt Write-off Regulations, 1994.

6.25.10 Waive of Interest

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No PWGSC employee is authorized to waive interest owed to Canada without the appropriate delegated authority. For the authority to waive interest charges, refer to "Waive of Interest" in the departmental Delegation of Authorities Instrument This link is available only to clients with access to The Source, the PWGSC intranet.. For more information regarding waive of interest, see TB Interest and Administrative Charges Regulations.

6.25.15 Per Diem Rates

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This section of the Supply Manual has been removed as per Policy Notification 105 (PN-105).

6.25.20 Nil Value Amendment

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Nil value amendments involving a simple administrative change are the responsibility of each procurement sector/region. For nil value amendments where risk or liability will be transferred to Canada, refer to Annex 6.4.8: Contract Amendment Approval Instructions for all Complexities, section 11.

6.25.25 Financial Evaluation of Bids/Offers/Arrangements

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  1. For any complex competitive procurements requiring contract entry approval of the Assistant Deputy Minister or above, more than one PWGSC employee must be involved in the evaluation of the prices. For more information on financial evaluation of bids/offers/arrangements, see 5.45 Financial Evaluation of Bids.
  2. Contracting officers should also consider having more than one PWGSC employee involved in the evaluation of the prices for complex standing offers and supply arrangements requiring the approval of the Assistant Deputy Minister.
  3. For Standard competitive procurements, a peer review of the bid (technical and financial) evaluation and contractor selection must be obtained if the Procurement Risk Assessment indicates a mandatory peer review is necessary.

6.25.30 CORCAN

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Although arrangements with CORCAN are not governed by the Government Contracts Regulationsand the Treasury Board Contracts Directive, all existing departmental limits governing the approval of entry into and signing of contracts apply.

6.25.35 Stop Work Orders and Notices of Termination

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Stop work orders and notices of termination must be approved and signed by a contracting officer with the approval authority (see Annex 6.4: Conditions Imposed on the Approval Authority Limits for PWGSC Personnel) for the total contract value at the time of the termination.

6.25.45 Trade-ins

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Contracts for which trade-ins have been approved through disposal operations procedures are subject to approval authorities as detailed in Annex 6.4: Conditions Imposed on the Approval Authority Limits for PWGSC Personnel. (All trade-ins are disposal operations and, as such, are subject to disposal operations procedures.) The trade-in value will not be considered in determining the required level of authority.

6.25.50 Treasury Board Exceptional Contracting Limits

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  1. PWGSC may enter into any form of agreement used by a railway company for permission to construct or maintain a private crossing or a pipe or cable crossing over, across or under the property of the company at a rate or in an amount no greater than those normally charged for each permission.
  2. PWGSC may enter into any agreement with a railway, telegraph, telephone or power company for permission to attach wire to poles belonging to the company at a rate or in an amount no greater than those normally charged for each permission.
  3. PWGSC may enter into and amend contracts with the United States Government containing that government's usual terms dealing with indemnity and liability, subject to the limits of the TB Contracts Directive.

6.25.55 Contracts for Legal Services

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Contracts for the performance of legal services may be entered into only by or under the authority of the Minister of Justice.

6.25.60 Standing Offer

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  1. At the Procurement Strategy stage, the approval authority is based on the total estimated value of the requirement.
  2. If advance approval was not sought or given to issue the standing offer(s), then approval to issue each resulting standing offer is required. The total estimated value of each resulting standing offer is used to determine the approval authority.
  3. For Basic and Standard Procurements, the approval authority is determined by the Procurement Risk Assessment. For Complex procurements the approval authority is determined by the appropriate table for Contract Approval and Signing Authority Limits – for Complex Procurements.

6.30 Procurement Process Initiated by Client

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Public Works and Government Services (PWGSC) is sometimes asked to process requirements when the procurement process was initiated by client departments (e.g. sourcing, bidding, evaluation, selection). For details on how to process these types of requirements, refer to section 2.65 Procurement Process Initiated by Client..

6.30.1 Ratification by Treasury Board

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As stated in the Treasury Board (TB) Contracting Policy, subsection 4.1.11:

“If a contracting authority enters into a contract without Treasury Board approval when such approval should have been obtained, ratification by the Treasury Board must be sought as soon as possible.”

In a case where contract approval is being sought for work already commenced, the contracting officer must include with the request for TB’s approval the client's certification to the effect that the client department concerned had agreed to the commencement of work before the receipt of TB approval.

6.30.5 Ratifications within Departmental Authorities

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Ratifications:

Authorities for approving agreements which involve: pre-contractual work, ratification of contractual commitments, confirming orders, or contracts/amendments which include pre-contractual work clauses, or any other retroactive elements will be:

  1. For Complex Procurements, the appropriate director or higher authority, as determined by the contract value and non-competitive contract approval authority limits, must approve the contracts processed by PWGSC. These limits are reduced by 50 percent below the ADM level, as per Annex 6.4.2.5 Contracting Limits for Complex Procurements.
  2. For Basic and Standard Procurements (with the exception of confirming orders), the appropriate authority, as determined by the procurement risk assessment, and non-competitive contract approval authority limits, must approve the contracts processed by PWGSC.

6.30.10 Confirming Orders and Contracts Involving Pre-contractual Work

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  1. PWGSC does not normally place contracts to confirm the actions of departments or agencies. The practice of providing such service to client departments should be discouraged to the maximum extent practical. However, it may be necessary for PWGSC to become involved because of its exclusive goods procurement authority. PWGSC may have some value to add in processing confirming orders when the work is complete, or contracts when the work has started.
  2. Requests for confirming orders and contracts for pre-contractual work must be evaluated and processed on the basis of the circumstances surrounding each instance. Where the request is the result of attempts to circumvent normal procurement procedures, return of the request to the client department should be a prime consideration.
  3. When the work has been completed, Legal Services will prepare a confirming order that will contain only the information necessary to document the transaction, which includes the parties, the work performed, the dates, the amount, a release and, if required, a transfer of intellectual property rights. The appropriate director or higher authority, as determined by the contract value and non-competitive contract approval authority limits, must approve the confirming orders processed by PWGSC.
  4. Where the work has commenced, the contracting officer will prepare a contract. This contract should only include work that was not subject to a proper contract authorization. Even though the work started before a required contract authorization, the contract must not be backdated. The date in the Period of the Contract or Period of Performance clause must be the award date of the written contract. The contract cannot be backdated or retroactive under any circumstances. To ensure that the work done before the contract date will be covered by the contract, the pre-contractual work clause C0210C of the Standard Acquisition Clauses and Conditions Manual, indicating the date the work has started, must be included in the contract to pay the contractor for any work performed before the award of the written contract. For Complex procurements, the appropriate director or higher authority, as determined by the contract value and non-competitive contract approval authority limits, must approve the contracts processed by PWGSC. These limits are reduced by 50 percent below the ADM level, as per Annex 6.4.2. Contracting Limits. For Basic and Standard Procurements, the appropriate authority, as determined by the procurement risk assessment, and non-competitive contract approval authority limits, must approve the contracts processed by PWGSC.
  5. The client department will remain liable for any complaints resulting from their actions.

Annex 6.1: Procurement Plan Instructions

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The Procurement Plan must be prepared as a memorandum from the Director General or Regional Director General to the Assistant Deputy Minister and must include the elements identified below. Forms, Guides and Templates This link is available only to clients with access to The Source, the PWGSC intranet.can be found on the Acquisitions Branch Web site.

Formal Procurement Plan Description

Give a brief description of the requirement, including any options, advance approvals and set-aside amounts. Indicate the period of the proposed contract and options, where applicable.

(Insert relevant information for Assistant Deputy Minister (ADM) if procurement exceeds contract approval limit of director general/regional director general (DG/RDG) and is a non-competitive procurement (including non-competitive procurements where an advance contract award notice is used).

The ADM is to be notified of sensitive procurements after they are approved by the DG/RDG by way of a copy of the signed procurement plan).

Background

Provide background information and overall context. Address any audit recommendations, Canadian International Trade Tribunal (CITT) determinations, Treasury Board decisions, etc. specific to the requirement.

Estimated Cost and Name of Client

State the estimated cost, the Goods and Services Tax or Harmonized Sales Tax included, for the requirement. Include any options, set-aside amounts, etc., and state which client department it is chargeable to.

Anticipated Contract (or Standing offer or supply arrangement) Approval Authority Required

Indicate the anticipated contract approval authority. Explain why this would be the approval authority, if not evident.

Sourcing

Identify applicable trade agreements (North American Free Trade Agreement, World Trade Organization Agreement on Government Procurement, Agreement on Internal Trade, etc.), Comprehensive Land Claims Agreements, and any significant policies governing sourcing decisions (Set-aside Program for Aboriginal Business, Canadian Content, Shipbuilding, Repair, Refit and Modernization, Policy on Green Procurement, etc.).

Explain the sourcing strategy, i.e. GETS, other public advertising, source lists (one time, permanent).

Substantiate any decision to use sole source.

For procurement plans for which Treasury Board (TB) submissions will be required, a substantiation as detailed in paragraph b.ii. of section 6.5.15 Treasury Board Submission must be included.

Policy Issues

Attach relevant Procurement Review Committee document. Identify any other relevant socio-economic or environmental considerations. For more information on the Industrial and Regional Benefits Program, see 3.70 Industrial and Regional Benefits (IRB) Program.

Outline any special or unusual aspects of the procurement, for example, a deviation from policy.

Recommend a course of action to resolve or handle any problems involving potential major risks or deviations from sourcing policy or other PWGSC policy. Where there are major risks inherent in the proposed approach, they must be examined in consultation with PWGSC financial authorities and Legal Services.

Evaluation and Contractor Selection Methodology

Identify the evaluation criteria and the selection method to be used with any bid solicitation, including pricing basis, point rating or mandatory/desirable criteria for the technical evaluation.

Anticipated Basis of Payment

Provide an indication of the anticipated basis of payment to be used in the contract, (e.g. firm price, fixed time rates, ceiling price, limitation of expenditure, etc.)

Use this section to substantiate the use of advance payments, and to indicate when financial security (e.g. surety bond, irrevocable standby letter of credit) will be required from the supplier/contractor. Address contract audit provisions.

Milestones

Give target dates for important milestones (for example, bid solicitation, contract award, delivery schedule) in the form of "early" May or "mid" August or "late" October, rather than specific dates.

Additional Comments

Include any information that should be brought to the approval authority's attention, e.g. limitation of contractor's liability, fairness monitor, industrial security requirements, intellectual property, business line consultations, green procurement.

Contracting Officer

State the name, sector/region, division and telephone number of the authority responsible for the project.

Comments

Leave two or three lines for comments by the approval authority.

Recommended by:

______________________
Senior Director or Regional Director OR
Director General/Regional Director General
Sector or Region

______________________
Date

Approved by:

______________________
Director General/Regional Director General OR
Assistant Deputy Minister

______________________
Date

Add the Sole Source Questions and Answers as Annex A

Annex 6.2: Contract Request Instructions

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Contract Request 1. General
  1. For Complex Procurements requesting the Assistant Deputy Minister (ADM) approval authority and for all contracts, regardless of complexity stream, not pre-approved through the Contract Planning and Advance Approval (CPAA) process, a Contract Request for authority to enter into a contract must be prepared. Approval must be obtained before accepting any offer from a supplier or requesting a potential contractor to carry out specific work.
  2. The Contract Request must give an accurate description of the terms and conditions requiring approval, which must reflect and be supported by data contained in the applicable files. Each Contract Request must identify and explain any proposed deviations from applicable policies and procedures.
  3. Details of the proposed contract must be recorded clearly and briefly on the Contract Request. For Complex Procurements, the signed Contract Request must be submitted for review to at the Contract Quality Control (CQC) Division within the Acquisition Program Integrity Secretariat (APIS).
  4. After any CQC officer's concerns are addressed, the Contract Request will be submitted for approval.
  5. For Complex Procurements, the Contract Request must be supported by a copy of the proposed contract and the applicable files.
  6. Regardless of complexity stream, all recommendations involving deviations from government contracting policies must also be submitted to CQC for pre-award review.
  7. For Complex Procurements, the sector's legal counsel will review all contract requests at or above Senior Director/Regional Director and provide a legal risk assessment. (See 6.10.5 Legal Services Review.)
  8. For Complex Procurements, the cost analysis review will be required in accordance with 6.10.10 Cost and Price Analysis Services.
  9. For Complex Procurements requiring approval of the ADM or above, after considering the advice of CQC, Legal Services and the cost analyst, the Director General (DG) will recommend the Contract Request to the ADM, Acquisitions Branch, for approval.
  10. For Basic and Standard Procurements, review by CQC, Legal Services and the cost analyst is within the discretion of the contracting officer or the approval authority, except where contacting the cost analyst is mandatory under the Directive on the Use of Cost and Price Analysis Services (located under the theme of Risk ManagementThis information is only accessible to federal government employees. of the Acquisitions Program Policy Suite). (See 6.10.10 Cost and Price Analysis Services).
  11. On receipt of the Contract Request, the approval authority will review it and grant full approval to proceed or identify concerns and direct changes to the request or request additional steps before award.
2. Responsibility of the Contracting Officer
  1. For Complex Procurements requiring approval of the ADM or above, the contracting officer must see to the preparation, recommendation and completion of the Contract Request on forms PWGSC-TPSGC 1151-1This information is only accessible to federal government employees. and PWGSC-TPSGC 1151-2This information is only accessible to federal government employees. in accordance with the following preparation instructions:
    1. certify that the information provided in the Contract Request is an accurate representation of information on file;
    2. submit the Contract Request to the appropriate approval authority and ensure that:
      1. the submission is forwarded and recommended by all line management officers between the contracting officer and the approval authority;
      2. sector or region resources such as legal counsel, contract quality control, cost analysts, and commodity teams review the submission, as required. See 6.10.10. Cost and Price Analysis Services;
    3. obtain policy interpretations from the Acquisition Policy and Process Directorate and opinions from departmental specialists (e.g. Legal Services) on the consequences of any proposed deviations from general conditions, policies and regulations;
    4. obtain the client department's agreement for any deviations from specifications, standards and delivery requirements; and
    5. highlight, in the recommendation, the facts surrounding any proposed deviations and their negative consequences to Canada.
3. Preparation of Contract Request
  1. Contracting officers must prepare the Contract Request as outlined below.
  2. Contract Request form PWGSC-TPSGC 1151-1This information is only accessible to federal government employees. is used for contracts requiring approval from the Assistant Deputy Minister, Deputy Minister or Minister. Information can be presented in either French or English.
Part 1 Submission Data - Contract Request - form PWGSC-TPSGC 1151-1
  1. The key elements of a Contract Request include the following:
    1. the requirement and its end use;
    2. the supplier and the selection criteria;
    3. the cost, basis of payment and cash flow.
  2. The preparation should focus on these general key elements. The following sections provide additional considerations for the contracting officer's attention, when applicable.
1. Priority Attention

If priority consideration is requested because of delivery requirements or for any reason, including expiry of price validity, state the consequences of not meeting the expiry date.

2. Subject

State whether this is a request for authority to enter into contract or authority to utilize a standing offer method of supply or supply arrangement.

3. Proposal
  1. State action proposed (e.g. authority to enter into contract with; to authorize the use of a standing offer or the use of a Master (Regional) standing offer). Identify the contractor by correct legal name and give its location (e.g. city, town or village; province; country if other than Canada). Briefly describe the goods or services being supplied and their end use; part numbers and specification numbers should be referred to in Part 2 of form PWGSC-TPSGC 1151-2This information is only accessible to federal government employees. only. State the delivery point (e.g. city, town, etc.). If there are numerous delivery points, state 'Delivery to various destinations' but do not list them in this section. Refer to an appendix.
  2. Specify any proposed deviations from Cabinet or TB contracting policies.
  3. When certain terms or certain deviations from departmental policies are being recommended in the Contract Request, creating a financial obligation for Canada, request authority for the monetary obligation in this section and, in the Remarks section, explain why it is recommended that Canada be responsible in this case.
  4. If any advance payments are being proposed, specify in this section and describe in the Basis of Payment section.
  5. If there is an option to be exercised by Canada by a specific date, and the method of pricing is known or pricing formula agreed upon and the funds for the option are available in the requisition (or expected to be provided in the future), request approval to exercise the option in this section. Provide the method of pricing for the option or pricing formula, and the final date for exercise of the option in the Basis of Payment section.
  6. Indicate in a separate paragraph when approval is being requested for an additional estimated amount so that provision may be made for unscheduled work such as work arising, design changes or escalation.
  7. In the case of a proposed contract for a specified term or period only, or of a proposed standing offer, state whether the expiry date is for ordering or delivery.
4. Cost
  1. Show the total estimated cost to Canada to complete the proposed contract, Goods and Services Tax/Harmonized Sales Tax (GST/HST) included. When the price to be paid is in a foreign currency, the estimated Canadian equivalent, based on the conversion rate currently in effect, should follow in brackets. Identify the funding source (vote and requisition number) and name the certifying department or agency. For standing offers which are not funded, state that the amount is chargeable to the client.
  2. The total estimated cost, as mentioned in the first line of the preceding paragraph, refers to the total amount payable to the contractor, GST/HST included, under the contract, including payment for all goods or services, plus any options for which funds are available (or expected to be provided in the future) and any additional estimated amount for foreseeable subsequent amendments covering unscheduled work, etc., for which approval is being sought.
  3. Include a schedule of cash flow, providing a distribution by fiscal year of the funds expected to be disbursed during the course of the contract.
5. Basis of Payment
  1. Summarize all factors which have a bearing on the proposed purchase, such as (details of major elements of cost should be provided in an appendix):
    1. price to be paid;
    2. method of pricing;
      1. firm lot price;
      2. firm unit price;
      3. target price, ceiling price and incentive fee formula;
      4. target price and incentive fee formula without ceiling price;
      5. fixed time rate; or
      6. price-to-be-negotiated (PTBN) - include a formula for determination of firm basis of payment, or provide an explanation as to why inclusion of a formula is not possible, and why PTBN is not a ceiling price, if this is the case.
    3. audit or verification provisions;
    4. customs duty;
    5. Goods and Services Tax:
      1. included,
      2. extra,
      3. exempt or zero-rated (indicate reason for exemption), or
      4. not applicable;
    6. other taxes;
    7. delivery terms, for example:
      1. FOB (free on board) destination,
      2. FAS (free alongside ship),
      3. FAF (free alongside flight),
      4. FOB common carrier, contractor's plant,
      5. CIF (cost, insurance and freight);
    8. exchange rate fluctuation provisions, if applicable. Identify the amount of foreign currency which is subject to the fluctuation and any special conditions;
    9. any escalation provisions except those provided for in the general conditions forming part of the contract (e.g. sales tax, excise tax, customs duties);
    10. option – method of pricing or pricing formula plus final date for exercise of option.
  2. Describe any advance payment requirements.
  3. Provide the proposed basis of payment for any unscheduled work (introduced in the "Proposal" section and included in the "Cost" section as an estimated amount).
  4. If a large number of items and/or destinations are involved, insert the following statement under Basis of Payment:
    "Unit (and/or Lot) prices totalling $ ________, sales tax _____________, FOB_______________, as detailed in the attached annex or in an annex attached to the proposed contract."
6. Remarks

Ensure that source and price are adequately justified, by using the following criteria:

  1. Indicate how many suppliers were requested to bid and the method of soliciting bids. If a competitive process was followed, state the number of bids received and the relative standing of the recommended bidder with regard to price, e.g., the lowest being recommended. When a non-competitive (sole source) procurement strategy is chosen, the legal authority to use an exception to a competitive bidding process must be stated. (See 3.10 Competitive Contracting Process and 3.15 Non-competitive Contracting Process.)
  2. If other than the lowest-responsive bid is recommended, explain clearly why any lower bid is not acceptable.
  3. If a bid is considered non-responsive because it does not meet the mandatory requirements of the solicitation, but is lower in price than the lowest-responsive bid, concisely describe the major deficiencies.
  4. If two bids have an identical price and one of the two is recommended for acceptance, detail the governing selection criteria.
  5. If selection is not made by competitive bid, provide sufficient support for the choice made. In the absence of competition, quote the price certification obtained and explain why the price is considered to be reasonable and justifiable. Include a brief summary of Part 2, Section F2, Previous Price, of form PWGSC-TPSGC 1151-2This information is only accessible to federal government employees..
  6. If deviations from Cabinet or TB contracting policies are recommended, quote opinions given by the functional branches, specifying any financial or other consequences, and give reasons for such recommendations. Whenever possible, express Canada's proposed obligations in monetary terms.
  7. If deviations from the provisions of the North American Free Trade Agreement, World Trade Organization Agreement on Government Procurement, or the Agreement on Internal Trade are recommended, provide reasons for the deviation.
  8. If approval is being requested for any estimated amount for unscheduled work arising, design changes or escalation, as introduced in the "Proposal" section, estimated in the "Cost" section and substantiated in the "Basis of Payment" section, provide support in this section.
  9. Describe any options in this section and include the criteria that will be used for determining whether the option should be exercised.
  10. If the proposed contract is of a value in excess of $2 million for goods and services or of any value with a socio-economic impact judged to be significant, include a section dealing with the socio-economic considerations, including any funding implications. Attach the recommendations of the dedicated management committee or of the Procurement Review Committee.
  11. If advance payments are recommended, explain why and state the benefits to Canada.
  12. Include a statement on the amount of Canadian content and the creation/maintenance of jobs in Canada and their location.
  13. Describe briefly the profit calculations.
  14. State the dates for commencement and completion of deliveries included in the bid being recommended for acceptance. Do not include all of the delivery details.
  15. Whenever possible, give the TB number which grants the client program approval.
7. Expiry Date

State the expiry date of the bid.

NOTE:If genuine urgency exists, the reason should be stated in Part 1, "Priority Attention" section.

Part 2 Supporting Data - Contract Request - form PWGSC-TPSGC 1151-2

In particular, note the information in sections A to F below.

When a non-competitive (sole source) procurement strategy is chosen based on exception 6.(d) of the Government Contracts Regulations, the responses to the questions found in Annex 3.1: Treasury Board Questions for Sole Source must be attached to this Part 2.

Section A - Details of Contract Demand or Requisition
  1. If all of the goods or services requisitioned by the client are not in the proposed contract for which approval is being sought and Part 1 of form PWGSC-TPSGC 1151-1This information is only accessible to federal government employees. did not make this clear, briefly summarize, for the understanding of the approval authority, the total number of items on the requisition and the number included in the proposed contract. If there is not enough space because of the size of the summary explanation, refer to the appendix or document on file which provides the details.
  2. If the goods and/or services requisitioned are the same as those being recommended for acceptance from the proposed supplier, describe them in this section or refer to the work specifications.
Section B - Special Terms not Included in Part 1
  1. Detail any special terms which will have an effect on the proposed contract which are not included in Part 1 of form PWGSC-TPSGC 1151-1This information is only accessible to federal government employees., such as financial security, royalty payments, etc. Address conformance with the following policies (some sectors/regions may prefer to address these policies in Section F, either location is acceptable):
    1. International Sanctions,
    2. Federal Contractors Program for Employment Equity, and
    3. Conflict of Interest.
  2. It is not necessary to refer to normal escalation provisions contained in the general conditions.
Section C – Delivery

State the delivery requirements specified by the client and promised by the supplier and the acceptability of delivery if not in accordance with the delivery specified.

Section D - Type of Contract Document

State the type of contract document, e.g. "Your Tender is Accepted"; "You are Requested"; "Standing Offer"; "Your Proposal is Accepted"; "Formal Agreement".

Section E - Bids Received

State if there was a public opening of bids.

Section F - Basis of Recommendation F1 - Price support for negotiated cases

In the absence of competition, detail the price support which has been obtained, if this was not provided in Part 1 of form PWGSC-TPSGC 1151-1This information is only accessible to federal government employees.. State reasons why the various price elements are considered to be reasonable and justifiable. Substantiate the profit or mark-up factor being recommended.

F2 - Previous Price

Provide details of previous prices for negotiated contracts when available, including the percentage of increase or decrease, and an explanation for any substantial increases. Provide this information also for competitive contracts unless the number of low dollar value items makes the comparison too complex to serve a useful purpose.

F3 - Discrepancies, if any, between bid solicitation and bid recommended

Provide details and reconcile amounts, when discrepancies occur between bid solicitation and bid recommended.

F4 - Support for deviations from departmental policy, changes or deletions in general conditions and supplemental general conditions

Support deviations from departmental policy in this section.

F5 - Acceptability of goods and/or services if not in accord with specifications

Support acceptability of supplies if not to specifications.

F6 - Method of Payment
  1. Detail the method of payment. If progress payments are being proposed, fully describe them, including any holdbacks.

    Note:If there are numerous items, and items and unit prices are not detailed in Part 1 of form PWGSC-TPSGC 1151-1This information is only accessible to federal government employees., or in an appendix to Part 1, make reference in Section F to the specific document on the file which details the information.

  2. Other data, if applicable, should be stated under Section F, such as:
    1. Add list of suppliers who were invited to bid and their ownership.
    2. Attach financial officer's opinion on supplier's financial status.
    3. Attach legal counsel's opinions on the legal nature of the case and on the contract submission, including its consistency with the contract.
    4. If not previously mentioned in Section B, address the contractor's compliance with:
      1. international sanctions;
      2. Federal Contractors Program for Employment Equity; and
      3. conflict of interest provisions.

Annex 6.3: Preparation of Contract Amendment Approval Documents

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1. Preparation of the Contract Amendment Request form
  1. The Contract Amendment Request (CAR), available in the Automated Buyers Environment (ABE), may be used for Director General and Regional Director General approval and below. If a CAR is used for Basic and Standard Procurements, a procurement risk assessment for amendments must be performed prior to completing the CAR.
  2. Contracting officers should include the following information, as applicable:
    1. Description/Proposal: Briefly describe the goods or services as provided in the original CPAA and state the purpose of the proposed amendment.
    2. Amendment Increase/Decrease: Show total cost of the proposed amendment in Canadian dollars or foreign currency, as applicable. If using foreign currency, give the equivalent in Canadian currency for the amendment only.
    3. Provide the name of the client involved.
    4. Approval Summary: Provide a table addressing the approval documents, the document value, the approval value of each approval documents, and the approval level.
    5. Proposed Basis of Payment: If any alteration in the Basis of Payment is proposed, provide justification and support.
    6. Remarks: Provide the following information, as a minimum:
      1. Give additional important information required for a proper assessment of the proposed amendment. For example, if the proposed amendment is for a substantial increase, state why this additional requirement did not form part of the original requirement.
      2. Provide a justification for the amendment.
  3. For requirements requiring approval at the ADM level or above, preparation of Contract Amendment Request:

Form PWGSC-TPSGC 1151-4This information is only accessible to federal government employees., Contract Amendment Request, can be presented for Assistant Deputy Minister, Deputy Minister and Minister's approval in either French or English.

Part 1 - Submission Data Contract Amendment Request - form PWGSC-TPSGC 1151-1
  1. The key elements that should be included in a Contract Amendment Request are:
    1. the purpose of the amendment; and
    2. the amendment cost.
  2. The preparation of Part 1 should focus on these general key elements. The following sections provide additional considerations for the contracting officer's attention, when applicable.
Subject
  1. Authority to Amend Contract

    Form PWGSC-TPSGC 1151-1This information is only accessible to federal government employees., can be used to obtain approval to utilize a standing offer that has been revised by the bidder.

  2. Proposal
    1. State the purpose of the proposed amendment and briefly describe the goods and/or services, as provided in the original contract request (for example, to amend the contract with ABC for the supply of 20 additional widgets). Include, in the case of goods or services being added, the prices, sales tax position, delivery points, etc.
    2. Identify any differences between funds previously authorized and contract commitments.
    3. If a large number of items are involved, state:

      "Unit (and/or Lot) prices totalling $ ____________, sales tax ____________, FOB_____________, as detailed in the attached appendix or in an appendix attached to the proposed amendment."

    4. If the proposed amendment involves any deviations from Cabinet or TB contracting policies, not included in the original approval, describe the deviations fully.
  3. Additional Costs (or Reduction in Cost)
    1. Show total cost of the proposed amendment in Canadian dollars or foreign currency, as applicable. If using foreign currency, give the equivalent in Canadian currency.
    2. Show the proposed amended estimated cost of the contract. If the previously authorized total contains an amount for specific future work or foreseen yet unscheduled work (such as design changes or work arising), always include this amount in the total estimated cost. If not, authority for the amount set aside is lost.
    3. Also, provide the name of the client involved, cash flow, etc., as explained under the "Cost" section of the contract request in Annex 6.2: Contract Request Instructions.
    4. Provide a brief description of previous amendments and their cost.
  4. Remarks
    1. Give additional important information required for a proper assessment of the proposed amendment. For example, if the proposed amendment is for a substantial increase, state why this additional requirement did not form part of the original requirement. Refer to the Remarks section of the contract request in Annex 6.2: Contract Request Instructions for a guide to the information, which should be provided, if applicable.
    2. When a Contract Amendment Request requires a higher approval level than originally authorized in the contract, detail the basis for the selection of the contractor and the Basis of Payment. It is not necessary to repeat in Part 1, the present Basis of Payment if it was previously approved at a higher level or by the contracting authority being approached now for approval of this amendment.
    3. If any alteration in the Basis of Payment is proposed, provide justification and support.
    4. If a difference exists between funds authorized and contractual commitments, explain why.
    5. If items are being added, or when establishing a firm Basis of Payment for a contract, previously issued on a price-to-be-negotiated basis, provide price support.
  5. Authority

    Show the original authority for entry into the contract and the authority for each approved amendment. When Treasury Board (TB) authority has been obtained, give the TB number and date and when the Minister's approval has been obtained and state "ministerial authority." In all other cases, state "departmental authority." Do not show amounts in Part 1.

Part 2 - Supporting Data Contract Amendment Request - form PWGSC-TPSGC 1151-4

In completing this form, pay particular attention to providing all supporting information. In particular, note the following:

Section A - Physical Progress to Date

In this section, summarize the progress of the contract, such as quantities already delivered and the percentage completed; work in progress or completed; advance or progress payments made or any other preliminary expenses; and other matters of a similar nature.

Section B - Authorities for and Status of Contract, plus Amount of Proposed Amendment

Give specific authorities and authorized amounts under the "Authority and Amount" column for the contract and each amendment (that is, TB, Minister, Deputy Minister, Director General, Director, etc.). Any differences between authorities (approvals) and commitments should be reconciled in Section B. Also, if the amount of the proposed amendment exceeds the funds available, it should be noted in this section.

Section C - Basis and Method of Payment as Last Amended

Describe briefly the Basis of Payment and Method of Payment as Last Amended, including sales tax position, delivery terms [for example, FOB], advance and progress payments) unless it is proposed to amend the Basis of Payment or Method of Payment. In this case, give a detailed description of the present Basis of Payment and Method of Payment for any portion of the work for which a new Basis of Payment or Method of Payment is being recommended.

Section D - Basis of Recommendation
  1. Support price and changes in terms or method of payment.
  2. Detail all price support for any items being added or when establishing a firm Basis of Payment for a contract, previously issued on a price-to-be-negotiated basis.
  3. Explain any discrepancies between: (a) the amount approved for the contract and amendments (if any), and (b) the total committed.

Note:If numerous items and unit prices have not been detailed in Part 1 of form PWGSC-TPSGC 1151-1, or in an annex to Part 1, make reference in Section D to the specific document of the file that details the information.

2. Preparation of Treasury Board Amendment Submission

Treasury Board approval is required for any contract amendment exceeding the limits outlined in Annex 6.4.2: Contracting Limits and Annex 6.4.3: Exceptional Contracting Limits for Complex Procurements and subject to the exceptions detailed in Annex 6.4.1: Approval Authorities and Additional Signing Authorities in Support of Clients' Programs Only - Other than for Canadian Commercial Corporation.

Annex 6.4: Conditions Imposed on the Approval Authority Limits for Public Works and Government Services Canada Personnel

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Complex Procurement

The approval authority limits for Public Works and Government Services Canada (PWGSC) personnel are subject to the following conditions:

  1. that contracting authorities ensure that, for requirements and associated amendments requiring their approval, the conditions of the contract are consistent with the representations made to them as to the substantive nature of the transaction;
  2. that the Assistant Deputy Minister/Directors General/Regional Directors General/Senior Directors/Regional Directors ensure that, for requirements and associated amendments requiring their approval, the contract quality control officers in place have been duly consulted and have had an opportunity to review the contractual documents and the substance of the business case (see 6.10.1 Contract Quality Control Review);
  3. that the Assistant Deputy Minister/Directors General/Regional Directors General/Senior Directors/Regional Directors ensure that, for requirements and associated amendments requiring their approval, the cost analyst and legal officer assigned to the sector/region have been given the opportunity to review the contractual documents and provide comments. See 6.10.5 Legal Services Review and 6.10.10 Cost and Price Analysis Services;
  4. that legal review of a solicitation be obtained when the requirement:
    1. is within the delegation of authority for Senior Director/Regional Director and above; or
    2. is valued in excess of $50,000,000, whichever is the lowest.
  5. Legal Services must also be consulted when the contracting officer is considering a deviation from Standard Acquisition Clauses and ConditionsManual clauses or the departmental standard procurement templates. The contracting officer should also seek advice from Legal Services on sensitive requirements. For other situations requiring consultation with Legal Services, see 3.110 Legal Services.

NOTE:The Minister's approval authority is required for specific submissions described in Annex 6.4.1: Approval Authorities and Additional Signing Authorities in Support of Clients' Programs Only - Other than for Canadian Commercial Corporation

Basic and Standard Procurement

The approval authority limits for Public Works and Government Services Canada (PWGSC) personnel are subject to the following conditions:

  1. that contracting authorities ensure that, for contracts and contract amendments requiring their approval, the conditions of the contract are consistent with the representations made to them as to the substantive nature of the transaction;
  2. Legal Services must also be consulted when the contracting officer is considering a deviation from Standard Acquisition Clauses and Conditions Manual clauses or the departmental standard procurement templates. The contracting officer should also seek advice from Legal Services on sensitive requirements. For other situations requiring consultation with Legal Services, see 3.110 Legal Services.

Annex 6.4.1: Approval Authorities and Additional Signing Authorities in Support of Clients' Programs Only - Other than for Canadian Commercial Corporation

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This annex describes the internal approval and signing authorities and exceptions to the internal approval authorities. It also addresses additional signing authorities such as for progress payments, certifications, etc.

1. Approval Authorities
  1. Internal approval and signing authorities are in accordance with Annex 6.4.2: Contracting Limits and Annex 6.4.3: Exceptional Contracting Limits for Complex Procurements.
  2. Treasury Board (TB) approval is required for submissions exceeding the authority found in Annex 6.4.2: Contracting Limits and Annex 6.4.3: Exceptional Contracting Limits for Complex Procurements.
  3. Exceptions to Annex 6.4.2: Contracting Limits and Annex 6.4.3: Exceptional Contracting Limits for Complex Procurements are described in 1.1 below.
1.1 Exceptions to Internal Approval Authorities 1.1.1 Former Public Servants
  1. Contracting limits in Annex 6.4.2: Contracting Limits and Annex 6.4.3: Exceptional Contracting Limits for Complex Procurements apply to submissions granting approval to enter into a contract including amendments for the services of former public servants in receipt of a pension when the contract value, including amendments, does not exceed $100,000 (competitive) or $25,000 (non-competitive).
  2. TB approval is required for submissions granting approval to enter into a contract including amendments for the services of former public servants in receipt of a pension when the contract value, including amendments, exceeds $100,000 (competitive) or $25,000 (non-competitive).
  3. The fee component in any non-competitive contract must be abated if the individual has been retired for less than one year and is in receipt of a pension. See 3.90(e).
  4. TB approval is required for submissions granting approval to enter into or amend a contract with former public servants in receipt of a lump sum payment pursuant to the terms of a work force reduction program where the fee component will exceed $5,000 of either the individual contract or a combination of contracts, during the period covered by the lump sum payment. See 3.90(e).

Note:For more information on the definition of former public servants and pension, see 3.90(b).

1.1.2 Confirming Orders

Submissions granting approval to issue a confirming order must be approved at the Director level or higher in accordance with the non-competitive contract approval authority limits in Annex 6.4.2: Contracting Limits and Annex 6.4.3: Exceptional Contracting Limits for Complex Procurements. The limitation to non-competitive contract approval authority limits apply to all positions below Assistant Deputy Minister. (See 6.30.10 Confirming Orders and Contracts Involving Pre-contractual Work.)

1.1.3 Royalty Payments
  1. For contracts subject to the Defence Production Act (DPA), when royalty payments exceed five percent, Deputy Minister approval is required before entering into a contract. (Approval of the Deputy Minister is not sought to enter into contract, but to permit Canada to pay the royalty.)
  2. If there is an increase in the amount of the royalty to be paid or if further items become subject to royalty payments during the life of a contract, the same guidelines for approval apply.
  3. To obtain the approval of the Deputy Minister for royalties exceeding five percent, the following information is to be provided on Part 1 of the contract request:
    1. details of the royalties;
    2. a forecast of anticipated future purchases beyond the requirement in the present submission;
    3. the comments of Legal Services.
1.1.4 National Security Exception
  1. The Assistant Deputy Minister, Acquisitions Branch (ADM/AB) must have approved the National Security Exception (NSE) pursuant to a letter from the client ADM requesting the NSE before the document approval process takes place.
  2. Following NSE approval by the ADM/AB, the normal document approval process and authority apply.
  3. For complete details of the NSE process, see 3.105 National Security Exceptions.
1.1.5 Integrity Provisions
  1. The Assistant Deputy Minister, Acquisitions Branch (ADM/AB) must approve all procurements to enter into or amend a contract (including call-ups issued by PWGSC) with a supplier who has committed certain acts or offences or has received a conditional or absolute discharge, as specified in the Integrity Provisions of Standard Instructions 2003 and in other standard instructions and general conditions. This also applies to the issuing of supply arrangements and standing offers, the publishing of a pre-qualified supplier list and the assignment of contracts. With respect to contracts with task authorizations, the ADM/AB must approve the continued use of such a contract. This level of approval is required regardless of which version of the Integrity Provisions is used in the contract or procurement instrument.

    In such circumstances, contracting officers must request direction from senior management, in consultation with the Acquisitions Program Integrity Secretariat (APIS), by e-mail at DGAIntegrite.ABIntegrity@tpsgc-pwgsc.gc.ca.

    For further details on this topic, see sections 4.21 Integrity Provisions and 5.16 Integrity Compliance.
  2. The Director General or Regional Director General must approve all procurement transactions under the Acquisitions Program where there is a potential for wrongdoing by the supplier (i.e under investigation). Contracting officers should follow the approval process established in their sector/region. In certain circumstances where heightened due diligence is required, the approval level may be increased to the level of Assistant Deputy Minister, Acquisitions Branch (ADM/AB). This applies to:
    1. awarding or amending a contract, a call-up under a standing offer or a contract under a supply arrangement;
    2. exercising of an option;
    3. the continued use of a contract with task authorizations;
    4. assigning a contract;
    5. issuing or amending (to extend) a standing offer;
    6. issuing or amending a supply arrangement; and
    7. publishing of a pre-qualified supplier list.
2. Additional Signing Authorities

Signing authorities for purchase orders, contracts, standing offers, supply arrangements, formal agreements and arrangements, stores and supply transfer orders, written direction to the Agency of Record, assignments, go-ahead letters and messages, letters of intent, consents to subcontract, termination for convenience notices, and amendments to any of the above, are as follows:

  1. in accordance with Annex 6.4.2: Contracting Limits and Annex 6.4.3: Exceptional Contracting Limits for Complex Procurements for goods, services, construction, non-regulated telecommunication, and architecture and engineering services;
  2. and if under departmental seal, together with the Corporate Secretary.
2.1 Advance, Milestone and Progress Payments

The authority for certification of advance, milestone and progress payment claims (form PWGSC-TPSGC 1111This information is only accessible to federal government employees., Claim for Progress Payment), as a prerequisite for client certification pursuant to section 34 of the Financial Administration Actis as follows:

  1. For incumbents of positions listed in Annex 6.4.2: Contracting Limits, with the exception of Intern Officers/Trainees, Senior Purchasing Assistants and Procurement Assistants, unlimited certification authority applies;
  2. For Senior Purchasing Assistants:
    1. for contracts beyond their approval authority: certification authority for claims up to $40,000, with the exception of a final claim or of a release of a holdback;
    2. for contracts within approval authority: certification for all claims.
2.2 Settlement and Release Documents
  1. The authority to sign release and settlement documents (form PWGSC-TPSGC 9223-2This information is only accessible to federal government employees., Settlement and Release) for terminations on behalf of the Minister is delegated as follows:
    1. Arising from termination for convenience:
      1. Director General, Policy, Risk, Integrity and Strategic Management Sector, Acquisitions Branch (PRISM/AB)
      2. Director, Acquisition Program Integrity Secretariat, PRISM/AB
      3. Chairman, Contracts Settlement Board
    2. Other than for termination of convenience, authority is one of the following in the order listed:
      1. Chief Risk Officer
      2. Chairman, Contracts Settlement Board.
  2. For assistance, contracting officers may consult the Specialized Support Services for Procurement Division, at 819-934-1382.
2.3 Industrial Security

The Director, Canadian Industrial Security Directorate, has the authority to provide instructions to contractors concerning industrial security requirements.

2.4 Certificates under departmental seal

The Assistant Deputy Minister, Corporate Services, Policy and Communications Branch, has the authority for certifying that documents under departmental seal are true copies.

Annex 6.4.2: Contracting Limits

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This section of the Supply Manual has been amended as per Policy Notification 105 (PN-105).

6.4.2.1 Contracting Limits for Basic and Standard Procurements

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Instructions
  1. The limits shown in the following tables are expressed in terms of thousands (K) or millions (M) of dollars or, where dollars are not appropriate, in terms of policy or regulatory constraints.
  2. The relevant limits for individual officers, which may be lower than the maximums delegated to the levels below, are contingent upon Acquisitions Branch policies and procedures. Contracting officers must ensure that any authorities they exercise are in accordance with their approved delegation form.
  3. For the purposes of contract approval authorities, an Advance Contract Award Notice (ACAN) is classified under the "electronic bidding" category. The electronic bidding approval levels apply whenever an ACAN has been posted and no valid Statement of Capabilities was submitted.
  4. In addition to dollar references in the tables, some limits are shown as "Full". This full authority is subject to the lesser of 1) Treasury Board/Public Works and Government Services Canada restrictions and 2) the availability of funds in the client budget.
  5. Position titles shown in the tables are examples only. For more information on the Table of Equivalent Positions, see Annex 6.4.5: Table of Equivalent Positions.
  6. For information on contract entry approval authorities for contracts requiring ratification, refer to section 6.30.5 Ratifications within Department Authorities.
Grid 1 - Risk-Based Procurement Delegation

This grid illustrates the delegation limits of individual officers based on the risk level and the complexity of the procurement. Row headers identify the risk level, moving down from high to low. Column headers identify procurement complexity, moving left to right from basic to complex. Some delegation limits have not been established and a data cell may have a value of to be determined (TBD) assigned to it. For example, an intern officer is limited to basic procurements, with a low level of risk.

COMPLEXITY
Basic Standard Complex Complex 2 Complex 3
Risk Level High Manager Director TBD TBD Treasury Board
Medium-High Supply Team Leader Manager TBD TBD TBD
Medium Supply Specialist Supply Team Leader TBD TBD TBD
Medium-Low Supply Officer Supply Specialist TBD TBD TBD
Low Intern Officer / St. Purchasing Assistant / Procurement Assistant Supply Officer TBD TBD TBD
Contract Approval and Signing Authority Limits for Basic and Standard Streams of Procurement

The following limits set out below are maximums and can only be utilized for Basic and Standard Procurements as defined by the application of a Complexity Assessment. The determination of the authority required for contract entry, or amendments, will be determined on a case-by-case basis through the application of a Procurement Risk Assessment, which will identify the specific risks of a procurement, and the appropriate level of approval required for contract entry.

If the total cost of the procurement for approval purposes exceeds the limits set out in PWGSC’s delegation of authority instrumentThis information is only accessible to federal government employees., the requirement is considered Complex and Treasury Board approval is required.

Any incumbent, under any Level, who holds a valid delegation of approval authority for contract entry may sign a contractual document for the same categories for which the incumbent has delegation of authority. For example, if the incumbent holds a valid delegation of approval authority for contract entry for goods and military repair and overhaul, approval authorities, then the incumbent has signing authority for goods and military repair and overhaul.

The following tables outline PWGSC’s Departmental Contracting Limits in accordance with Appendix C – Treasury Board Contracts Directive.

Table 1 - Contract Approval Authority Limits for Basic and Standard Procurements

This table illustrates the contract approval limits for basic and standard procurements by commodity type. Row headers identify five commodity groups, moving down these include: Goods, Services, Construction, Architectural and Engineering Services, and Non-regulated Telecommunications Services. A top level column header entitled "Approval" includes the following next level column headers identify the contracting process, moving from left to right, these include: Electronic Competitive; Competitive; and Non-competitive. Each contracting process is further subdivided by dollar limits for Contract Entry and Aggregate of Amendments, and is expressed terms of thousands (K) or millions (M) of dollars. For example, an electronic competitive procurement for goods has a maximum contract entry limit of $40 million and a maximum aggregate limit for amendments of $20 million.

  Approval
Electronic Competitive Competitive Non-Competitive
Contract Entry Aggregate of Amendments Contract Entry Aggregate of Amendments Contract Entry Aggregate of Amendments
Goods $40M $20M $10M $5M $2M $1M
Services $20M $10M $10M $5M $3M $1.5M
Construction $40M $20M $10M $5M $500K $500K
Architectural and Engineering Services $5M $2.5M/ $250K 2 $2M $1M/ $125K 2 $100K $100K/ $100K 2
Non-Regulated Telecommunications Services $200M $100M $20M $10M $3M $1.5M
2 = Authority to issue subsequent amendments to an amendment approved by Treasury Board to the maximum limit shown.
Examples:
Table 2 - Example 1: Supply Team Leader (Level 3, which means by default, they have 50% of the departmental limit) who has Goods and Services delegation:

This table provides an example of the contract approval authority of a Level 3 Supply Team Leader for basic and standard procurements. Row headers identify, moving down from the top, two commodity types: goods, and services. A top level column header entitled "Approval" includes the following next level column headers that contain information about the contracting process and moving from the left to right include: electronic competitive procurement; competitive procurement; and non-competitive procurement. Each contracting process is further subdivided by dollar limits for contract entry and the aggregate of amendments, and is expressed in terms of thousands (K) or millions (M) of dollars. For example, a Supply Team Leader has a contract approval authority for an electronic competitive procurement for goods for a contract entry amount of $20 million and an aggregate of amendments of $10 million.

  Approval
Electronic Competitive Competitive Non-Competitive
Contract Entry Aggregate of Amendments Contract Entry Aggregate of Amendments Contract Entry Aggregate of Amendments
Goods $20M $10M $5M $2.5M $1M $500K
Services $10M $5M $5M $2.5M $1.5M $750K
Table 3 - Example 2: Supply Officer (Level 4, which means by default, they have 5% of the departmental limit) who has Goods, Services and Construction delegation:

This table provides an example of the contract approval authority of a Level 4 Supply Officer for basic and standard procurements (goods, services, and construction). Row headers identify, moving down from the top, three commodity types: goods, services, and construction. A top level column header entitled "Approval" includes the following next level column headers contain information about the contracting process and moving from the left to right include: electronic competitive procurement; competitive procurement; and non-competitive procurement. Each contracting process is further subdivided by dollar limits for contract entry and the aggregate of amendments, and is expressed terms of thousands (K) or millions (M) of dollars. For example, a Supply Officer has a contract approval authority for an electronic competitive procurement for goods for a contract entry amount of $2 million and an aggregate of amendments of $1 million.

  Approval
Electronic Competitive Competitive Non-Competitive
Contract Entry Aggregate of Amendments Contract Entry Aggregate of Amendments Contract Entry Aggregate of Amendments
Goods $2M $1M $500K $250K $100K $50K
Services $1M $500K $500K $250K $150K $75K
Construction $2M $1M $500K $250K $25K $25K
Table 4 - Example 3: Exceptional Contracting Approval Authorities

This table illustrates the exceptional contracting approval authorities for specific commodity types. Row headers identify seven specific commodity types. There are two column headers, moving left to right. The first header contains the contract entry (including the aggregate of amendments) expressed in terms of millions (M) of dollars. The second header contains a numerical reference to special notes found beneath the table related to the specific commodity. For example, the commodity type of deregulated electricity and natural gas has a total contract entry value of $100 million (including the aggregate of amendments) and the reader should refer to the note in column 49 for additional information.

  Contract Entry plus Aggregate of Amendments See Note in Column
Deregulated electricity and natural gas $100M 49
Repair and overhaul of military equipment $50M 50
Procurement under the U.S. Foreign Military Sales Program $25M 51
Procurement of ammunition under the Munitions Supply Program $50M 52
Agreement for the supply of edible agricultural products for foreign aid programs $10M 53
Agreements for the transport by ocean-going vessel any goods shipped for the Canadian International Development Agency $5M 54
Bulk Fuels $10M 55
Table 5 - Example 4: Exceptional Contracting Approval Authorities

This table illustrates the exceptional contracting approval authorities for Contracting Authority levels by specific commodity type. Row headers identify the Contracting Authority’s authority level information, moving top to bottom, from the highest level to the lowest level. A bottom and final row header entitled “see Note in Column” contains a numerical reference tospecial notes found beneath the table related to the specific commodity . Three column headers move from left to right and express the contract entry (including the aggregate of amendments) in terms of millions (M) of dollars for different commodity types. In addition to dollar references in the tables, some limits are shown as "Full". This full authority is subject to the lesser of 1) Treasury Board/Public Works and Government Services Canada restrictions and 2) the availability of funds in the client budget. For example, an individual with a Level 1 contract approval authority has the full authority for contracts obtained for transportation services from common carriers and makes reference to note in column 47.

Level Contract Entry plus Aggregate of Amendments
Transportation services from common carriers Regulated electricity, gas, water, sewage disposal, heat and telecommunications services Standing Offers and Supply Arrangement Approval Authority
1 FULL FULL FULL
2 FULL FULL FULL
3 $10M $10M $100M
4 $1M $1M $10M
See Note in Column 47 48 56
Table 6 - Example 5: Supply Officer (Level 4, which means by default, they have 5% of the departmental limit) who has Repair and overhaul of military equipment delegation:
  Contract Entry plus Aggregate of Amendments
Repair and overhaul of military equipment $2.5M
Remarks:
  • When using these tables, contracting authorities must refer to the Instructions found at the beginning of this Annex.
  • Defence Construction Canada (DCC) has exclusive authority to acquire or construct defence projects required by the Department of National Defence (DND). Contract authorities for construction services carried out on behalf of DND are limited by an agreement between PWGSC and DCC, which stipulates that PWGSC will carry out construction services on behalf of DND only if the value of the services does not exceed $60,000. If the value of such services carried out on behalf of DND exceeds $60,000, approval to proceed must be obtained from DCC.
Authority Reference:
  • Defence Production Act, articles 6.(1), 10.(2) and 16(c)
  • Operating Agreement between DND and DCC dated November 16, 1994.
Notes: Column 47: Transportation Services from Common Carriers

Approval authority to enter into or amend a service contract for transportation services from common carriers, if:

  • the rates charged do not exceed the normal rates for such services.
Authority Reference:
  • Contracting Policy, Appendix C - Contracts Directive, Part II, Departmental Index to Exceptional Contracting Limits, Article 1.(a).
Column 48: Regulated electricity, gas, water, sewage disposal, heat and telecommunication services

Approval authority to enter into or amend a service contract for electricity, gas, water, sewage disposal, heat and telecommunication services, which by full or partial regulation, are only available from suppliers at regulated prices or at prices accepted by a regulatory mechanism, if:

  1. the rates do not exceed the normal rates, and
  2. the contract does not involve negotiated installation or capital charges in excess of $200,000.
Authority Reference:
  • TB Contracting Policy, Appendix C - Contracts Directive, Part II, Departmental Index to Exceptional Contracting Limits, Article 1.(b).
Column 49: Deregulated electricity and natural gas

Approval authority to enter into or amend a service contract for deregulated electricity and natural gas using competitive electronic bidding, when the deregulated portion does not exceed $100M.

Authority Reference:
  • TB Contracting Policy, Appendix C - Contracts Directive, Part II, Departmental Index to Exceptional Contracting Limits, Article 1.(c).
Column 50: Repair and overhaul of military equipment

Approval authority to enter into or amend a contract to repair and overhaul military equipment.

Authority Reference:
  • TB Contracting Policy, Appendix C - Contracts Directive, Part II, Departmental Index to Exceptional Contracting Limits, Section 7.
Column 51: Procurement under the U.S. Foreign Military Sales Program

Approval authority to enter into or amend a contract for procurement under the U.S. Foreign Military Sales Program. This authority is to be exercised by the ADM, Acquisitions Branch and by those officers occupying a position in PWGSC (Washington) and, where the contract is for the supply of highly classified goods and/or services, the following positions may also exercise the authority:

  • Manager, Information Security and Electronic Warfare Division
  • Senior Director, Electronics, Munitions and Tactical Systems Procurement Directorate
  • Director General, Defence and Major Projects Sector
Authority Reference:
  • TB Contracting Policy, Appendix C - Contracts Directive, Part II, Departmental Index to Exceptional Contracting Limits, Section 31.
Column 52: Procurement of ammunition under the Munitions Supply Program

Approval authority to enter into or amend a goods contract for the procurement of ammunition under the Munitions Supply Program:

Authority Reference:
  • TB Contracting Policy, Appendix C - Contracts Directive, Part II, Departmental Index to Exceptional Contracting Limits, Section 30.
Column 53: Agreements for the supply of edible agricultural products for foreign aid programs

Approval authority to enter into or amend a goods contract for the procurement of any edible agricultural product for foreign aid programs, if:

  1. the price offered is reasonable under prevailing market conditions, the lowest-priced bid is accepted or, when necessary to obtain the tonnage demanded, successive lowest-priced bids are accepted, or
  2. a bid solicitation FAS (Free Alongside Ship) multiple ports is issued, the lowest-priced bid is accepted or, when necessary to obtain the tonnage demanded, successive lowest-priced bids that result in the lowest total cost to the recipient country are accepted:
Authority Reference:
  • TB Contracting Policy, Appendix C - Contracts Directive, Part II, Departmental Index to Exceptional Contracting Limits, Section 5.
Column 54: Agreements for the transport by ocean-going vessel of any goods shipped for the Canadian International Development Agency

Approval authority to enter into or amend an agreement for the transport by ocean-going vessel of any goods shipped for the Canadian International Development Agency, if:

  1. the price offered is considered to be reasonable under prevailing market conditions, and
  2. the lowest-priced bid is accepted or, if it is necessary to accept more than one bid to accommodate the quantity of goods to be shipped, successive lowest-priced bids are accepted:
Authority Reference:
  • TB Contracting Policy, Appendix C - Contracts Directive, Part II, Departmental Index to Exceptional Contracting Limits, Section 6.
Column 55: Procurement of bulk fuels

Approval authority to enter into or amend a contract for the procurement of bulk fuels, if the total amount payable under the contract, including any amendments, or call-up against a standing offer, does not exceed $10,000,000:

The following positions have full authority to approve and enter into a standing offer method of supply for the procurement of bulk fuels:

  • Director General, Commercial Acquisitions and Supply Management Sector
  • Regional Directors General
  • Manager (Koblenz)
Authority Reference:
  • TB Contracting Policy, Appendix C - Contracts Directive, Part II, Departmental Index to Exceptional Contracting Limits, Section 32.
Column 56: Standing Offers and Supply Arrangements

Approval authority to use a standing offer method of supply or a supply arrangement when the resulting individual call-ups or contracts will not exceed the limits prescribed by TB.

6.4.2.5 Contracting Limits for Complex Procurements

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Instructions
  1. The limits shown in the following tables are expressed in terms of thousands (K) or millions (M) of dollars or, where dollars are not appropriate, in terms of policy or regulatory constraints.
  2. The relevant limits for individual officers, which may be lower than the maximums delegated to the levels in the table, are contingent upon Acquisitions Branch policies and procedures. Contracting officers must ensure that any authorities they exercise are in accordance with their approved delegation form.
  3. For the purposes of contract approval authorities, an Advance Contract Award Notice (ACAN) is classified under the “electronic bidding” category. The electronic bidding approval levels apply whenever an ACAN has been posted and no valid Statement of Capabilities was submitted.
  4. In addition to dollar references in the tables, some limits are shown as "Full". This full authority is subject to the lesser of 1) Treasury Board/Public Works and Government Services Canada restrictions and 2) the availability of funds in the client budget.
  5. Position titles shown in the tables are examples only. For more information on the Table of Equivalent Positions, see Annex 6.4.5 Table of Equivalent Positions.
  6. For information on contract entry approval authorities for contracts requiring ratification, refer to section 6.30.2 Ratifications within Departmental Authorities.
  7. Any incumbent, under any Level, who holds a valid delegation of approval authority for contract entry may sign a contractual document for the same category for which the incumbent has delegation of authority.
GOODS - Contract Approval and Signing Authority Limits for Complex Procurements
Table 8 - GOODS: Contract Approval and Signing Authority Limits for Complex Procurements

This table illustrates the contract approval and signing authority limits of various procurement positions for the complex procurement of Goods. Row headers identify level of authority and positions within the level. Authority levels move down from high to low. Column headers contain information about the contracting process and moving from the left to right include: electronic competitive procurement; competitive procurement; and non-competitive procurement. Each contracting process is further subdivided by dollar limits for contract entry and the aggregate of amendments, and is expressed terms of thousands (K) or millions (M) of dollars. For example, the Assistant Deputy Minister (ADM) has Level 1 approval and signing authority limits for electronic competitive procurements of goods with a contract entry of $40 million and aggregate amendments of $20 million.

Level Position Electronic Competitive Non-competitive
Contr. Entry Aggreg. Amend. Contr. Entry Aggreg. Amend. Contr. Entry Aggreg. Amend.
Minister $40M $20M $10M $5M $2M $1M
1 ADM $40M $20M $10M $5M $2M $1M
DG, RDG $30M $1.5M $7.5M $1.5M $1.5M $750K
Sr. Director,
Reg. Director
$20M $1M $5M $1M $1M $750K
2 Director $10M $500K $2.5M $500K $500K $500K
Manager $5M $200K $1M $200K $400K $200K
3 Supply Team Leader $1M $100K $400K $100K $150K $100K
Supply Specialist $300K $50K $300K $50K $100K $50K
4 Supply Officer $100K $15K $100K $15K $30K $15K
Intern Officer/
Trainee
$70K $10K $70K $10K $20K $10K
Sr. Purchasing Assistant $40K $5K $40K $5K $10K $5K
Proc. Assistant $10K $2K $10K $2K $4K $2K

Any incumbent, under any Level, who holds a valid delegation of approval authority for contract entry may sign a contractual document for the same category for which the incumbent has delegation of authority.

Remarks:
  • When using this table, contracting authorities must refer to the Instructions found at the beginning of this annex.
SERVICES - Contract Approval and Signing Authority Limits for Complex Procurements (excluding construction, non-regulated telecommunication, and architectural and engineering services)
Table 9 - SERVICES: Contract Approval and Signing Authority Limits for Complex Procurements (excluding construction, non-regulated telecommunication, and A&E services)

This table illustrates the contract approval and signing authority limits of various procurement positions for complex procurement of Services. Row headers identify level of authority and positions within the level. Authority levels move down from high to low. Column headers contain information about the contracting process and moving from the left to right include: electronic competitive procurement; competitive procurement; and non-competitive procurement. Each contracting process is further subdivided by dollar limits for contract entry and the aggregate of amendments, and is expressed terms of thousands (K) or millions (M) of dollars. For example, the Assistant Deputy Minister (ADM) has Level 1 approval and signing authority limits for non- competitive procurements of services (excluding construction, non-regulated telecommunication, and architectural and engineering services) with a contract entry of $3 million and aggregate amendments of $1.5 million.

Level Position Electronic Competitive Non-competitive
Contr. Entry Aggreg. Amend. Contr. Entry Aggreg. Amend. Contr. Entry Aggreg. Amend.
Minister $20M $10M $10M $5M $3M $1.5M
1 ADM $20M $10M $10M $5M $3M $1.5M
DG, RDG $15M $1.5M $7.5M $1.5M $2.25M $1.125M
Sr. Director,

Reg. Director
$10M $1M $5M $1M $1.5M $750K
2 Director $5M $400K $2.5M $400K $400K $400K
Manager $2.5M $200K $1M $200K $300K $200K
3 Supply Team Leader $1M $100K $400K $100K $200K $100K
Supply Specialist $300K $50K $300K $50K $100K $50K
4 Supply Officer $100K $15K $100K $15K $30K $15K
Intern Officer/
Trainee
$70K $10K $70K $10K $20K $10K
Sr. Purchasing Assistant $40K $5K $40K $5K $10K $5K
Proc. Assistant $10K $2K $10K $2K $4K $2K

Any incumbent, under any Level, who holds a valid delegation of approval authority for contract entry may sign a contractual document for the same category for which the incumbent has delegation of authority.

Remarks:
  • When using this table, contracting authorities must refer to the Instructions found at the beginning of this annex.
CONSTRUCTION - Contract Approval and Signing Authority Limits for Complex Procurements
Table 10 - CONSTRUCTION: Contract Approval and Signing Authority Limits for Complex Procurements

This table illustrates the contract approval and signing authority limits of various procurement positions for complex procurement of Construction. Row headers identify level of authority and positions within the level. Authority levels move down from high to low. Column headers contain information about the contracting process and moving from the left to right include: electronic competitive procurement; competitive procurement; and non-competitive procurement. Each contracting process is further subdivided by dollar limits for contract entry and the aggregate of amendments, and is expressed terms of thousands (K) or millions (M) of dollars. For example, a Director has Level 2 approval and signing authority limits for non- competitive procurements of construction with a contract entry of $125 thousand and aggregate amendments of $125 thousand.

Level Position Electronic Competitive Non-competitive
Contr. Entry Aggreg. Amend. Contr. Entry Aggreg. Amend. Contr. Entry Aggreg. Amend.
Minister $40M $20M $10M $5M $500K $500K
1 ADM $40M $20M $10M $5M $500K $500K
DG, RDG $30M $3M $7.5M $1.5M $300K $300K
Sr. Director,
Reg. Director
$20M $2M $5M $1M $200K $200K
2 Director $10M $1M $2.5M $400K $125K $125K
Manager $5M $500K $1M $200K $125K $100K
3 Supply Team Leader $2.5M $250K $400K $100K $100K $50K
Supply Specialist $750K $75K $300K $50K $50K $25K
4 Supply Officer $250K $25K $100K $15K $25K $15K
Intern Officer/
Trainee
           
Sr. Purchasing Assistant          
Proc. Assistant            

Any incumbent, under any Level, who holds a valid delegation of approval authority for contract entry may sign a contractual document for the same category for which the incumbent has delegation of authority.

Remarks:
  1. When using this table, contracting authorities must refer to the Instructions found at the beginning of this annex.
  2. Defence Construction Canada (DCC) has exclusive authority to acquire or construct defence projects required by the Department of National Defence (DND). Contract authorities for construction services carried out on behalf of DND are limited by an agreement between PWGSC and DCC, which stipulates that PWGSC will carry out construction services on behalf of DND only if the value of the services does not exceed $60,000. If the value of such services carried out on behalf of DND exceeds $60,000, approval to proceed must be obtained from DCC.
Authority Reference:
  • Defence Production Act, articles 6.(1), 10.(2) and 16(c)
  • Operating Agreement between DND and DCC dated November 16, 1994.
NON-REGULATED TELECOMMUNICATION SERVICES - Contract Approval and Signing Authority Limits for Complex Procurements
Table 11 - NON-REGULATED TELECOMMUNICATION SERVICES: Contract Approval and Signing Authority Limits for Complex Procurements

This table illustrates the contract approval and signing authority limits of various procurement positions for complex procurement of Non-regulated telecommunication services. Row headers identify level of authority and positions within the level. Authority levels move down from high to low. Column headers contain information about the contracting process and moving from the left to right include: electronic competitive procurement; competitive procurement; and non-competitive procurement. Each contracting process is further subdivided by dollar limits for contract entry and the aggregate of amendments, and is expressed terms of thousands (K) or millions (M) of dollars. For example, a Supply Team Leader has Level 3 approval and signing authority limits for non- competitive procurements of non-regulated telecommunication services with a contract entry of $200 thousand and aggregate amendments of $100 thousand.

Level Position Electronic Competitive Non-competitive
Contr. Entry Aggreg. Amend. Contr. Entry Aggreg. Amend. Contr. Entry Aggreg. Amend.
Minister $200M $100M $20M $10M $3M $1.5M
1 ADM $200M $100M $20M $10M $3M $1.5M
DG, RDG $150M $1.5M $15M $1.5M $2.25M $1.125M
Sr. Director,
Reg. Director
$100M $1M $10M $1M $1.5M $750K
2 Director $50M $400K $5M $400K $400K $400K
Manager $2.5M $200K $1M $200K $300K $200K
3 Supply Team Leader $1M $100K $400K $100K $200K $100K
Supply Specialist $300K $50K $300K $50K $100K $50K
4 Supply Officer $100K $15K $100K $15K $30K $15K
Intern Officer/
Trainee
$70K   $10K   $70K   $10K   $20K   $10K  
Sr. Purchasing Assistant $40K   $5K   $40K   $5K   $10K   $5K
Proc. Assistant $10K   $2K   $10K   $2K   $4K   $2K  

Any incumbent, under any Level, who holds a valid delegation of approval authority for contract entry may sign a contractual document for the same category for which the incumbent has delegation of authority.

Remarks:
  • When using this table, contracting authorities must refer to the Instructions found at the beginning of this annex.
ARCHITECTURE AND ENGINEERING SERVICES - Contract Approval and Signing Authority Limits for Complex Procurements
Table 12 - A&E SERVICES: Contract Approval and Signing Authority Limits for Complex Procurements

This table illustrates the contract approval and signing authority limits of various procurement positions for complex procurement of Architectural and Engineering services. Row headers identify level of authority and positions within the level. Authority levels move down from high to low. Column headers contain information about the contracting process and moving from the left to right include: electronic competitive procurement; competitive procurement; and non-competitive procurement. Each contracting process is further subdivided by dollar limits for contract entry and the aggregate of amendments, and is expressed terms of thousands (K) or millions (M) of dollars. For example, a Manager has Level 2 approval and signing authority limits for non- competitive procurements of architecture and engineering services with a contract entry of $50 thousand and aggregate amendments of $50 thousand.

Level Position Electronic Competitive Non-competitive
Contr. Entry Aggreg. Amend. Contr. Entry Aggreg. Amend. Contr. Entry Aggreg. Amend.
Minister $5M $2.5M / $250K 1 $2M $1M / $125K 1 $100K $100K / $100k 1
1 ADM $5M $2.5M / $250K 1 $2M $1M / $125K 1 $100K $100K / $100K 1
DG, RDG $3.75M $750K / $200K 1 $1.5M $375K / $100K 1 $80K $80K
Sr. Director,
Reg. Director
$2.5M $500K / $150K 1 $1M $250K / $75K 1 $80K $80K
2 Director $1.5M $300K / $125K 1 $750K $100K / $50K 1 $50K $50K
Manager $1M $200K / $100K 1 $500K $75K / $37.5K 1 $50K $50K
3 Supply Team Leader $750K $75K $350K $50K $50K $50K
Supply Specialist $500K $50K $200K $50K $40K $25K
4 Supply Officer $125K $25K $70K $25K $5K $5K
Intern Officer/
Trainee
           
Sr. Purchasing Assistant          
Proc. Assistant            

Any incumbent, under any Level, who holds a valid delegation of approval authority for contract entry may sign a contractual document for the same category for which the incumbent has delegation of authority.

Remarks:
  • 1 = Authority to issue subsequent amendments to an amendment approved by Treasury Board to the maximum limit shown.
  • When using this table, contracting authorities must refer to the Instructions found at the beginning of this annex.

Annex 6.4.3: Exceptional Contracting Limits for Complex Procurements

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INSTRUCTIONS
  1. The tables that form part of this annex must be read in conjunction with Annex 6.4.4: Notes to Exceptional Contracting Limits for Complex Procurements, using the column numbers for reference. The notes provide additional information about the authorities contained in the tables, describing the meanings of column headings and documenting the relevant restrictions that apply to various authorities but which are not shown in the tables themselves.
  2. The limits shown in this table are expressed in terms of thousands (K) or millions (M) of dollars or, where dollars are not appropriate, in terms of policy or regulatory constraints.
  3. The relevant limits for individual officers, which may be lower than the maximums delegated in the tables, are contingent upon Acquisitions Branch policies and procedures. Acquisitions personnel are to ensure that any authorities they exercise are in accordance with their approved individual delegation form.
  4. In addition to dollar references in the tables, some limits are shown as "Full". This full authority is subject to the lesser of 1) Treasury Board/Public Works and Government Services Canada restrictions and 2) the availability of funds in the client budget.
  5. Position titles shown in the tables are examples only. For more information, see the Table of Equivalent Positions in Annex 6.4.5.
  6. Any incumbent, under any Level, who holds a valid delegation of approval authority for contract entry may sign a contractual document for the same category for which the incumbent has delegation of authority.
Table 1 - Contract Approval and Signing Authority Limits for Complex Procurements

(the authority limits in this table apply to the cumulative value of the contract including amendments)

This table illustrates the exceptional contract approval and signing authority limits of various procurement positions for complex procurement. Row headers identify level of authority and positions within the level. Authority levels move down from high to low. A bottom and final row header entitled “see Note in Column” contains a numerical reference to special notes found in the next annex related to the specific commodity. Column headers identify information about the procurement type and moving from the left to right include: Emergency Contracting Authority, Special Contracting limits, Repair and Overhaul of Military Equipment, and Procurement under the U.S. Foreign Military Sales Program. The header, Special Contracting Limits, is further subdivided into three different procurement categories. Approval and authority dollar limits are expressed terms of thousands (K) or millions (M) of dollars. In addition to dollar references in the tables, some limits are shown as "Full". This full authority is subject to the lesser of 1) Treasury Board/Public Works and Government Services Canada restrictions and 2) the availability of funds in the client budget. For example, the Assistant Deputy Minister (ADM) has Level 1 approval and signing authority limits of $15 million for emergency contracting and should refer to note in column 46 for additional information.

Level Position Emergency Contracting Authority
(See notes)
Special Contracting Limits Repair and overhaul of military equipment
(See notes)
Procurement under the U.S. Foreign Military Sales Program
(See notes)
Transp. services from common carriers
(See notes)
Regulated electricity, gas, water, sewage disposal, heat and telecom. services
(See notes)
Deregulated electricity and natural gas
(See notes)
Minister $15M Full Full $100M $50M $25M
1 ADM $15M Full Full $100M $50M $25M
DG, RDG   Full Full $50M $25M $15M
Sr. Director, Regional Director   Full Full $50M $20M $15M
2 Director   $5M $5M $5M $10M $10M
Manager   $2.5M $2.5M $2.5M $5M $5M
3 Supply Team Leader   $1M $1M $1M $1M $1M
Supply Specialist   $300K $300K $300K $300K $300K
4 Supply Officer   $100K $100K $100K $100K $100K
Intern Officer/Trainee   $70K $70K $70K $70K $70K
Sr. Purchasing Assistant   $40K $40K $40K $40K $40K
Proc. Assistant   $10K $10K $10K $10K $10K
See Note in Column 46 47 48 49 50 51

Position Titles: Position titles shown above are examples only - all equivalent positions (as shown in the Table of Equivalent Positions found in Annex 6.4.5) have the same authorities as indicated above.

The relevant limits for individual officers, which may be lower than the maximums delegated to the levels in the tables, are contingent upon Acquisitions Branch policies and procedures. Contracting officers must ensure that any authorities they exercise are in accordance with their approved delegation form.

The limits shown in this table are expressed in terms of thousands (K) or millions (M) of dollars or, where dollars are not appropriate, in terms of policy or regulatory constraints. The word "Full" means that the authority limit is subject to the lesser of TB/departmental restriction or budgetary limit (i.e., the availability of funds).

Remarks: Contracting authorities must refer to the following:

  1. Instructions to Exceptional Contracting Limits, found at the beginning of this annex.
  2. Explanation of Notes (as referred to in table above) found in Annex 6.4.4: Notes to Exceptional Contracting Limits for Complex Procurements.
Table 2 - Contract Approval and Signing Authority Limits for Complex Procurement

(the authority limits in this table apply to the cumulative value of the contract including amendments)

This table illustrates the exceptional contract approval and signing authority limits of various procurement positions for complex procurement. Row headers identify level of authority and positions within the level. Authority levels move down from high to low. A bottom and final row header entitled “see Note in Column” contains a numerical reference to special notes found in the next annex related to the specific commodity.. Column headers, moving from the left to right, identify information about the procurement type. Approval and authority dollar limits are expressed terms of thousands (K) or millions (M) of dollars. For example, an Assistant Deputy Minister (ADM) has Level 1 approval and signing authority limits of $50 million for the procurement of ammunition under the Munitions Supply Program and should refer to note in column 52 for additional information.

Level Position Procurement of ammunition under the Munitions Supply Program Agreements for the supply of edible agricultural products for foreign aid programs
(See notes)
Agreements for the transport by ocean-going vessel of any goods shipped for CIDA
(See notes)
Procurement of Bulk Fuels
(See notes)
Minister $50M $10M $5M $10M
1 ADM $50M $10M $5M $10M
DG, RDG $25M $5M $2.5M $10M
Sr. Director, Regional Director $20M $4M $2.5M $10M
2 Director $10M $2.5M $1M $2.5M
Manager $5M $1.5M $500K $1.5M
3 Supply Team Leader $1M $1M $250K $1M
Supply Specialist $300K $300K $150K $300K
4 Supply Officer $100K $100K $100K $100K
Intern Officer/Trainee $70K $70K $70K $70K
Sr. Purchasing Assistant $40K $40K $40K $40K
Proc. Assistant $10K $10K $10K $10K
See Note in Column 52 53 54 55

Remarks:
Contracting authorities must refer to the following:

  1. Instructions to Exceptional Contracting Limits found at the beginning of this annex.
  2. Explanation of Notes (as referred to in table above) found in Annex 6.4.4: Notes to Exceptional Contracting Limits for Complex Procurements.
Table 3 - Contract Approval and Signing Authority Limits for Complex Procurement

(the authority limits in this table page apply to the cumulative value of the contract/standing offer/supply arrangement including amendments/revisions)

This table illustrates the exceptional contract approval and signing authority limits of various procurement positions for complex procurement. Row headers identify level of authority and positions within the level. Authority levels move down from high to low. A bottom and final row header entitled “see Note in Column” contains a numerical reference to special notes found in the next annex related to the specific commodity. Column headers identify information about the procurement contract type and moving from the left to right include: Standing Offers and Supply Arrangements, and Energy Management Contracts. The header, Energy Management Contracts, is further subdivided into two authority types that include: approval authority and signing authority. The sub header of Approval Authority is further subdivided into two approval category dollar limits that include: Contract Entry and Aggregate of Amendment. Approval and authority dollar limits are expressed terms of thousands (K) or millions (M) of dollars. In addition to dollar references in the tables, some limits are shown as "Full". This full authority is subject to the lesser of 1) Treasury Board/Public Works and Government Services Canada restrictions and 2) the availability of funds in the client budget. For example, a Director has Level 2 approval and signing authority limits of $10 million contract entry and $5 million aggregate of amendments for Energy Management Contracts and should refer to notes in columns 57 and 58 for additional information.

Level Position Standing Offers and Supply Arrangements Energy Management Contracts
Approval Authority Signing Authority
Contract Entry Aggregate of Amendment
Minister Full $25M including amendments Full
1 ADM Full $25M including amendments
(See Notes)
Full
DG, RDG Full $25M including amendments
(See Notes)
Full
Sr. Director, Regional Director (See Note 1) $25M including amendments
(See Notes)
Full
2 Director (See Note 1) $10M
(See Notes)
$5M
(See Notes)
Full
Manager (See Note 1) $5M
(See Notes)
$2.5M
(See Notes)
Full
3 Supply Team Leader (See Note 1)     Full
Supply Specialist (See Note 1)     Full
4 Supply Officer (See Note 1)     Full
Intern Officer/Trainee (See Note 1)     Full
Sr. Purchasing Assistant (See Note 1)     Full
Proc. Assistant (See Note 1)     Full
See Note in Column 56 57 58 59

Remarks: Contracting authorities must refer to the following:

  1. Instructions to Exceptional Contracting Limits found at the beginning of this annex.
  2. Explanation of Notes (as referred to in table above) found in Annex 6.4.4: Notes to Exceptional Contracting Limits for Complex Procurements.

For standing offers and Supply Arrangements: Approval and amendment authorities are set out in above. The Contract Planning and Advance Approval (CPAA) issued to seek advance approval (or the formal procurement plan to seek procurement strategy approval) to use the standing offer method of supply, or establish a supply arrangement, must be approved based on the total estimated value, Goods and Services Tax/Harmonized Sales Tax (GST/HST) included, of the requirement (the whole project/program) that is proposed to be satisfied by this method of supply. Therefore, if it is intended to issue more than one standing offer against a Request for a Standing Offer, the sum of the total estimated value, GST/HST included, of all resulting standing offers must be used to obtain CPAA or formal procurement plan approval.

Table 4 - Disposal of Surplus Crown Assets (See Notes)

This table illustrates the approval and signing authority limits of various procurement positions for the disposal of surplus Crown assets. Row headers identify level of authority and positions within the level. Authority levels move down from high to low. A bottom and final row header entitled “see Note in Column” contains a numerical reference to special notes found in the next annex related to the specific disposal authority. Column headers identify information about the approval and signing authority limits. This header is further subdivided into three areas of authority limitations, that include: Sales Limitations; Inventory Shortages; and Refunds, Claims and Discrepancies. The sub header of Sales Limitations is further subdivided into three categories that include: Competitive; Non-competitive; Aggregate Amendments. Approval and authority dollar limits are expressed terms of thousands (K) or millions (M) of dollars. In addition to dollar references in the tables, some limits are shown as "Full". This full authority is subject to the lesser of 1) Treasury Board/Public Works and Government Services Canada restrictions and 2) the availability of funds in the client budget. For example, a Manager has Level 2 disposal approval and signing authority limits of $250 thousand for sales done through a competitive procurement and should refer to note in column 60 for additional information.

Level Position Disposal Approval and Signing Authority Limits
Sales Limitations Inventory Shortages Refunds, Claims and Discrepancies
Comp. Non-comp. Aggreg. Amend.
Minister Full Full Full Full Full
1 ADM Full Full Full Full Full
DG Full Full Full Full Full
Sr. Director of Crown Assets Distribution Full Full Full Full Full
2 Director          
Manager $250K $75K $50K $2.5K Full
3 Supply Team Leader, Chief $200K $50K $10K   $2K
Supply Specialist $100K $25K $5K    
4 Supply Officer $30K $10K $1K    
Intern Officer/Trainee          
Sr. Purchasing Assistant          
Procurement Assistant          
See Note in Column 60 61 62 63 64

These authorities must be exercised only by: the ADM, Acquisitions Branch; the Associate Assistant Deputy Minister, Acquisitions Branch; the Director General, Commercial Acquisitions and Supply Management Sector; the Senior Director, Crown Assets Distribution; and those positions under the Crown Assets Distribution Directorate.

Remarks: Contracting authorities must refer to the following:

  1. Instructions to Exceptional Contracting Limits found at the beginning of this annex.
  2. Explanation of Notes (as referred to in table above) found in Annex 6.4.4: Notes to Exceptional Contracting Limits for Complex Procurements.
Table 5 - Other Authority Limits

This table illustrates the approval and signing authority limits of various procurement positions for other procurement related activities. Row headers identify level of authority and positions within the level. Authority levels move down from high to low. A bottom and final row header entitled “see Note in Column” contains a numerical reference to special notes found in the next annex related to the specific procurement related activity.. Column headers identify information about the various procurement related activities, and moving from left to right include: Canadian Commercial Corporation; Instructions Tools and Equipment required by Contractors for R&O of Defence Supplies; Certification of Defence Supplies; Seized Property Management and Disposal; and Disposal of Seized Real Property. The header of Canadian Commercial Corporation is further subdivided by contracting document type that includes: Bid Certification, and Contract Signing. The sub header of Bid Certification is further subdivided to include: Bids, Proposals, and Quotations; and Aggregate Amendments. The sub header of Contract Signing is further subdivided to include Contract and Aggregate Amendments. Approval and authority dollar limits are expressed terms of thousands (K) or millions (M) of dollars. In addition to dollar references in the tables, some limits are shown as "Full". This full authority is subject to the lesser of 1) Treasury Board/Public Works and Government Services Canada restrictions and 2) the availability of funds in the client budget. For example, a Supply Team Leader has Level 3 approval and signing authority limits for Canadian Commercial Corporation Bid Certification documents of $500 thousand for Bids, Proposals and Quotations, and $125 thousand for Aggregate Amendments and should refer to notes in columns 65 and 66 for additional information.

Level Position Canadian Commercial Corporation Instructions Tools and Equipment required by Contractors for R&O of Defence supplies Cert. of Defence supplies Seized Property Management and Disposal
(See Notes)
Disposal of Seized Real Property
(See Notes)
Contracting Documents
Bid Certification Contract Signing
Bids, Proposals and Quotations Aggreg. Amend. Contract Aggreg. Amend.
Minister Full Full Full Full Full Full Full Full
1 ADM Full Full Full Full Full Full Full
(See Notes)
Full
(See Notes)
DG, RDG Full Full Full Full Full Full Full
(See Notes)
Full
(See Notes)
Sr. Director, Regional Director Full Full Full Full Full Full Full
(See Notes)
Full
(See Notes)
2 Director Full Full Full Full Full Full Full
(See Notes)
 
Manager Full Full Full Full Full Full $150K
(See Notes)
 
3 Supply Team Leader $500K $125K $2M $500K     $100K
(See Notes)
 
Supply Specialist $250K $75K $1M $250K     $70K
(See Notes)
 
4 Supply Officer $100K $25K $200K $50K     $30K
(See Notes)
 
Intern Officer/ Trainee $60K $12K $100K $20K     $20K
(See Notes)
 
Sr. Purchasing Assistant $40K $8K $50K $10K     $10K
(See Notes)
 
Procurement Assistant $20K $4K $20K $4K     $5K
(See Notes)
 
See Note in Column 65 66 67 68 69 70 71 72

Remarks: Contracting authorities must refer to the following:

  1. Instructions to Exceptional Contracting Limits found at the beginning of this annex.
  2. Explanation of Notes (as referred to in table above) found in Annex 6.4.4: Notes to Exceptional Contracting Limits for Complex Procurements.

Annex 6.4.4: Notes to Exceptional Contracting Limits for Complex Procurements

()

The notes below apply to the matching column number in each table contained in Annex 6.4.3: Exceptional Contracting Limits for Complex Procurements:

Column 46: Emergency Contracting Authority

Approval authorities for non-competitive contracts, for goods and services up to $15M rests with the Minister of Public Works and Government Services Canada (PWGSC), the Assistant Deputy Minister, Acquisitions Branch, or the Associate Assistant Deputy Minister, Acquisitions Branch, in response to emergencies by departments where there will be significant human and/or financial risk on condition that a report be sent to the Treasury Board (TB) Secretariat within 60 calendar days of the authorization or beginning of work.

This emergency contracting authority can be used only if all of the following criteria are met:

  1. the Assistant Deputy Minister, Acquisitions Branch, invokes the National Security or Extreme Urgency provisions of the applicable trade agreements
  2. the requirement cannot be satisfied by normal contracting procedures due to the urgency of the situation; and
  3. the applicable client departmental minister requests that the PWGSC Minister approves the use of this authority.

This authority remains subject to the reporting requirement for the use of emergency contracting as set out in the TB Contracting Policy.

Authority Reference:

TB Contracting Policy, Appendix C - Contracts Directive, Part III, Emergency Contracting Limit - Section 5.

Column 47: Transportation Services from Common Carriers

Approval authority to enter into or amend a service contract for transportation services from common carriers if:

  1. the rates charged do not exceed the normal rates for such services.
  • All positions in Level 1: Full Authority.
Authority Reference:

TB Contracting Policy, Appendix C - Contracts Directive, Part II, Departmental Index to Exceptional Contracting Limits, Article 1.(a).

Column 48: Regulated electricity, gas, water, sewage disposal, heat and telecommunication services

Approval authority to enter into or amend a service contract for electricity, gas, water, sewage disposal, heat and telecommunication services, which by full or partial regulation, are only available from suppliers at regulated prices or at prices accepted by a regulatory mechanism, if:

  1. the rates do not exceed the normal rates; and
  2. the contract does not involve negotiated installation or capital charges in excess of $200,000.
  • All positions in Level 1: Full Authority.
Authority Reference:

TB Contracting Policy, Appendix C - Contracts Directive, Part II, Departmental Index to Exceptional Contracting Limits, Article 1.(b).

Column 49: Deregulated electricity and natural gas

Approval authority to enter into or amend a service contract for deregulated electricity and natural gas using competitive electronic bidding, when the deregulated portion does not exceed $100M.

Authority Reference:

TB Contracting Policy, Appendix C - Contracts Directive, Part II, Departmental Index to Exceptional Contracting Limits, Article 1.(c).

Column 50: Repair and overhaul of military equipment

Approval authority to enter into or amend a contract to repair and overhaul military equipment.

Authority Reference:

TB Contracting Policy, Appendix C - Contracts Directive, Part II, Departmental Index to Exceptional Contracting Limits, Section 7.

Column 51: Procurement under the U.S. Foreign Military Sales Program

Approval authority to enter into or amend a contract for procurement under the U.S. Foreign Military Sales Program. This authority is to be exercised by the ADM, Acquisitions Branch, by those officers occupying a position in PWGSC (Washington) and, where the contract is for the supply of highly classified goods and/or services, the following positions may also exercise the authority:

  • Manager, Information Security and Electronic Warfare Division
  • Senior Director, Electronics, Munitions and Tactical Systems Procurement Directorate
  • Director General, Defence and Major Projects Sector.
Authority Reference:

TB Contracting Policy, Appendix C - Contracts Directive, Part II, Departmental Index to Exceptional Contracting Limits, Section 31.

Column 52: Procurement of ammunition under the Munitions Supply Program

Approval authority to enter into or amend a goods contract for the procurement of ammunition under the Munitions Supply Program.

Authority Reference:

TB Contracting Policy, Appendix C - Contracts Directive, Part II, Departmental Index to Exceptional Contracting Limits, Section 30.

Column 53: Agreements for the supply of edible agricultural products for foreign aid programs

Approval authority to enter into or amend a goods contract for the procurement of any edible agricultural product for foreign aid programs, if:

  1. the price offered is reasonable under prevailing market conditions, the lowest-priced bid is accepted or, when necessary to obtain the tonnage demanded, successive lowest-priced bids are accepted; or
  2. a bid solicitation FAS (Free Alongside Ship) multiple ports is issued, the lowest-priced bid is accepted or, when necessary to obtain the tonnage demanded, successive lowest-priced bids that result in the lowest total cost to the recipient country are accepted.
Authority Reference:

TB Contracting Policy, Appendix C - Contracts Directive, Part II, Departmental Index to Exceptional Contracting Limits, Section 5.

Column 54: Agreements for the transport by ocean-going vessel of any goods shipped for the Canadian International Development Agency

Approval authority to enter into or amend an agreement for the transport by ocean-going vessel of any goods shipped for the Canadian International Development Agency, if:

  1. the price offered is considered to be reasonable under prevailing market conditions; and
  2. the lowest-priced bid is accepted or, if it is necessary to accept more than one bid to accommodate the quantity of goods to be shipped, successive lowest-priced bids are accepted.
Authority Reference:

TB Contracting Policy, Appendix C - Contracts Directive, Part II, Departmental Index to Exceptional Contracting Limits, Section 6.

Column 55: Procurement of bulk fuels

Approval authority to enter into or amend a contract for the procurement of bulk fuels, if the total amount payable under the contract, including any amendments, or call-up against a standing offer, does not exceed $10,000,000.

The limits in Column 55 reflect approval authority for contracts. Standing offer approval authority is in accordance with the applicable table for Complex Procurements (GOODS) in Annex 6.4.2 Contracting Limits.

The following positions have full authority to approve and enter into a standing offer method of supply for the procurement of bulk fuels:

  • Director General, Commercial Acquisitions and Supply Management Sector
  • Regional Directors General
  • Manager (Koblenz)
Authority Reference:

TB Contracting Policy, Appendix C - Contracts Directive, Part II, Departmental Index to Exceptional Contracting Limits, Section 32.

Column 56: Standing Offers and Supply Arrangements

Approval authority to use a standing offer method of supply or a supply arrangement when the resulting individual call-ups or contracts will not exceed the limits prescribed by TB.

Notes:
  1. In accordance with the applicable table for Complex Procurements of Annex 6.4.2 Contracting Limits up to the limit indicated (e.g. Goods Non-competitive) When using a formal procurement plan, the positions of director general/regional director general and above have full approval authority to use a standing offer method of supply or a supply arrangement with the exception of non-competitive (including non-competitive procurements where an advance contract award notice is used) procurements exceeding the director general/regional director general limits where the Assistant Deputy Minister, Acquisitions Branch, has full approval authority.
  2. See Column 55 for Procurement of Bulk Fuels.
Columns 57, 58 and 59: Energy Management Contracts

Approval authority to enter into or amend a service contract for the procurement of energy supply, energy efficiency improvements, energy management services and energy management monitoring and training if the total amount under the contract, including any amendments :

  1. does not exceed $25M or the maximum indicated; and
  2. provided that each custodian's first energy management contract over $1M is submitted for TB approval.
Authority References:
  • TB Contracting Policy, Section 8.10;
  • TB Contracting Policy, Appendix C - Contracts Directive, Part II, Departmental Index to Exceptional Contracting Limits; Section 49.
Columns 60 to 64: Disposals of Surplus Crown Assets

These are the approval authorities required for the sale, exchange, transfer to another department, lease, lend or otherwise disposal of surplus government assets by Crown Assets Distribution Centres and the Crown Assets Distribution Directorate. These authorities must be exercised only by: the ADM, Acquisitions Branch; the Associate Assistant Deputy Minister, Acquisitions Branch; the Director General, Commercial Acquisitions and Supply Management Sector; the Senior Director, Crown Assets Distribution; and those positions under the Crown Assets Distribution Directorate.

The authorities in these columns apply to all sales transacted with:

  1. the general public;
  2. any preferred customer, defined in two groups:
    1. Group 1, consisting of federal government departments or agencies listed in Schedules I and II of the Financial Administration Act, as well as Branches Designated as Departments for the purposes of the Act; and
    2. Group 2, consisting of provincial government departments and agencies; municipal government bodies and boards; incorporated Indian bands or councils; educational institutions, supported financially through federal, provincial or municipal subsidy or concession; or charitable or non-profit organizations with appropriate certification status.
  3. if surplus assets have been offered to the public, preferred status will not be recognized. However, the party may submit an offer in the normal manner.
Authority References:
  • Surplus Crown Assets Act
  • TB Directive on Disposal of Surplus Material
Columns 65 to 68: Canadian Commercial Corporation

This is the authority for PWGSC to carry out contracting services in relation to Canadian Commercial Corporation (CCC)'s export activities.

The position of Manager has Full authority for bid certification and contract signing.

Authority Reference:

Interdepartmental Memorandum of Understanding between CCC and PWGSC.

Column 69: Instructions - Tools and Equipment

As part of the fulfilment of the Minister's duties and responsibilities under the Defence Production Act, this is the authority to issue instructions for shipment, transportation, storage and warehousing of machine tools, special production tooling and special test equipment that are required by contractors in the manufacturing or in the repair and overhaul of defence supplies or other equipment.

Authority Reference:

Defence Production Act

. Column 70: Certification of Defence Supplies

This is the authority to provide the certification required by the Canada Revenue Agency from PWGSC that items imported, pursuant to contract, by the Department of National Defence are "defence supplies". "Defence supplies", as defined in the Defence Production Act, means

  1. arms, ammunition, implements of war, vehicles, mechanical and other equipment, watercraft, amphibious craft, aircraft, animals, articles, materials, substances and things required or used for the purposes of the defence of Canada or for cooperative efforts for defence being carried on by Canada and an associated government,
  2. ships of all kinds, and
  3. articles, materials, substances and things of all kinds used for the production or supply of anything mentioned in paragraph (a) or (b) or for the construction of defence projects.
Authority Reference: Column 71: Seized Property Management and Disposal

Approval and signing authorities under the Seized Property Management Act and Regulations are to manage and dispose of all seized properties (excluding disposal of seized real property).

These authorities are to be exercised only by the ADM, Acquisitions Branch; the Associate Assistant Deputy Minister, Acquisitions Branch; the Director General, Commercial Acquisitions and Supply Management Sector, and by those officers occupying a position within the Seized Property Management Directorate who have been delegated authorities under the Seized Property Management Act.

Authority Reference: Seized Property Management Act and Regulations. Column 72: Disposal of Seized Real Property

This statutory authority to dispose of seized real property is found in the Seized Property Management Act. Section 10 of the Seized Property Disposition Regulations specifies that where the Minister of Public Works and Government Services disposes of property that is real property, the Minister will do so in accordance with the Federal Real Property and Federal Immovables Act and Regulations. Therefore, the Minister has signed a stand-alone Section 3 Authorization pursuant to the Federal Real Property and Federal Immovables Act.

This authority is delegated as follows:

Specific Delegation of Authority
Level 1
  • Assistant Deputy Minister, Acquisitions Branch
  • Director General, Commercial Acquisitions and Supply Management Sector
  • Senior Director, Seized Property Management Directorate
FULL
Authority Reference:

Annex 6.4.5: Table of Equivalent Positions

()

Purpose

Unless otherwise specified, all positions in this table are in the Acquisitions Branch, located in either headquarters or at client locations, or in regional operations with responsibility for common service acquisition functions.

Remarks:
  1. Unless restricted by legislation, regulation, or policy, the Deputy Minister and the Associate Deputy Minister have the same authorities as the Minister.
  2. For any position titles not listed in this Table of Equivalent Positions, the equivalent positions as recognized by the Chief Financial Officer will apply.
Table of Equivalent Positions
Level 1
  • Assistant Deputy Minister, Acquisitions
  • Associate Assistant Deputy Minister, Acquisitions
  • Director General, Acquisitions
  • Regional Director General
  • Senior Director, Acquisitions
  • Senior Director, Crown Assets Distribution
  • Senior Director, Seized Property Management Directorate
  • Regional Director, Acquisitions
Level 2 Director, Acquisitions
  • Manager
  • Project Manager
  • Procurement Manager
  • Manager (Koblenz)
Level 3
  • Supply Team Leader
  • Chief
  • Supervisor
  • Senior Procurement Officer
  • Senior Contract Management Officer
  • Senior Contracts Officer (Washington)
  • Supply Specialist
  • Team Leader
  • Senior Case Officer
  • Project Officer
  • Procurement Officer
  • Contract Management Officer
  • Marine Technical Inspector (when performing purchasing functions)
  • Senior Contracts Officer
Level 4
  • Supply Officer
  • Export Transportation Officer
  • Purchasing Officer
  • Contracts Officer
  • Case Officer
Intern Officer/Trainee
Senior Purchasing Assistant
  • Procurement Assistant
  • Purchasing Assistant
  • Sales Representative (Crown Assets Distribution)
  • Project Clerk
  • Contract Clerk

Annex 6.4.6: Basic and Standard Contract Amendment Approval Instructions

()

With the exception of administrative amendments and pre-approved amendments, the correct approval authority level for a proposed amendment to a Basic or Standard contract is determined by completing a Risk Assessment for Amendments (RAA). When answering the "Value" question within the RAA, consideration must be given not only to the value of the proposed amendment but also to the cumulative value (or aggregate) of all amendments, both positive and negative (previous and proposed). Therefore, the dollar value to be used in the "Value" question must be the aggregate amendment value (previous and proposed) excluding pre-approved amendments. The following are examples of when a RAA is required for a Basic or Standard contract awarded on an electronically competed basis.

1. Determining the Amendment Approval Authority for Competitive Contracts for Goods within the Basic Stream

A Contract Planning and Advance Approval (CPAA) was approved for a total original procurement value estimated at $500,000 (GST/HST included). A Procurement Risk Assessment was performed to determine the risks involved with the procurement and the associated approval authority. The electronic bidding process was utilized. The original contract was awarded at $384,620. The CPAA included a quantity option equalling $115,380 to be exercised at anytime before the expiry date of the contract.

The quantity option was not funded at the time of contract award and was not included in the contract value.

Amendments 1 to 3 are determined as follows:

Amendment 1: Administrative; revised client contact information

Revision
Impact to Approval Amount Nil - Administrative
Impact to Contract Value Nil - Administrative
RAA Required No - Administrative
Signing Authority Any incumbent holding a valid delegation of authority
Revised Contract Value $384,620 - Unchanged
Revised Approval Amount $500,000 - Unchanged

Amendment 2: Exercises the pre-approved quantity option, increasing the Contract value by $115,380

Revision
Impact to Approval Amount Nil - pre-approved option
Impact to Contract Value Increase of $115,380
RAA Required No - Administrative
Signing Authority Any incumbent holding a valid delegation of authority
Revised Contract Value $500,000 - Increase of $115,380
Revised Approval Amount $500,000 - Unchanged

Amendment 3: Purchasing an additional quantity (20) of the same item at a total estimated cost of $7,692.40 (GST/HST included)

Revision
Impact to Approval Amount Increase of $7,692.40
Impact to Contract Value Increase of $7,692.40
RAA Required Yes – Adding a requirement (an additional quantity of 20) not previously approved
RAA "Value" Response $7,692.40 – Aggregate value of all amendments (previous and proposed), excluding options
Signing Authority Any incumbent holding a valid delegation of authority
Revised Contract Value $507,692.40
Revised Approval Amount $507,692.40
2. Determining the Amendment Approval Authority for Competitive Contracts for Services within the Standard Stream

A Contract Planning and Advance Approval (CPAA) was approved for a total original procurement value estimated at $3,600,000 (GST/HST included). The electronic bidding process was utilized. The original contract was awarded at $2,000,000. The CPAA included an option to extend the period of services for one (1) additional year equaling $1,000,000, to be exercised at anytime before the expiry date of the contract. The CPAA also included a set-aside amount for unscheduled work equaling $600,000.

The option year and the set aside amount for unscheduled work were not funded at the time of contract award and were not included in the contract value.

Amendments 1 to 8 are determined as follows:

Amendment 1: Administrative; revised client contact information

Revision
Impact to Approval Amount Nil – Administrative
Impact to Contract Value Nil – Administrative
RAA Required No – Administrative
Signing Authority Any incumbent holding a valid delegation of authority
Revised Contract Value $2,000,000 - Unchanged
Revised Approval Amount $3,600,000 - Unchanged

Amendment 2: To incorporate $100,000 of unscheduled work into the contract using a portion of the pre-approved set aside amount

Revision
Impact to Approval Amount Nil – using pre-approved set aside amount
Impact to Contract Value Increase of $100,000
RAA Required Yes – Risk of additional work requires evaluation
RAA "Value" Response $100,000 using "non-competitive" and "set aside amount" selection within "Value" Question
Signing Authority Any incumbent holding a valid delegation of authority
Revised Contract Value $2,100,000 - Increase of $100,000
Revised Approval Amount $3,600,000 – Unchanged
Pre-approved Set Aside Amount Remaining $500,000

Amendment 3: Exercises the pre-approved option to extend the period of services by one (1) additional year, increasing the Contract value by $1,000,000

Revision
Impact to Approval Amount Nil – pre-approved option
Impact to Contract Value Increase of $1,000,000
RAA Required No – Administrative
Signing Authority Any incumbent holding a valid delegation of authority
Revised Contract Value $3,100,000 - Increase of $1,000,000
Revised Approval Amount $3,600,000 – Unchanged

Amendment 4: To incorporate $300,000 of unscheduled work into the contract using a portion of the pre-approved set aside amount

Revision
Impact to Approval Amount Nil – using pre-approved set aside amount
Impact to Contract Value Increase of $300,000
RAA Required Yes – Risk of additional work requires evaluation
RAA "Value" Response: $300,000 using "non-competitive" and "set aside amount" selection within "Value" Question
Signing Authority Any incumbent holding a valid delegation of authority
Revised Contract Value $3,400,000 - Increase of $300,000
Revised Approval Amount $3,600,000 – Unchanged
Pre-approved Set Aside Amount Remaining $200,000

Amendment 5: To delete a work package no longer required under the contract

Revision
Impact to Approval Amount Decrease of $50,000
Impact to Contract Value Decrease of $50,000
RAA Required No – Administrative
Signing Authority Any incumbent holding a valid delegation of authority
Revised Contract Value $3,350,000 – Decrease of $50,000
Revised Approval Amount $3,550,000 – Decrease of $50,000

Amendment 6: To incorporate $200,000 of unscheduled work into the contract using the remaining pre-approved set aside amount

Revision
Impact to Approval Amount Nil – using pre-approved set aside amount
Impact to Contract Value Increase of $200,000
RAA Required Yes – Risk of additional work requires evaluation
RAA "Value" Response $200,000 using "non-competitive" and "set aside amount" selection within "Value" Question
Signing Authority Any incumbent holding a valid delegation of authority
Revised Contract Value $3,550,000 - Increase of $200,000
Revised Approval Amount $3,550,000 – Unchanged
Pre-approved Set Aside Amount Remaining $0 – All of pre-approval now utilized

Amendment 7: To add an additional requirement to the contract not previously anticipated

Revision
Impact to Approval Amount Increase of $100,000
Impact to Contract Value Increase of $100,000
RAA Required Yes – Adding a requirement (additional requirement) not previously approved
RAA "Value" Response $50,000 - Aggregate value of all amendments (previous and proposed), excluding options and set aside amount
Signing Authority Any incumbent holding a valid delegation of authority
Revised Contract Value $3,650,000 – Increase of $100,000
Revised Approval Amount $3,650,000 – Increase of $100,000

Amendment 8: To extend the period of contract performance by three (3) months due to unforeseen delays (outside of the contractor’s control) to allow all work under contract to be completed. Cost Impact of contract extension estimated at $300,000, however, sufficient funding remains within the contract to cover cost of additional three (3) months.

Revision
Impact to Approval Amount Nil – But Cost Impact is $300,000
Impact to Contract Value Nil – Sufficient funding remains within contract
RAA Required Yes – Extending contract to include three (3) months of additional work not previously approved
RAA "Value" Response $350,000 - Aggregate value of all amendments (previous and proposed), excluding options and set aside amount
Signing Authority Any incumbent holding a valid delegation of authority
Revised Contract Value $3,650,000 – No change
Revised Approval Amount $3,650,000 – No change

Annex 6.4.7: Complex Contract Amendment Approval Instructions

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When the correct approval authority level for a proposed amendment is being determined, consideration must be given not only to the value of the amendment but also to the cumulative value (or aggregate) of amendments. The amendment approval authority level is based on the aggregate amendment value excluding negative and pre-approved amendments. Following is an example of how to determine the appropriate authority for amendments to a contract awarded on a competitive basis.

Determining the Amendment Approval Authority for Competitive Contracts for Goods

A Contract Planning and Advance Approval (CPAA) was approved at the director level for a total original procurement value estimated at $10,000,000. The electronic bidding process was utilized. The original contract was awarded at $8,500,000 and signed by the Manager, the applicable signing authority level. The CPAA included a quantity option equalling $1,000,000 to be exercised at anytime before the expiry date of the contract. The CPAA also included a set aside amount for design changes equalling $500K.

The quantity option and the set aside amount for design changes were not funded at the time of contract award and were not included in the contract value.

Amendments 1 to 10 are determined as follows:

  1. Amendment 1: not pre-approved, is needed to add some items equalling $28,400.

    The amendment approval authority is the Supply Specialist.

    Revised contract value is now $8,528,400.

  2. Amendment 2: not pre-approved, is for a mutually agreeable one-month delay in the estimated delivery date of the first shipment (i.e., delivery date is not firm). A NIL amendment.

    Amendment aggregate value for not pre-approved amendments is $28,400.

    NIL value amendments where no further risk or liability accrued to Canada are administrative in nature and can be approved by the contracting authority.

    Revised contract value is now $8,528,400 (no change).

  3. Amendment 3: a pre-approved option quantity, exercises half of the option quantity amount equalling $500,000.

    Aggregate amendment values for not pre-approved amendments are separate from the aggregate amendment values of either options or set-aside amounts. If required, options or set-aside amounts can be exercised to the maximum value in one amendment.

    Cumulative amendments to exercise a pre-approved option are $500,000.

    The amendment to exercise an option has already been pre-approved at the CPAA stage.

    Revised contract value is now $9,028,400.

  4. Amendment 4: not pre-approved, is for unscheduled work equalling $76,400.

    Amendment aggregate value for not pre-approved amendments is $104,800.

    The amendment approval authority is the Manager.

    Revised contract value is now $9,104,800;

  5. Amendment 5: pre-approved option quantity exercises the second half of the option quantity for a value of $500,000.

    The cumulative value for the pre-approved option is $1,000,000. The option is now fully exercised.

    The amendment to exercise an option has already been pre-approved at the CPAA stage.

    Revised contract value is now $9,604,800.

  6. Amendment 6: not previously approved, a NIL amendment is required to add a Standard Acquisition Clauses and Conditions(SACC) Manual clause, inadvertently omitted from the original document.

    Amendment aggregate value for not pre-approved amendments is $104,800.

    NIL value amendments where no further risk or liability accrued to Canada are administrative in nature and require no approvals.

    Revised contract value is now: $9,604,800. No change.

  7. Amendment 7: pre-approved set aside amount, is raised to exercise a portion of the pre-approved set aside amount for design changes equalling $280,000.

    The cumulative value for amendments to exercise the pre-approved set aside amount is $280,000.

    The amendment approval authority is the Manager.

    Amendments issued to use an amount set aside amount for unscheduled work, work arising, or design changes must be approved by the appropriate non-competitive contract entry approval authority, not to exceed the Director level.

    Aggregate amendment values of set aside amounts, previously approved, are separate from the aggregate amendment values of either options or normal amendments. If required, options or set-aside amounts can be exercised to the maximum value in one amendment.

    Revised contract value is now $9,884,800.

  8. Amendment 8: pre-approved set aside amount, is raised to exercise a portion of the pre-approved set-aside amount for design changes equalling $100,000.

    The cumulative value for amendments to exercise the pre-approved set-aside amount is $380,000. Balance remaining is $120,000.

    * The set-aside amendment value stands alone: non-competitive contract entry approval authority is sought for $100,000.

    The amendment approval authority is the Supply Specialist.

    Revised contract value is now $9,984,800.

  9. Amendment 9: not pre-approved, is for unscheduled work equalling $210,000.

    Amendment aggregate for not pre-approved amendments is now $314,800.

    As per the Electronic Aggregate Amendment levels, the Director can approve amendments to a maximum aggregate amendment value of $500,000.

    The amendment approval authority is the Director.

    Revised contract value is now $10,194,800.

  10. Amendment 10: not pre-approved; the client decides, due to cut backs, that Amendment 9, is no longer required. The supplier agrees to forego this work at no additional cost to Canada, (having just recently ordered materials and was able to negotiate no cancellation fees, etc. from his suppliers) for a negative value amendment of $210,000.

    Amendment aggregate value for not pre-approved amendments remains at $314,800.

    The amendment approval authority is the Contracting Authority, designated as such in the contract.

    Revised contract value is now $9,984,800.

Annex 6.4.8: Amendment Approval Instructions for all Complexities

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1. Reductions in Contract Value
  1. Situation: The client reduces the quantity required and the supplier/contractor agrees to the reduced quantity with no increase in the unit price.

    Approval Level: The contracting authority, designated as such in the contract, may approve the amendment that reduces the value of the contract (if amendment is deemed administrative in nature).

  2. Situation: The client reduces the quantity required but the supplier/contractor wants to increase the price because of the reduced quantity. Renegotiation is necessary.

    Approval Level: The approval level for the contract amendment is that required for the revised unit price multiplied by the new quantity. Aggregate amendment approval authorities apply.

  3. Situation: The client wishes to disencumber funds allocated to a repair and overhaul contract in the last quarter of the fiscal year, because no more work arising will be forthcoming during that period.

    Approval Level: The contracting authority, designated as such in the contract, may approve an amendment to reduce the value of the contract.

  4. Situation: The client requires a work package to be removed from a research and development contract. There is no clear relationship between the reduced cost and the reduced work package.

    Approval Level: The amendment will be approved at a level equal to the value of the proposed cost reduction. Aggregate amendment approval authorities apply. Nil value amendment is not appropriate as there is no link between the value of the work package and the reduction.

2. Substitute Item (or work package)

If a client requests the contracting authority to amend a contract by deleting an item (or work package) and substituting a different item (or work package), the value of the substitute item (or work package) will determine the contract amendment approval level. For Complex Procurements, if the contract amendment approval level, based on the value of the substitute item (or work package) exceeds the Director General's approval authority, the standard method of determining the amendment approval authority, based on cumulative value of amendments, must be used to determine whether the approval of the Assistant Deputy Minister, Acquisitions Branch, or higher, is required. For Basic and Standard Procurements, a Procurement Risk Assessment must be performed to determine the appropriate approval authority required to add the substitute item (or work package).

3. Additional Risks

Contract amendments that propose changes to either the basis of payment, the method of payment or the contract conditions, so that additional risk or liability is transferred to Canada, must be authorized at, or above, the original approval level for Complex Procurements and in accordance with the Procurement Risk Assessment for Basic and Standard Procurements, for that contract only if corresponding compensatory benefits accrue to Canada. In the absence of corresponding benefits, such changes would constitute extra payments for which only TB has approval authority.

The following are examples of changes that would constitute additional risk to Canada:

  1. liberalizing the progress payments;
  2. eliminating the requirement for a performance bond;
  3. slippage, by the contractor, of firm delivery dates.
4. Advance Approval for Amount Set Aside
  1. If the original authority to enter into a contract also included advance approval for an amount to be set aside for unscheduled work, design changes or work arising, then on each occasion when any of the amount set aside is used, it must be approved by the appropriate non-competitive contract entry approval authority. For Complex procurements the approval is not to exceed the Director level. For Basic and Standard the Procurement Risk Assessment will determine the appropriate approval authority relative to the risks involved. When completing the "Value" question of the RAA, contracting officers are to select the "non-competitive", "set aside amount" selections within the question.
  2. If an amendment to use the remainder of the amount set aside for a specific purpose exceeds the amount set aside, the approval authority for the excess amount will revert back to the appropriate aggregate amendment approval authority in accordance with Annex 6.4.2: Contracting Limits. Aggregate amendment values of set asides, previously approved, are separate from the aggregate amendment values of either options or normal amendments. If required, set-asides can be exercised to the maximum value in one amendment.
  3. If a condition of the original approval requires other levels of approval for encumbering amounts set aside, the levels established in the original contract approval will take precedence.
  4. The amount of the set aside should be based on sound front-end planning and preparation. The better the planning and preparation the better the ability to predict additional quantities or unforeseen work arising, and the more accurate the assigned dollars values. A procurement plan that is thoroughly justified as to the purpose of each planned expenditure, is more likely to be approved.
  5. Some examples of the vehicles used to utilize the amount of the set-aside are Contract amendment, work authorization form, form DND 626 Requisition on a Contract, or a Pre-Approved Amount for Anticipated Amendments (PAAA).
5. Advance Approval for Options
  1. Once approval has been obtained to exercise an option, the contract amendment to exercise the option requires only the signature of an incumbent, under any level, who holds a valid delegation of approval authority for contract entry for the same categories for which the incumbent has delegation of authority. For example, if an incumbent holds delegation of authority for contract entry for goods and military repair and overhaul, then that incumbent would have signing authority for goods and military repair and overhaul. Funds and approval received for an option can only be used for the specific purpose stated in the approval document. For Complex procurements, the original approval authority must approve any change to the scope or period of the option. For Basic and Standard another Procurement Risk Assessment is required to determine the appropriate approval authority relative to the risks involved.
  2. Aggregate amendment values of options, previously approved, are separate from the aggregate amendment values of either set asides or normal amendments. If required, options can be exercised to the maximum value in one amendment.
  3. Approval and funding for unexpected changes in the scope of the work, that were not specifically provided for in the approval document as an Advance Approval for Amount Set-Aside (see section 5 above), cannot be drawn from the approval for an option. For example, if approval is obtained for a 1 year services contract valued at $200,000, with an option year also valued at $200,000, the contracting officer cannot use the approval and funding related to the option year to cover an increase in the services required during the first year. Any change in the scope of work that was not approved as part of the original submission is a change in the requirement and must be approved on its own merits.
6. Contract Code for Pre-approved Amendments
  1. Document Type number 22, Contract Code for Pre-approved Amendments, is available in ABE(Automated Buyer Environment) and SELECT systems, and is used to identify all pre-approved amendments.
  2. These include, but are not limited to:
    1. amendments issued to exercise an option for additional quantities or years that were included in the original bid solicitation and approved as part of the original contract approval submission; and,
    2. amendments which use amounts set-aside for anticipated, but not yet clearly defined, changes (e.g., unscheduled work, design changes, work arising), which were approved as part of the original contract approval submission.
  3. Amendments that do not fit within the description of the original approval or go beyond the scope or value of the approval will be coded as "Normal Amendments" and must be approved at the appropriate level as determined by the Minister's delegation of amendment authorities.
7. Rates (or prices-to-be-negotiated) / Interim Rates (or prices)

If the basis of payment in a contract includes interim rates (or prices) and it is proposed to amend the contract to provide for firm rates (or prices) in lieu, then the amendment approval authority level will be as follows (unless otherwise instructed by the contract approval authority):

  1. Contracting authority, only if the firm rates (or prices) are equal to or less than the interim rates (or prices); or
  2. at the original contract approval authority level, for Complex procurements, when the firm rates (or prices) exceed the interim rates (or prices). For Basic and Standard procurements a Procurement Risk Assessment for Amendments is required to determine the appropriate approval authority; or
  3. Director General, if the contract was approved by the Assistant Deputy Minister, the Minister or TB.
8. Combining Several Types of Contract Changes in One Amendment

When a contract amendment is raised to incorporate several types of changes enumerated above (i.e., firming up price-to-be-negotiated items, using a portion of an amount set aside, addition of items/quantities, etc.), the highest approval level must apply for any one type of these changes or combinations being incorporated into the contract by that amendment.

9. Amendments to Contracts with Former Public Servants

TB must approve all amendments to service contracts with former public servants in receipt of a pension pursuant to the Public Service Superannuation Act, in accordance with section 1.1.1 of Annex 6.4.1: Approval Authorities and Additional Signing Authorities in Support of Clients' Programs Only - Other than for Canadian Commercial Corporation.

10. Interpretation of Aggregate Amendment Value
  1. All amendment approval authorities (for amendments not pre-approved) must be determined on the basis of the aggregate amendment value.
  2. Aggregate amendment value means the sum total of the amendments to a contract, including positive and negative amendments. It applies only to amendments requiring TB approval. For internal purposes and to ensure adequate control measures are in place, the aggregate amount for amendments not pre-approved will be calculated using only positive amendments.
  3. As a general principle, once an approval level has been reached it can never be lowered. As an example, once the ministerial level for approval has been reached every subsequent positive amendment reverts to the minister regardless of dollar value.
  4. Nil value amendments where no further risk or liability accrued to Canada are administrative in nature and can be approved and signed by the Contracting Authority. For Complex procurements, nil value amendments where further risk or liability will be Canada's responsibility require the approval authority at or above the original approval authority. For Basic and Standard procurements, the completion of a Risk Assessment for Amendments is required to determine the appropriate approval authority.
  5. Extending the period of a contract with a specific end date (i.e. a contract, task authorization contract, standing offer or supply arrangement, etc.) cannot be treated as administrative in nature. Adding additional time to the contract represents additional liability for Canada regardless of whether or not additional funding is required. For example, if a contract has been awarded for a two (2) year period ending March 31st, in the amount of $10M and there is $4M left over on April 1st, that $4M cannot be used for an extension of the contract without obtaining the appropriate approval, even though the original approval to contract was for $10M.
11. Amendment Approved by Treasury Board

When TB has approved an amendment, PWGSC may further amend the contract without TB approval if the cumulative value of the amendments after each issuance of an amendment pursuant to a TB approval does not exceed the non-competitive contract amendment approval authority limits set out in Annex 6.4.2: Contracting Limits.

7 Chapter 7 - Award of Contracts and Issuance of Standing Offers and Supply Arrangements

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7.1 Overview

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  1. This chapter describes the process of contract award to a successful bidder, as well as the issuing of the authorization to use a standing offer (SO) or a supply arrangement (SA) received from a successful offeror or supplier. It also provides general instructions for release of information to the public about the results of the bid solicitation.
  2. Before award/issuance of the document, the contracting officer must ensure that the following elements have been appropriately addressed:
    1. industrial security requirements (see 3.55 Industrial Security Requirements (Personnel or Organization)and 5.15 Verifying Compliance with Security Requirements);
    2. vendor performance corrective measures (see 8.180 Vendor Performance Policy);
    3. supplier financial capability or financial security (see 5.60 Financial Capabilities of Contractor);
    4. award/issuance is in accordance with the approval obtained and any exceptions to internal approval authorities (see article 1.1. of Annex 6.4.1: Approval Authorities and Additional Signing Authorities in Support of Clients' Programs Only - Other than for Canadian Commercial Corporation);
    5. Integrity Provisions (see 5.16 Integrity Compliance);
    6. Federal Contractors Program for Employment Equity (see Annex 5.1 Federal Contractors Program for Employment Equity).

7.5 Contract Award

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  1. Contract award may take place at any time, after bid closing and completion of the evaluation, and before the bid validity expiry date. The contract document will depend on the type of bid solicitation.
  2. A "purchase order" will be issued when quotations are received, either by way of a Request For Quotation (RFQ) or a telephone buy. If quotations were solicited by telephone, the supplier must confirm, in writing, the terms of the purchase order.
  3. A "Your Tender/Proposal is accepted" document will be issued when tenders/proposals are requested, and the bid is received in writing and accepted. This type of document is used when the contract reflects those conditions proposed or agreed to in writing by the successful bidder. The document should make reference to the bid and any amendments to it.

    Note: Construction contracts are awarded under a true bid and acceptance process. The bidder submits the completed bid and acceptance form, and Public Works and Government Services Canada (PWGSC) sends an acceptance document.

  4. A "You are Requested" document is issued where the proposed contract may reflect a condition not agreed to in writing by the successful bidder. This type of contract constitutes a counter-offer by PWGSC, and must be accepted by the successful bidder in writing to constitute a legally binding contract.

    Note: The "You are Requested" documents, and in some cases purchase orders, are not contracts but only offers by PWGSC to potential contractors. Although a legal contract does not exist, such offers usually reflect the contracting officer's understanding of the conditions, which are agreeable to the successful bidder. If the successful bidder does not accept the PWGSC offer, or proposes modifications to the contract, the matter should be referred to Legal Services.

  5. Formal Agreements. Contracting officers must consult with Legal Services when considering this type of contract.

7.10 Issuance of Supply Arrangements and Standing Offers

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Following a Request for Standing Offers (RFSO) or a Request for Supply Arrangements (RFSA) process, an authorization document is issued, which gives contracting officers and client departments, when applicable, the authority to use the instrument. For more information on the use of these instruments, see 3.5 Existing Procurement Instruments, 3.15 Non-competitive Contracting Process, 4.10.20 Request for Standing Offers and 4.10.25 Request for Supply Arrangements.

7.10.1 Standing Offers

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  1. The authorization document for standing offers, entitled "Standing Offer and Call-Up Authority", may take one of the following forms:
    1. a "National Master Standing Offer (NMSO)", which is generally issued for the use of all departments. PWGSC contracting officers and client departments are both authorized to make call-ups;
    2. a "Departmental Individual Standing Offer (DISO)", which is generally issued for the use of a single client. Only PWGSC contracting officers are authorized to make call-ups. However, software DISOs, which are structured more like NMSOs, are an exception as they authorize the client to make call-ups;
    3. a "National Individual Standing Offer (NISO)", which is generally issued for the use of a single client. Both PWGSC contracting officers and client department are authorized to make call-ups;
    4. a "Regional Master Standing Offer (RMSO)", which is generally issued for the use of many clients within a specific geographic area; and
    5. a "Regional Individual Standing Offer (RISO)", which is generally issued for the use of a single client within a specific geographic area.
  2. Call-ups must be made in accordance with the procedure set out in the SO and, in the case of multiple SOs, in accordance with the call-up methodology described in all of the SOs being referenced. Call-ups cannot exceed the contracting limit set out in the standing offer. For more information on allowable call-up limitations, see 4.10.20.1(a).
  3. A call-up against a standing offer carried out by an identified user constitutes acceptance of the offer. The SO (offer) and call-up (acceptance) form a binding contract between Canada and the offeror. Form PWGSC-TPSGC 942 (PDF Version 130 KB)This information is only accessible to federal government employees. - (Help on File Formats) is the standard document for identified users to make call-ups against a standing offer. Form PWGSC-TPSGC 944 (PDF Version 346 KB)This information is only accessible to federal government employees. - (Help on File Formats) is used for call-ups against multiple standing offers.

7.10.5 Supply Arrangements

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  1. The authorization to use a supply arrangement insert (SA) will take the form of a SA document that is generally issued for use by all client departments. Client departments may or may not be authorized to award contracts or issue bid solicitations. If authorized, they will award contracts under their own contracting authority within their own financial contracting authority. For contracts beyond client departments' contracting authority, PWGSC will be the contracting authority.
  2. Resulting contracts must be awarded in accordance with the procedures, and within the contracting limits, described in the supply arrangement.

7.15 Legal Entity

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  1. Whatever the form of procurement document, the contracting officer must ensure that it is with a supplier that is a legal entity having the legal capacity to contract, and that the supplier's legal name is used.
  2. Possession of a Procurement Business Number (PBN) is not equivalent to having the legal capacity to contract. The contracting officer must still verify that the supplier has the legal capacity to contract.
  3. For example, a contract may not be awarded to a division of a corporation, as it is not a legal entity. Be aware that computerized source lists may include an abbreviated name for a supplier. In some cases, a legal entity (for example a numbered company) will use a business name to do business. In such cases, the legal name (the number of the company) must be used and it could be followed by "doing business as ______(insert the business name)".

7.20 Letter of Intent

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  1. When the timely delivery of goods or services would be jeopardized by lengthy negotiations, a Letter of Intent authorizes commencement of the work before the contract is awarded. It is a binding commitment to place a contract with a designated supplier.
  2. Letters of Intent can only be used in exceptional circumstances, and must not be issued without prior approval of the Deputy Minister (DM).
  3. A Letter of Intent is issued subsequent to DM approval of the conditions already agreed to by the proposed contractor, but before obtaining contract approval of all the conditions of the proposed contract.
  4. Letters of Intent are prepared by Legal Services with the cooperation of the contracting officer.
  5. No contractual commitment may be made that would constitute the first step of a procurement that might require subsequent Treasury Board approval.
  6. The Letter of Intent must accurately describe the work authorized, state the maximum liability of Canada, expressed as funds to be spent by the contractor, and specify how the payment will be made. The contract serial number that will be assigned to the subsequent contract must be indicated on the Letter of Intent.
  7. After DM approval is received, the original Letter of Intent must be signed by the appropriate contract signing authority and distributed in the same manner as a contract.
  8. On completion of negotiations of all the conditions of the proposed contract, the contract approval document will be submitted for review and approval at the appropriate level.
  9. The contracting officer must clearly indicate in the contract that the work authorized under the Letter of Intent is not to be duplicated.

7.25 Go-Ahead Letters

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Go-ahead letters may be issued after obtaining final approval of the contract approval document, provided all appropriate conditions of the proposed contract are known and accepted by the proposed contractor. Go-ahead letters are subject to the appropriate signing authorities. After issuing the go-ahead letter, the contract must be sent to the contractor in a timely manner.

7.30 Procurement Reporting and Posting of Award Notices

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The following sections describe procedures that contracting officers must follow to meet departmental responsibilities for award notices and contract activity reporting. These requirements stem from legal requirements, corporate and government policies, parliamentary needs and departmental procedures. The following is a summary of reporting requirements:

  1. Award Notices posted on the Government Electronic Tendering Service (GETS);
  2. Purchasing Activity Reports (government-wide annual reporting);
  3. Contract History database (published on Buyandsell.gc.ca);
  4. Comprehensive Land Claim Agreement contract reporting;
  5. Procurement Strategy for Aboriginal Business reporting;
  6. Trade agreements reporting requirements; and;
  7. Specific procurement activities such as contracts with task authorizations, terminations and conditional amendments related to vendor performance.

Note: The above section is not written to address the complete reporting requirements of client departments or suppliers, but only of contracting officers in the Acquisitions Program of Public Works and Government Services Canada.

7.30.1 Award Notices on the Government Electronic Tendering Service (GETS)

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  1. For procurements subject to the international trade agreements, an award notice must be posted on GETS within 72 days of contract award. Although there are no minimum time periods identified for the Agreement on Internal Trade (AIT), the 72-day limit applies for reasons of consistency.
  2. For all contractual documents issued through the Automated Buyer Environment (ABE), award notices are generated automatically through ABE, with the release of the completed Procurement Summary, and posted on Buyandsell.gc.ca, except when the "National Security" indicator is checked. See 7.30.30 Use of the National Security Indicator for more details.
  3. For more information on completing the Procurement Summary, see the ABE Bluebook (PDF 2.8 MB)This information is only accessible to federal government employees. (Help with PDFfiles).
  4. For procurements subject to the trade agreements where ABE is not used for contract award, contracting officers must create award notices using the Tender Management Application (TMA) on Buyandsell.gc.ca. For more information about obtaining an account to use TMA, please contact the InfoLine at: 1-800-811-1148.

7.30.5 Procurement Activity Reporting to Treasury Board Secretariat

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  1. In 1996, Public Works and Government Services Canada (PWGSC) agreed with the Treasury Board Secretariat (TBS) that PWGSC would be responsible for collecting contract data from other government departments and agencies to generate the annual procurement activity reports. This annual activity entails the reporting of the following:
    1. federal contracting (on behalf of the Treasury Board Secretariat);
    2. federal contracting in respect of all Trade Agreements to which Canada is a signatory (on behalf of the Department of Foreign Affaires and International Trade);
    3. federal contracting in respect of the Agreement on Internal Trade, and the Ownership of Intellectual Property (on behalf of the Department of Industry); and
    4. all procurements related to the Procurement for Aboriginal Business (on behalf of the Department of Aboriginal Affairs and Northern Development Canada).
  2. The Office of Small and Medium Enterprises and Strategic Engagement (OSME-SE) is responsible for assembling contract activity data based on input submitted from all departments and agencies. This information is then provided to TBS to support the publishing of the government's Purchasing Activity Reports for each calendar year.
  3. On completion and release of the procurement summary in the Automated Buyer Environment (ABE), the award data is sent automatically to the Acquisition Information System (AIS) and will be included in the contract activity reporting.
  4. PWGSC Contract Activity Outside of ABE

    Contracts done outside of ABE must be reported to OSME-SE at NCRReporting.RCNRapportage@pwgsc-tpsgc.gc.ca on an annual basis. The reports, summary or detail, should be submitted by the end of February. Such reports should include contract activity such as formal agreements, confirming orders, security sensitive contracts and any other contract or call-up not otherwise captured in automatic reporting in ABE.

  5. Standing Offers and Supply Arrangements

    In the past, departments and agencies have reported only the total contract activity under standing offer agreements instead of reporting details on individual call-ups as quite a number of departments did not have the capability to report against call-ups. Beginning in 2011, departments and agencies phased in the reporting of standing offer call-ups as part of the Purchasing Activity Reports. Effective January 2011:

    1. all call-ups issued by PWGSC contracting officers are captured in the Government Contract Activity Report assembled by OSME-SE. Contracting officers must release the procurement summary in ABE for all call-ups to ensure the data is captured;
    2. the value entered for the total estimated value, appearing on the front page of Standing Offers is no longer used as part of the contract activity report, regardless of the type of standing offer. Contracting officers within AB are not responsible for reporting client departments' contracts/call-ups which utilizes PWGSC SOs and SAs. This is reported to OSME-SE directly from the departments;
    3. call-ups done within PWGSC/AB but outside of ABE must be reported separately to OSME-SE per subsection d. of this section.

7.30.10 Contract History on Buyandsell.gc.ca

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  1. The Contract History database for Public Works and Government Services Canada (PWGSC) common services procurement was originally launched to facilitate requests about contracts awarded by PWGSC, and is accessible to both suppliers and government buyers. Making this data readily available supports a reduction in access to information and privacy (ATIP) requests for information on contract awards. On March 8, 2013, this database was added to the Procurement Data section on BuyandSell.gc.ca, along with other data such as Standing Offers and Supply Arrangements (SOSA), and also Goods and Services Identification Number (GSIN) on June 1, 2013.
  2. On completion and release of the procurement summary in the Automated Buyer Environment (ABE), the award data is sent automatically to the Contract History database and published on Buyandsell.gc.ca, except when the National Security indicator is checked. There is no requirement for buyers to report in this system for contracts done outside of ABE.

7.30.15 Comprehensive Land Claims Agreement Reporting

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  1. As detailed in Treasury Board Secretariat Contracting Policy Notice 2008-4, the government monitors and reports on procurements that are subject to Comprehensive Land Claims Agreements (CLCAs). Therefore, contracting officers must ensure that the coding for procurements subject to CLCAs is done accurately. See section 7.70.30 Comprehensive Land Claims Agreement (CLCA) Coding for instructions for the Automated Buyer Environment (ABE).
  2. Contracting done outside of ABE must be reported as described in subsection d. of 7.30.5 Procurement Activity Reporting to Treasury Board Secretariat.

7.30.20 Procurement Strategy of Aboriginal Business Reporting

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  1. Treasury Board Secretariat (TBS) Aboriginal Business Procurement Policy Performance Objectives - (Contracting Policy Notice 1996-6) sets out details of department's responsibilities with respect to developing performance objectives relating to procurements from aboriginal businesses and to develop related reporting mechanisms. The establishment of, and reporting on, annual objectives in support of the program, includes value and numbers of contracts awarded to Aboriginal businesses, supplier promotion activities, and increased representation of Aboriginal businesses on department source lists.
  2. Therefore, contracting officers must ensure that reporting on procurements subject to a Procurement Strategy of Aboriginal Business (PSAB) set-aside is done accurately. All procurements subject to PSAB must be coded as such; in the Automated Buyer Environment (ABE), this involves clicking on "Trade Agreement" and selecting "Set-Aside Program for Aboriginal Business (SPAB)".

7.30.25 Trade Agreements Reporting

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  1. Some trade agreements, including the Agreement on Internal Trade (AIT), North American Free Trade Agreement (NAFTA) and the World Trade Organization Agreement on Government Procurement (WTO-AGP) require that parties report on covered procurement. In response to this obligation, Public Works and Government Services Canada provides statistics to the Treasury Board Secretariat who is responsible for the government-wide report.
  2. Contracting officers are to ensure that the procurement summary in the Automated Buyer Environment (ABE) is coded properly when their procurement is covered by AIT, NAFTA and/or the WTO-AGP. ABE selection choices, which include NAFTA, also include the bilateral trade agreements that have reporting obligations.
  3. Contracts done outside of ABE must be reported as per subsection d. of 7.30.5 Procurement Activity Reporting to Treasury Board Secretariat. Such reports must identify whether the procurement was covered by the AIT, NAFTA and/or the WTO-AGP.

7.30.30 Use of the National Security Indicator

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  1. There may be circumstances other than National Security where posting an award notice could reasonably be expected to compromise government confidences, cause economic disruption, or similarly be contrary to the public interest.  On the other hand, there are procurements for which a National Security Exception (NSE) was approved in accordance with paragraph 3.105 National Security Exceptions of the Supply Manual, but it is still appropriate to post an award notice.
  2. A contracting officer may suppress the posting of an award notice by checking the box for the National Security Indicator in the ABE Procurement Summary. Contracting officers must treat this indicator as if it were labeled “Suppress Posting”. 
  3. For amendment documents in ABE, the value of the National Security Indicator always defaults to “No” (unchecked) regardless of the value on the original document.  If the National Security indicator was “Yes” (checked), on the original award, the contracting officer must remember to choose “Yes” (by checking the box) for subsequent amendments.  If the National Security indicator was “No” (unchecked) on the original award, the contracting officer must leave the box set to “No” (unchecked) for subsequent amendments.  Changing the value of the National Security Indicator on an award amendment can result in awards being posted in error on the Buy and Sell website.
  4. Therefore, the following procedures apply with regard to the National Security Indicator on the ABE Procurement Summary:
    1. when an NSE is invoked for a procurement in accordance with paragraph 3.105 of the Supply Manual, and posting an award notice is contrary to the public interest, the contracting officer must check the National Security Indicator box for the original contractual document and for any subsequent amendments, thus no award notices will be posted for any documents.
    2. when an NSE is invoked in accordance with paragraph 3.105 National Security Exceptions of the Supply Manual, and posting an award notice is not contrary to public interest, the National Security Indicator must be left unchecked for both original and subsequent amendment documents and the award notice will be posted.
    3. if an NSE does not apply, but the contracting officer’s management has advised that it is not in the public interest to post an award notice, the contracting officer must check the National Security Indicator box for the original contractual document and for any subsequent amendment documents.
    4. if during the life of a contract, it is decided and approved that the National Security Indicator must be changed (as not being the same as for the original), contracting officers must first contact the Acquisitions Systems Service Desk (ITSB) either by phone at 819-956-3325 or via e-mail at: assd.basa@pwgsc-tpsgc.gc.ca, to have them modify the indicator from the original contractual documents.  This is a complex process that, if not followed properly, can cause reporting issues, so contracting officers should not attempt to make the change without ITSB’s assistance.

7.30.35 Reporting of Contract with Task Authorizations

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After issuing a contract with task authorizations (TAs) or an amendment to this type of contract, contracting officers must report on the procurement. See section 7.70.35 Contracts with Task Authorizations – Coding for instructions.

7.30.40 Reporting of Emergency Requirements

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Use of the emergency contracting authority is subject to the reporting requirement for such contracts as set out in the TB Contracting Policy (see section 11.2.9 Emergency Contracting for details).

7.35 Notification to Unsuccessful Bidders/Offerors/Suppliers

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Contracting officers should notify unsuccessful bidders/offerors/suppliers as soon as possible after contract award and issuance of a standing offer or supply arrangement. Samples of regret letters are provided in Annex 7.1: Samples of Regret Letters.

7.40 Debriefing and Feedback Session to Bidders/Offerors/Suppliers

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  1. Debriefing
    1. The purpose of a debriefing is to explain to unsuccessful bidders/offerors/suppliers why their bid/offer/arrangement was not accepted, allowing them to improve their future documents. A debriefing demonstrates the fairness, openness, and transparency of the federal government contracting process. Also, contracting officers can improve future solicitations by using the comments and suggestions provided by bidders/offerors/suppliers.
    2. Every solicitation must include a provision stating that bidders/offerors/suppliers may request a debriefing about the results of the solicitation. The departmental standard procurement templates include a provision to this effect.
    3. Following the award of a contract or issuance of a standing offer (SO)/supply arrangement (SA), a debriefing will be provided upon request. A written debriefing is usually done in the form of a regret letter that is sent out to each unsuccessful bidder/offeror/supplier. See samples of regret letters in Annex 7.1 Samples of Regret Letters.
    4. In the case of a complex procurement, when a solicitation is conducted in phases, the contracting officer will notify unsuccessful bidders/offerors/suppliers at the end of each phase and provide a debriefing upon request.
    5. Within the limits expressed at section 7.45 Disclosure of information, a debriefing will include the following, as applicable:
      1. the name(s) of the successful bidder(s)/offeror(s)/supplier(s);
      2. the total estimated cost of the contract(s), the unit price(s)/labour rate(s) of an SO, or (where applicable) the firm/ceiling unit price(s) or labour rate(s) of an SA;
      3. the total evaluated price of the successful bidder(s)/offeror(s)/supplier(s) and the total score, if applicable;
      4. very general information on the relative strengths of the successful bid(s)/offer(s)/arrangement(s), ensuring that confidential and commercial information is not divulged; and
      5. an outline of the reasons the bid/offer/arrangement of the bidder/offeror/supplier being debriefed was not successful according to the evaluation criteria and selection methodology. In addition, scores achieved on all rated criteria will be provided with sufficient detail for the bidder/offeror/supplier to understand why those scores were assigned.
  2. Feedback Session
    1. A feedback session is a form of debriefing. A feedback session will be provided, upon request, when a solicitation is to be cancelled and reissued. The purpose of a feedback session is to provide the bidder/offeror/supplier with information specific to their bid/offer/arrangement. As an example, a feedback session will provide the bidder/offeror/supplier with information on which mandatory criteria they passed or failed or their overall technical score or their score for each technical criterion. This information will allow the bidder/offeror/supplier to understand why their bid/offer/arrangement failed to meet the requirements. No information regarding other bids/offers/arrangements or the solicitation to be reissued must be divulged.
    2. In order to ensure the fairness, openness, and transparency of the solicitation process, all bidders/offerors/suppliers must have access to the same information on the solicitation to be reissued. Therefore, all information provided in a feedback session must be documented by the Contracting Authority. The information communicated during the feedback session, where pertinent, will be provided in a generic form in the solicitation to be reissued to maintain fairness to all potential bidders/offerors/suppliers. One or both of the following measures will be taken to provide bidders/offerors/suppliers with this information:
      1. The particular area of concern will be highlighted more prominently with additional instructions to bidders/offerors/suppliers in the solicitation to be reissued (for example, by adding text to inform or focus attention).
      2. A bidders' conference will be held for the solicitation to be reissued. For further information on bidders' conferences, see section 4.30.45.15 Bidders' Conferences and Site Visits.
    3. In determining which of these two measures, b. ii. A. and/or B., to use, contracting officers should consider the following factors:
      1. the complexity of the procurement or solicitation documents;
      2. the likelihood of an unsuccessful reissued solicitation, e.g. if no responsive bids/offers/arrangements had been received;
      3. the nature of the issues that created a need to cancel and reissue the solicitation;
      4. the sensitivity of the procurement; and
      5. the estimated dollar value of the procurement.
    4. Both measures listed in, b. ii. A. and B. above, must be undertaken when Treasury Board (TB) contract approval is required.
    5. In accordance with subsection f. of section 4.100 Cancelling and Reissuing a Solicitation , all solicitations to be reissued must include Standard Acquisition Clauses and Conditions (SACC) clause A9043T Reissue of Bid Solicitation, informing bidders/offerors/suppliers that the reissued solicitation cancels and supersedes the previous solicitation and that a debriefing or feedback session will be provided, upon request, to bidders/offerors/suppliers who bid on the previous solicitation.
  3. Cancelled Solicitations
    1. When a solicitation is cancelled prior to the bid solicitation closing date, the Contracting Authority must adhere to the procedures addressed in section 4.100 Cancelling and Reissuing a Solicitation.
    2. When a solicitation is cancelled after the bid closing date but prior to completing the evaluation of mandatory or rated criteria, the Contracting Authority will inform bidders/offerors/suppliers of the cancellation and that the evaluation of the bids/offers/arrangements was not completed.
    3. When a solicitation is cancelled after the bid closing date, following the evaluation of mandatory or rated criteria, and a new solicitation is not planned or will not be issued, a debriefing will be provided upon request in accordance with section 7.40 Debriefing and Feedback Session to Unsuccessful Bidders/Offerors/Suppliers.
    4. When a solicitation is cancelled following the evaluation of mandatory or rated criteria and will be reissued, then a feedback session will be provided upon request.
      1. If the solicitation is cancelled because all bids/offers/arrangements are non-responsive or do not represent fair value and the Statement of Requirements of the solicitation to be reissued is significantly modified, bidders/offerors/suppliers will only be informed of which mandatory criteria(s) or rated criteria(s) requiring a minimum score were failed but no detail is to be provided as to why the bidders/offerors/suppliers failed each criteria. No information on other rated criteria(s) is to be provided.
      2. If the solicitation is cancelled because all bids/offers/arrangements are non-responsive or do not represent fair value and the Statement of Requirements of the solicitation to be reissued is not significantly modified, bidders/offerors/suppliers will be informed of which mandatory criteria(s) or rated criteria(s) requiring a minimum score were failed with sufficient detail for bidders/offerors/suppliers to understand why they failed each criteria. No information on other rated criteria(s) is to be provided.
      3. If the solicitation is cancelled for reasons other than those mentioned above, bidders/offerors/suppliers will only be informed of which mandatory criteria(s) or rated criteria(s) requiring a minimum score were failed but no detail is to be provided as to why the bidders/offerors/suppliers failed each criteria. No information on other rated criteria(s) is to be provided.

      Bidders/offerors/suppliers will be advised not to make any assumptions from the information received regarding the cancelled solicitation when bidding on the solicitation to be reissued as evaluation criteria(s) may change.
  4. Bidders/offerors/suppliers should request a debriefing or feedback session within fifteen (15) working days of receipt of the results of the solicitation process or cancellation of the solicitation process.
  5. A debriefing or a feedback session should be provided within ten (10) working days from the date a request was received.
  6. A debriefing or feedback session can be provided in writing, by telephone or in person. Contracting officers are to determine which method will be most effective in the context of a particular procurement. To the extent possible, any request for an in-person debriefing or feedback session, or for the information to be provided in a particular way, should be accommodated.
  7. Contracting officers should consult with management and, if required, legal services prior to providing a debriefing or feedback session for a requirement that is sensitive or high risk.
  8. If a fairness monitor was present during the evaluation process, then the contracting officer will advise the fairness monitor of the date and time of any telephone/in-person debriefing or feedback session or bidders' conference.
  9. If legal counsel is to accompany the bidder/offeror/supplier to any in-person debriefing or feedback session, or participate in any telephone debriefing or feedback session, the contracting officer will inform Legal Services and discuss their participation.
  10. Contracting officers must keep a record of the debriefing or feedback session information provided including, but not limited to, minutes or a record of any meeting and comments and suggestions from the bidders/offerors/suppliers.
  11. Upon request, contracting officers should provide to bidders/offerors/suppliers the following general information about the judicial and quasi-judicial bodies to which bid protests can be made. For any given procurement, one or more of the following avenues may be available to a bidder/offeror/supplier that wishes to make a claim regarding the conduct of the procurement:
    1. Canadian International Trade Tribunal (CITT): Whether or not the CITT has jurisdiction to conduct an inquiry regarding any particular procurement will depend on factors such as the government institution conducting the procurement, the estimated value of the procurement, and the nature of the goods, services, or construction services being procured. More information can be obtained by visiting the How to File a Complaint section on the CITT Web site.
    2. Office of the Procurement Ombudsman (OPO): If the value of the procurement is below the monetary thresholds established under the Agreement on Internal Trade, the OPO may have jurisdiction to conduct a review. More information can be obtained by visiting the Make a Complaint section on the OPO Web site.
    3. An action in a Provincial/Territorial Superior Court or in Federal Court.

    NOTE: There are strict deadlines for bringing bid protests, and the time periods vary depending on where the bid protest is brought. Suppliers may wish to consult their own lawyers on the appropriate forum for bringing a bid protest.

7.45 Disclosure of Information

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  1. The following information can be released by contracting officers on a routine basis, after award of a contract or issuance of a standing offer (SO) or supply arrangement (SA):
    1. for all solicitations for goods and services, the name of the successful and unsuccessful bidders/offerors/suppliers, responsive and non responsive, together with the total evaluated price of the successful bidder/offeror/supplier and total score, if applicable. Since information on bidders/offerors/suppliers who are individuals may qualify for exemption under the Privacy Act, such requests should be directed to the Access to Information and Privacy Office as indicated in 7.45(b);
    2. for all goods and services requirements subject to public opening, information which was released at the public opening of bids; for example, name of each bidder and the total amount of each bid; and
    3. individual unit pricing information including labour rates contained in standing offers (see instructions at 7.45(c)).
  2. The following types of requests for bid, contract or standing offer and supply arrangement information should be referred to the Access to Information and Privacy Office:
    1. names of bidders/offerors who are individuals and the content of their bids/offers, including prices, since such information may be subject to an exemption under the Privacy Act;
    2. copies of bids/offers, including any accompanying catalogues, handbooks or pricing guides;
    3. copies of contracts, purchase orders or standing offer documents, including any accompanying PWGSC-produced catalogues, handbooks, or acquisition guides;
    4. bid and contract information pertaining to classified requirements;
    5. information contained in bids/offers/arrangements that have been cancelled or superseded by later bids/offers;
    6. individual unit pricing pertaining to contracts or purchase orders for goods and services and construction; and
    7. any other information not covered in (a) above.

    Any disclosures not referred to the Access to Information and Privacy Office should first be discussed with Legal Services.

  3. To ensure a consistent approach to the public disclosure of information, PWGSC will release on a routine basis the unit prices and labour rates contained in standing offers for goods and services. Offerors must be informed of PWGSC's intention to disclose unit prices and labour rates contained in successful offers in the event of a resulting standing offer. General conditions 2005 of the Standard Acquisition Clauses and Conditions (SACC) Manual include a provision to this effect.

    There may be circumstances where the provisions related to the disclosure of information, as set out above, cannot be applied. Such circumstances must be handled on a case-by-case basis and would require the approval of the manager or higher, depending on the approval authority, before issuing the RFSO or RFSA.

7.50 Bid and Contract Security

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  1. Surety bonds lapse automatically on expiration of the purpose or period for which they were required. Security deposits (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit) must be returned to bidders. The bidder must return the letters of credit to the issuer to complete the discharge.
  2. Lapsing of surety bonds or return of security deposits (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit) must occur in the following way for all requirements except construction:
    1. for all bidders, at the expiration of the bid validity period, either as originally set or as extended;
    2. for unsuccessful bidders, prompt notification or return of a security deposit, immediately after a contract is awarded, is essential in such cases so as not to constrain the their ability to make new bids;
    3. for a successful bidder, if no contract security is required, immediately upon award of a contract or, if contract security is required, once the contract security is received; and
    4. if contract security is required, the contract must be awarded before bid security lapses, if applicable, but not before the contract security has been received.
  3. Lapsing of surety bonds, or return of security deposits (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit) for construction requirements must occur as soon as practical following:
    1. the bid solicitation closing date, for those bidders submitting non-compliant bids;
    2. the administrative bid review, for those bidders submitting compliant bids ranked fourth to last on the schedule of bids;
    3. the award of contract, for those bidders submitting the second and third ranked bids; and
    4. the receipt of contract security from the successful bidder; or
    5. the cancellation of the bid solicitation, for all bidders.
    6. If one or more of the bids ranked third to first is withdrawn or rejected for whatever reason, then Canada should reserve the right to hold the bid security of the next highest ranked compliant bid in order to retain the bid security of at least three valid and compliant bids.
  4. For construction services requirements, if contract security is required, the security must be received within 14 days after contract award and before bid security lapses.

7.55 Industrial Security Requirements

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  1. For every proposed procurement, the client departments must identify the security requirements by completing a Security Requirement Check List (SRCL) or else certify in writing that there are no security requirements (date of no security requirement must be included).
  2. The contracting officer must verify with the Canadian Industrial Security Directorate (CISD), and not by using the security indicator from the VIM system, that the proposed contractor meets the security requirements before contract award. For more information, see 5.15 Verifying Compliance with Security Requirements.
  3. Contracting officers must include a comment on the front page of the contract, standing offer, or supply arrangement, as follows:

    "THIS DOCUMENT CONTAINS A SECURITY REQUIREMENT (specify date of statement)"

    Or

    "THIS DOCUMENT CONTAINS NO SECURITY REQUIREMENT (specify date of statement)"

  4. If applicable, the document index shall contain the block entitled:

    "Security Requirement(s)"

    AND, if applicable

    "Location(s) of Work Performance"

  5. If the contract, standing offer or supply arrangement contains security requirements, the contracting officer must forward a copy of the contract, standing offer or supply arrangement, and any amendments, or revisions, to CISD within two working days of the document being issued. Contracting officers may send a PDF version of the document by e-mail to sncrcontracts@tpsgc-pwgsc.gc.ca. For procurements using the Automated Buyer Environment (ABE), a copy of the contract is automatically sent to CISD.
  6. When contracting for destruction of protected and classified government materials, contracting officers must be aware of the additional measures required and manage the risks associated with the destruction of protected and classified government materials. The Corporate Security Technical Standard defines PWGSC corporate policy and procedures relating to classified waste destruction, and should follow the interim standard, regarding classification levels of shredders, and complete the appropriate form ARC 0203, Request for Non-Accessioned Disposal, for the destruction of sensitive documents.

    PWGSC threshold may be exceeded when administering destruction contracts on behalf of other client departments, based on the client's threat risk assessment. If such is the case, the client may develop a security guide as amplifying instructions, which is to be attached to the Security Requirements Check List (SRCL).

  7. For foreign classified information, consult with the Canadian Industrial Security Directorate before undertaking destruction.

7.60 Environmental Considerations

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Information on environmental considerations is found in sections  3.4 Contract Award and 3.5 Contract Performance Clauses of the Guideline for Integration of Environmental Performance Considerations in Federal Government Procurement.

7.65 Proactive Disclosure

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  1. Client departments are required to report on a quarterly basis on contracts awarded with a value over $10,000, an amendment with a value over $10,000, and an amendment when it modifies the initial value of a contract to an amended contract value that is over $10,000. After January 1, 2013, departments will be required to include information on contracts and contract amendments over $10 000 awarded to a former public servant in receipt of a Public Service Superannuation Act (PSSA) pension on the Disclosure of Contracts departmental websites.
  2. Contracting officers for common services should be providing the required information to client departments in a timely manner to facilitate their reporting process. For further information, consult the Guidelines on the Proactive Disclosure of Contracts on the Treasury Board of Canada Secretariat website.

7.70 Coding Procedures

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Statistical information pertaining to PWGSC contracting activities is required to meet corporate and parliamentary needs. Contracting officers are responsible for ensuring the complete and accurate recording of all contracts.

7.70.5 Public Works and Government Services Canada Reporting (Common Services)

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  1. The Acquisition Information System (AIS) database contains over 16 full years of historical contracting data beginning with calendar year 1993. AIS is a relational database. It is a collection of information organized in related tables. A table is a collection of information about a certain topic. It contains data about contracts, requisitions, solicitations, notices, organizations, vendors and customers. AIS feeds data to the Contract History application on Buyandsell.gc.ca. Most procurement-related data comes from the Automated Buyer Environment (ABE), but for those organizations who don't have access to ABE, there is a limited front end user interface called Automated Data Capture (ADC). From ABE, the working copy requisition, contract and line item information is sent upon release of the procurement summary for original contracts, and upon coding an amendment, an assignment or the termination of a contract. Within the ABE environment, there are several fields that are mandatory or that cannot be changed to protect data integrity.
  2. Contracting officers must follow the coding procedures in the Contract Coding Reference GuideThis information is only accessible to federal government employees..
  3. The Contract Coding Reference Guide contains a list of elements and definitions found in the Procurement Summary Release Document. The Procurement Summary Release Document is completed by the contracting officer and the information it contains is then released to AIS.

7.70.10 Coding of Advance Contract Award Notice Results

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  1. In the Automated Buyer Environment (ABE) Procurement Summary, when the requirement is competitive, choose the blank when selecting a choice from the ACAN Result box. This will create the response "Not Applicable" in the No ACAN Reason box.
  2. Where an ACAN is not published for other reasons, users are directed to choose only the option "No ACAN", when selecting a choice for this box. The choices of "ACAN not required" has been removed, and leaving it blank should only be selected as per a. above.
  3. The No ACAN Reason box then requires the user to select one No ACAN reason to explain why a competitive process cannot be followed, so an ACAN must not be used. See section 3.15.5.15 Advance Contract Award Notice Exceptions for details.

7.70.15 Coding of Region of Delivery

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When entering the delivery points information for a standing offer or supply arrangement within the Procurement Summary in the Automated Buyer Environment (ABE), contracting officers must select only those provinces or territories where potential deliveries may occur. The "national button" in the Procurement Summary must only be selected if it is for a National (Master or Individual) Standing Offer, and if potential deliveries may take place in all of the provinces and territories.

7.70.20 Coding of Call-ups

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Call-ups are coded as competitive or non-competitive depending on the procurement strategy used on the underlying Standing Offer.

  1. If a Standing Offer is issued competitively, with a clear ranking methodology for issuing call-ups in accordance with section 4.10.20.5 Ranking and Methodology for Standing Offers, then the resulting call-ups are considered competitive and must be coded accordingly.
  2. A Standing Offer that uses the Advance Contract Approval Notice is considered competitive for approval purposes only; call-ups resulting from a Standing Offer subject to an Advance Contract Award Notice (ACAN) posting must be coded as non-competitive.
  3. If a Standing Offer is issued using a non-competitive (sole-source) procurement strategy, or does not have a clear ranking methodology (e.g. the client can choose which firms to issue call-ups), then the resulting call-ups are considered non-competitive and must be coded accordingly.

7.70.25 Coding of Terminations and Conditional Amendments

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Contracting officers must do procurement coding in the Automated Buyer Environment (ABE) in support of the Vendor Performance Corrective Measures Policy (VPCMP) as follows:

  1. Terminations for Default

    When terminating contracts, purchase orders, or call-ups (sole source or competitive), contracting officers must select one of the two new codes, "Full Termination for Default" or "Partial Termination for Default", from the drop down list in the Document Type field of the Procurement Summary. The code "Termination for Default" is no longer available in the Document Type drop down list.

  2. Conditional Amendments

    When amending contracts, purchase orders or call-ups (sole source or competitive) conditionally, contracting officers may now select the new code "Conditional Amendment" from the drop down list in the Document Type field of the Procurement Summary.

    Note: A conditional amendment is triggered by an event as defined in the VPCMP. For more information on when you can use a conditional amendment, see section 8.180.10 Definitions.

7.70.30 Comprehensive Land Claims Agreement Coding

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Contracting officers using the Automated Buyer Environment (ABE) must properly code all procurements subject to Comprehensive Land Claims Agreements (CLCAs) by following these steps:

  1. Click the checkbox for CLCAs on Part I of the Procurement Summary.
  2. On Part II of the Procurement Summary, under "Project ID", select all applicable CLCAs.
  3. On Part II of the Procurement Summary, under "Project ID", select either "CLCA bid criteria included in the solicitation? -- Yes" or "CLCA bid criteria included in the solicitation? -- No" as appropriate.
  4. If bidding on a procurement restricted to CLCA beneficiaries under a CLCA right of first refusal, then the procurement must be coded, on Part I of the procurement summary, as "Only CLCA Beneficiaries Solicited" for the Trade Agreement field and as "Set-asides for Small and Minority Businesses" for the Derogation field.

7.70.35 Contracts withTask Authorizations - Coding

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Contracting officers must code contracts with Task Authorizations (TA)s as follows:

  1. For Automated Buyer Environment (ABE) users: on the main page of the Procurement Summary, click on "Program ID", and select "Contract that allows Task Authorizations".
  2. For Automated Data Capture (ADC) users: include the following statement when submitting the ADC procurement report: "Program ID: Contract that allows Task Authorizations".

Annex 7.1: Samples of Regret Letters

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Appendix A 7.1.1: Regret Letter to Unsuccessful Bidders/Offerors/Suppliers - Responsive Bid/Offer/Arrangement

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Note to Contracting Officer: Because the evaluation methodology for different procurements varies, this letter will have to be tailored to the individual requirement. This letter has been drafted assuming that this bidder/offeror/supplier, although unsuccessful, its bid/offer/arrangement was declared responsive because it has met all mandatory requirements. Contracting officers should use the other sample regret letter in Appendix B: Regret Letter to Unsuccessful Bidders/Offerors/Suppliers - Non-responsive Bid/Offer/Arrangement if the bid/offer/arrangement was declared non-responsive.

________(insert date)

____________(insert department address)

Attention: ___________(insert name of addressee)

_____________(insert supplier's name and address)

Dear Mr./Mrs. ____________(insert the addressee's last name):

Subject: Solicitation No. ________

Thank you for your ____________(insert "bid" or "offer" or "arrangement") submitted in response to our request for ____________(insert brief description of goods/services).

This is to inform you that a ___________(insert "contract" or "Standing Offer (SO)" or "Supply Arrangement (SA)") will not be ___________(insert "awarded" or "issued") to you for this requirement. A __________(insert "contract" or " SO" or " SA") has been ____________(insert "awarded" or "issued") to the successful __________(insert "bid" or "offer" or "arrangement") submitted by ____________(insert name of successful bidder/offeror/supplier) in response to the above-noted solicitation. The price of the awarded _________(insert "contract" or " SO" or " SA") is $_________(insert value of awarded contract or issued SO or SA), excluding Goods and Services Tax/Harmonized Sales Tax, as applicable.

Although your _______(insert "bid" or "offer" or "arrangement") was found to be responsive to the mandatory requirements of the solicitation, it did not achieve the highest-ranking under the evaluation methodology described in the solicitation.

For your information and to assist you in responding to future solicitations, you are informed that your _________(insert "bid" or "offer" or "arrangement") was evaluated as follows in comparison to the successful ___________(insert "bid" or "offer" or "arrangement"):

Appendix A - This table shows the point rating scored by the successful and unsuccessful bidders.
Comparison Technical Score Financial Score
Successful_______(insert "bid" or "offer" or "arrangement")    
Your _______(insert "bid" or "offer" or "arrangement")    

I would like to thank you for submitting your _________(insert "bid" or "offer" or "arrangement") and your interest in being a supplier to the Government of Canada. Your participation is appreciated, and I hope that you will continue to bid on procurement opportunities offered by Public Works and Government Services Canada.

Should you require further information regarding the evaluation of your ___________(insert "bid" or "offer" or "arrangement"), please do not hesitate to contact me.

_________________(insert name of contracting authority)
Contracting Authority

Telephone: _____-_____-______
E-mail: ________@tpsgc-pwgsc.gc.ca

cc: ________(insert any additional names of people who should receive a copy)

Appendix B 7.1.2: Regret Letter to Unsuccessful Bidders/Offerors/Suppliers - Non-responsive Bid/Offer/Arrangement

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Note to contracting officer: Because the evaluation methodology for different procurement varies, this letter will have to be tailored to the individual requirement. This letter has been drafted assuming that the bid/offer/arrangement was declared non-responsive because it has not met one or more mandatory requirements. Contracting officers should use the other sample regret letter provided in Appendix A: Regret Letter to Unsuccessful Bidders/Offerors/Suppliers - Responsive Bid/Offer/Arrangement if the bid/offer/arrangement was declared responsive but simply wasn't the highest-ranked.

____________(insert department address)

________(insert date)

_____________(insert supplier's name and address)

Attention: ___________(insert name of addressee)

Dear Mr./Mrs. ____________(insert the addressee's last name):

Subject: Solicitation No. ________

Thank you for your ____________(insert "bid" or "offer" or "arrangement") submitted in response to our request for ____________(insert brief description of goods/services).

This is to inform you that a _________(insert "contract" or "Standing Offer (SO)" or "Supply Arrangement (SA)") will not be issued to you for this requirement. A _________(insert "contract" or "SO" or" SA") has been awarded to the successful ________(insert "bid" or "offer" or"arrangement") submitted by ________(insert name of successful bidder/offeror/supplier) in response to the above-noted solicitation. The price of the awarded/issued _________(insert "contract" or "SO" or" SA") is $_________(insert value of awarded contract or SO or SA) excluding Goods and Services Tax/Harmonized Sales Tax, as applicable.

As indicated in the solicitation, a ______(insert "bid" or "offer" or"arrangement") was required to meet each and every mandatory requirement. Unfortunately, the evaluating team determined that your ______(insert "bid" or "offer" or"arrangement") did not comply with all the mandatory requirements of the solicitation, including the following:

__________________(insert description of non-compliance)

To provide you with information on the characteristics and relative advantages of the successful _________(insert "bid" or "SO" or" SA"), you are informed that the successful _______(insert "bid" or "SO" or "SA") has satisfied all the mandatory requirements of the solicitation and scored on the technical point-rated requirements (insert table below if relevant), as follows:

Appendix B - This table shows the point rating scored by the successful and unsuccessful bidders
Comparison Technical Score Financial Score
Successful_______(insert "bid" or "offer" or"arrangement")    
Your _______(insert "bid" or "offer" or "arrangement")    
Instruction to contracting officer:
  1. If you did not score the bid/offer because it was disqualified early in the process, add the following sentence (i.e. As a result of finding your …) and delete the second row in the above table (i.e. Your ____...).
  2. If you are providing the unsuccessful bidder/offeror/supplier with its score, delete the following sentence (i.e. As a result of finding your …).

As a result of finding your ______(insert "bid" or "offer" or"arrangement") to be non-responsive, your ______(insert "bid" or "offer" or"arrangement") was disqualified and Canada did not proceed with your evaluation and did not determine a technical score for your ______(insert "bid" or "offer" or"arrangement").

I would like to thank you for submitting your _________ (insert "bid" or "offer" or"arrangement") and your interest in being a supplier to the Government of Canada. Your participation is appreciated, and I hope that you will continue to bid on procurement opportunities offered by Public Works and Government Services Canada.

Should you require further information regarding the evaluation of your ________(insert "bid" or "offer" or "arrangement"), please do not hesitate to contact me.

___________(insert name of contracting authority)
Contracting Authority

Telephone: ____-____-______
E-mail: ________@tpsgc-pwgsc.gc.ca

cc: ________(insert any additional names of people who should receive a copy)

8 Chapter 8 - Contract Management

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8.1 Overview

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  1. Contract management is the process of systematically and efficiently managing contract development, implementation, and administration for maximizing financial and operational performance and managing inherent risk. Contract management encompasses the life cycle of a contract and involves many stakeholders including, but not limited to the contracting officer, the client department and the supplier.
  2. Contract administration is an important part of contract management, which includes those activities performed after a contract award, to ensure files are properly maintained and that the contractor meets the requirements of the contract.
  3. Contract management is an essential element of the procurement process that protects the interests of Canada while ensuring that suppliers are being treated fairly. Contract management can be divided into four distinct phases:
    1. pre-contractual (planning);
    2. contracting (bidding and awarding of contract);
    3. contract administration (after the contract is awarded);
    4. post-contractual (close out, warranty and audit);

    The pre-contractual phase is addressed in the contents of Chapter 2 - Defining the Requirement and Requisition Receipt and Chapter 3 - Procurement Strategy. The importance of early involvement by contracting officers during the pre-contractual phase cannot be overstated, as this sets the tone for the balance of the contract life cycle activities.

  4. Planning of the details of how the contract will be managed should start during the formulation of the requirement itself, which will set the standards of what the contractor must do, how performance will be monitored and what standards will be used. These details, together with other procedures related to how the contract will be managed, should be included in the bid solicitation, to allow bidders to determine what is required of them, to plan the activities needed and to reflect the costs in their bids.
  5. The contracting phase is addressed in Chapter 4 - Solicitation Process through Chapter 7 - Award of Contracts and Issuance of Standing Offers and Supply Arrangements. Responsibility for the elements of the contracting phase fall generally to the contracting officer, though client departments have lead responsibility for some elements (see Annex: Specific Division of Responsibilities Agreements).
  6. In general, the level of effort required for contract management will vary depending on the value and complexity of the procurement. Low dollar value or simple contracts may require only minimum management, while more complex contracts will require continuous monitoring by both the client and the contracting officer. A dedicated team of clients and contracting officers may be assigned to large projects, where roles and responsibilities are defined in more detail.

8.5 Contract Administration

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  1. Both the client department and Public Works and Government Services Canada (PWGSC) must administer the contracts. It is important that the client and the contracting officer understand and agree on who is responsible for managing and administering the various aspects of the contract.
  2. Contracting officers responsible for the management of contracts should be aware of any institutional or personal sanctions. As per section 12.1.3 of the Treasury Board (TB) Contracting Policy, TB may require that sanctions be imposed on either the department or certain officials when contracting practices or contract administration is not acceptable.
  3. Contracting officers should set up and maintain complete and up to date documentation on every aspect of the contract, both to provide a record of actions taken and to protect Canada's interests under the contract. The files will provide an organizational memory of activities and events and should include, where applicable, but not be limited, to the following:
    1. the procurement planning documents;
    2. the requisition and any amendments;
    3. the solicitation documents;
    4. bid evaluation plan and resulting evaluation documents;
    5. professional and specialist's advice;
    6. risk identification, assessment and mitigation;
    7. environmental considerations, impacts, and mitigation;
    8. correspondence with clients;
    9. contract conditions;
    10. contract amendments;
    11. work schedule, including milestones and deliverables;
    12. payment schedules, invoices and payments;
    13. other correspondence (written and email);
    14. records of phone discussions;
    15. formal records of meetings, including minutes;
    16. records of decisions;
    17. warranties;
    18. management reports, including audit reports, and
    19. contract closeout documents.
  4. Additional information on environmental considerations is provided in the Guideline for Integration of Environmental Performance Considerations in Federal Government Procurement, in section 4. Contract Management; Contract Management, in section 5. Use, Operation and Maintenance; Use, Operation and Maintenance, and in section 6. Disposal; Disposal.
  5. For guidelines on file organization, see Annex 8.1: Guidelines on File Organization and Make-up.

8.10 Administration of Service Contracts

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  1. Section 16. Service contracts of the TB Contracting Policy sets out the policy for service contracts. Article 16.11.3 states the following:

    "The contracting authority should appoint a contracting officer and the technical authority should appoint a project officer (who may be the same person), to be responsible and accountable for monitoring the work through:

    1. regular physical progress and financial reports from the consultant or professional;
    2. attending progress meetings with the consultant or professional;
    3. examining the work in progress to ensure conformity with contract requirements;
    4. monitoring time, resource, cost and quality aspects of the work against a pre-determined and agreed work plan;
    5. amending the contract to reflect new requirements, work schedules and payment provisions in response to changing circumstances;
    6. conducting technical and financial audits;
    7. accepting or approving the work at intermediate stages and at completion;
    8. certifying all payments and following up to ensure timely payment.

    The division of these responsibilities among authorities should be agreed to before placing the contract."

8.15 Contract Performance

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  1. The management of a contract involves many activities to ensure fulfillment of that contract. Events can sometimes alter or disrupt the performance of a contract. For example, a contractor may default on contractual obligations, disputes may arise about contract conditions, or there may be a need to make amendments to the contract after it has been awarded.
  2. Whenever the satisfactory fulfillment of a contract is jeopardized, contracting officers should take the necessary steps to serve and protect the interests of Canada. Contract disputes should be dealt with fairly, and as promptly as possible. Contracting officers should keep procurement files complete and up to date, to provide a record of actions taken.

8.20 Canada's Obligations

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In managing a contract, contracting officers must ensure strict adherence to all of Canada's obligations. A breach of such obligations could nullify a surety bond. Where responsibility lies with a client department, the contracting officer should ensure the client authority is aware of the obligations.

8.25 Contract Payments

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Work performed or goods received under a contract must be paid for in accordance with the government's policy on the payment of accounts providing for payment within 30 days. The payment period is measured from the date that the goods or services were received, in acceptable condition, at the location(s) specified in the contract, or the date that an invoice in proper form was received, whichever is later.

8.30 Progress Payments

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  1. Progress payments need to be measured against milestones. A project progress monitoring system should be in place to provide an indication of when the work has been accomplished. Progress payments must include appropriate documentation that is retained on file.
  2. When milestone progress payments are not appropriate, then payments may be made at set times during the contract period.

8.35 Claims for Progress Payment and Invoicing

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  1. No payment, other than a progress payment, may be made under a contract unless a person authorized by the appropriate minister certifies that:
    1. the work has been performed;
    2. the goods have been supplied or the services rendered as the case may be; and
    3. the price charged is according to the contract or, if not specified by the contract, is reasonable.
  2. When a payment must be made before the completion of the work, delivery of the goods or rendering of the service, the payment must be in accordance with the contract.
  3. Claims for progress payment are normally routed, through the contracting officer, to the client for verification and authorization of payment. Contracting officers processing payment claims must act promptly. The standard due date for payment is 30 days, after invoicing or receipt of goods, whichever is later. Acceptable performance standards should be set by the sectors/regions to allow adequate time for the certification of the claim by an authorized representative of the client.
  4. Claims for progress payment must include the completed form PWGSC-TPSGC 1111 Claim for Progress Payment, which requires a certification of contract expenditures.
  5. The contractor normally sends invoices directly to the client. A copy must also be sent to the contracting officer and kept on file.
  6. Invoices that include billings for items not received are not considered due until all items are received. If a contractor wishes payment for a partial shipment, a revised invoice, if permitted by the contract, must be submitted.
  7. Clients are required to notify contractors of any error or missing information in an invoice or supporting documentation, within 15 days of receipt. Clients should return, within 15 days, any invoice not in accordance with the terms of the contract, to the contractor for resubmission.

8.40 Exchange Rate Fluctuation Provision

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For contracts with an exchange rate fluctuation provision, client departments and contracting authorities must ensure that this provision is applied during invoicing and payment. Invoices must indicate the adjustment required and would typically include form PWGSC-TPSGC 450 Claim for Exchange Rate Adjustments showing the adjustment calculations, all in accordance with the contract terms.

8.45 Interest

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  1. Simple interest will be paid automatically on any amounts that are overdue, provided that Canada is responsible for the delay. The general conditions of the SACC Manual reflect this policy. The amount of interest will be shown separately on the cheque stub or accompanying remittance advice.
  2. Interest will be calculated from the day after the due date to the day before the date that the payment is issued. However, interest will not be paid until the contract payment is made.
  3. Interest is calculated according to the following formula:

    Interest = Amount owed x ([that date's bank rate + 3%] x [number of days interest payable/365])

  4. The provisions for payment of interest on overdue accounts set out in the general conditions must be strictly adhered to, except in special cases where the client requisition and appropriate provisions in the contract specifies a payment period longer than 30 days, for example when extensive product evaluation, inspection or testing requirements are involved.

8.50 Overtime

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  1. When a contractor performs overtime under a contract, added costs may be incurred by Canada in the form of overtime premiums. Recognition of the additional cost by Canada depends upon the attendant circumstances and the cause of the overtime. Work performed under contract to Canada should not attract higher overtime charges than would apply to similar commercial work.
  2. Scheduled overtime premium costs included in a contractor's overhead account and applied to contracts are allowed, if contracts account for a pro rata share of the overtime.
  3. Unscheduled overtime premium costs to specific contracts are allowable only, if the overtime is due to Public Works and Government Services Canada (PWGSC) or client demands for accelerated delivery, increased delivery quantities, or other reasons initiated by the client for which benefit to Canada can be demonstrated.
  4. If the need for unscheduled overtime appears likely, the contracting officer should ensure that proper provisions concerning authorization, rates and dollar limits are included in the contract.
  5. The contracting officer should consult with the cost analyst to ascertain whether the contractor's cost system includes overtime premium costs in the overhead account or as a direct charge to the particular contract, in accordance with the Guideline on the Use of Cost and Price Analysis Services (located under the theme of Risk ManagementThis information is only accessible to federal government employees. of the Acquisitions Program Policy Suite).
  6. When deciding to authorize unscheduled overtime, the contracting officer must:
    1. consult with the client and jointly determine that authorization and the need of overtime will result in benefit to Canada;
    2. ensure that funds are available to reimburse the contractor;
    3. determine the aggregate limits of time and costs of the overtime to be authorized;
    4. determine what delegation of authority, if any, should be made to the client representative;
    5. ensure that provision for proper claiming and approval of overtime claimed, and overtime payments to the contractor, is included in the contract, and
    6. ensure that the procurement file includes clear documentation of all elements included in the decision to authorize overtime.

8.55 Claims for Extra Payment

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  1. From time to time, contractors submit claims for upward price revision of firm price contracts, based on changes caused by Canada. A firm price contract may not be amended to provide for upward price revision, without prior approval of Treasury Board (TB), unless either the contract contains an escalation clause, covering the adjustment requested or the contract conditions allowed for the adjustment requested.
  2. The advice of Legal Services should be obtained to determine whether a proposed extra payment is considered an amendment to the contract or an "ex gratia" payment.
  3. The approval of TB is required for all extra payment claims, irrespective of the dollar amount. As a general rule, TB will not approve claims for extra payments arising solely from the following causes:
    1. increases in labour or material costs;
    2. changes in freight rates;
    3. revisions in exchange rates;
    4. delays caused by the contractor;
    5. errors on the part of the contractor; or
    6. other difficulties that the contractor overlooked, but should have foreseen.
  4. TB has granted full authority to deputy heads to make "ex gratia" payments, and to designate officials within the department to act on their behalf. See TB Policy on Claims and Ex Gratia Payment.

8.60 Services of Non-residents - Entry Requirements

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  1. In the performance of a contract, a contractor may wish to use the services of a non-resident employee on a temporary basis. The determination of eligibility to enter Canada is the responsibility of Immigration Canada.
  2. United States nationals may apply for employment authorization at the port of entry. All others must obtain authorization before the point of entry. To obtain the correct documentation and necessary authorizations, the applicant must contact the nearest Canadian embassy or consulate.
  3. Canadian citizens residing outside Canada always have the right to work in Canada.
  4. In cases of emergency service requirements, the client department (or Public Works and Government Services Canada) must provide the contractor with written notice, including details of the emergency. In some emergencies, this information may be provided by telephone to the appropriate immigration authorities.

8.65 Assignment of Monies

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  1. Contracting officers may receive from contractors, banks, other financial institutions, or other sources, statements or documents showing that persons or companies, other than the contractor, claim to be entitled to receive monies under a contract with Public Works and Government Services Canada (PWGSC) or Canadian Commercial Corporation (CCC).
  2. Payments to persons other than those named in the contract will only be made in cases of bankruptcy, the appointment of a receiver-manager, or an assignment of debt pursuant to Part VII of the Financial Administration Act.
  3. This does not include those cases where the contractor owes a debt to Canada for tax arrears where Canada Revenue Agency has obtained Treasury Board (TB) approval to collect taxes due or has requested a deduction for taxes due to Canada.
  4. If the claim relates to a bankruptcy or insolvency situation, see 8.120 Bankruptcy, Receivership, Insolvency.
  5. The contracting officer, immediately upon receipt of a notice of assignment of money under a contract with a request to pay the assignee of the Crown debt, should contact the Payment Standards Division, at 819-956-9328 or via e-mail at: dlpsd.lddnp@tpsgc-pwgsc.gc.ca to obtain information on how to process an assignment of Crown debt.

8.65.1 Receipt and Deposit of Monies

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  1. When contracting officers receive monies directly from contractors with respect to a particular claim by Canada, these monies must be sent, in compliance with TB Contracting Instrument " Policy on Deposits", to the departmental accounting unit, as soon as possible. A memorandum must accompany the monies, with copies to the client and the Cost and Profit Assurance Group (CPAG). The memorandum should include:
    1. a brief description explaining why monies are being remitted;
    2. the name of the client;
    3. the PWGSC file/contract serial number; and
    4. the name and telephone number of the contracting officer.
  2. In the National Capital Region (NCR), the monies are sent to:
    Finance Branch
    Public Works and Government Services Canada
    Portage III, 12B1
    Gatineau, Quebec K1A 0S5
  3. Outside NCR, the recipient is the appropriate PWGSC regional director's office.
  4. Reference should be made to section 10.70 Recovery and Disposition of Contract Claims Adjustments Process.

8.65.5 Release of Contract Financial Security

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  1. Surety bonds, according to their terms, automatically expire when the contractor has fulfilled all obligations under the contract. When the contract has been completed, surety bonds must be destroyed.
  2. Where a contract, in respect of which a security deposit (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit) was given, has been completed or terminated through no fault of the contractor, the security deposit must be returned to the contractor. The contracting officer must instruct the Finance Branch to requisition a cheque for the amount of a bill of exchange plus accumulated interest, or to request to arrange the release of bonds, letters of credit and other negotiable instruments deposited.

8.65.10 Financial Claims by Canada

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  1. There are two general categories of claims by Canada as a result of contracting activities:
    1. overpayments or overclaims, as may occur when reported as a result of audit, and
    2. legal disputes, for example, termination for default, bankruptcy (only when the amount owing is actually known and final).

      Note:Either instance can only be determined when a contract has been completed or terminated.

  2. Where monies may be owing to Canada as a result of contracting activity, sectors/regions are to determine the liability and amount owing with assistance, as necessary, from Legal Services.
  3. There are special procedures to be followed whenever there are suggestions of unreasonably high profits from any contract placed pursuant to the Defence Production Act, or from any contract other than a competitive firm priced contract. See Annex 8.5: Refunds of Excess Profits Earned on PWGSC Contracts for details of these procedures.
  4. The contracting officer should liaise with the contractor to get concurrence of the final amount owing. Once that amount has been established, the contracting officer, in accordance with TB Contracting Policy, must formally advise the client to establish an accounts receivable. The client must advise PWGSC that this has been done, and take collection action.
  5. Many organizations have roles to play relating to these claims by Canada.
    1. The contracting officer is responsible to:
      1. review the acceptability of contractor claimed amounts;
      2. respond to audit observations, as required;
      3. liaise with the client department as to concurrence on the final amount, and
      4. advise Cost and Profit Assurance Group (CPAG) of all settlements reached.
    2. Audit Services Canada (ASC) provides audit reports on specific contracts.
    3. Legal Services is responsible to:
      1. identify the potential risks and liability faced by Canada as a result of claims against the contractor;
      2. inform the contractor, when requested by the contracting officer, of Canada's claim, by way of a formal legal demand;
      3. initiate legal action against the contractor.
    4. Industrial Technologies Office of Industry Canada (IC) is responsible to:
      1. follow up on the disposition of all audit qualifications and/or observations raised by ASC, except for audit issues involving interpretation of the Contract Cost Principles 1031-2, which are a responsibility of PWGSC; and
      2. resolve issues and disputes in the case of joint Canadian Commercial Corporation and Industry Canada agreements.
  6. Reference should be made to section 10.70 Recovery and Disposition of Contract Claims Adjustments Process.

8.65.15 Financial Security Issues related to Amendments

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  1. Before authorizing any material changes in contract conditions, contracting officers should ensure that such changes do not invalidate security obligations by obtaining the consent of the surety company.

    "Material changes" means any change to the contract, except a change which on the face of it and without further explanation or investigation, is clearly for the benefit of the surety. Examples of changes requiring the surety company's approval are: changes in the contract price; changes in the scope of the work; revision to the completion and/or delivery dates specified in the contract; and changes in the payment schedule."

  2. When the change must be made via a contract amendment, a copy of the draft amendment should be sent to the surety company for concurrence. When the contract contains a provision for design or engineering changes within certain limits, it is not necessary to obtain the surety company's prior consent. In this case, the company only needs to be kept informed. If the limits must be changed, the surety company's consent is required.
  3. In cases where the contract price is being increased, it may be advisable to increase the amount of security to reflect the revised contract price. The face amount of a contract support letter of credit may be increased or reduced commensurate with the change in risk that has occurred. It may be changed by an amendment to the letter of credit. Alternatively, the letter of credit may contain an express provision for a change by a specified or determinable amount or amounts on a specified date or dates or upon presentation of the document(s) specified for this purpose, such as an interim certificate of completion. Any new letter of credit, if applicable, should be received before the contract is amended.
  4. If a security deposit exceeds the amount required due to changes in the contract price, the excess must be returned to the contractor (see 8.155.1 Refunds of Excess Profits). The face amount of a contract support letter of credit may be reduced commensurate with the change in risk that has occurred. The face amount may be changed by an amendment to the letter of credit. Alternatively, the letter of credit may contain an express provision for change by a specified or determinable amount or amounts on a specified date or dates or upon presentation of the document(s) specified for this purpose, such as an interim certificate of completion.

8.70 Contract Administration Considerations

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8.70.1 Industrial Security

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The client department must ensure that the contractor has a valid security clearance for the entire duration of the contract. When using standing offers or supply arrangements as a method of supply, client departments must confirm with the Canadian Industrial Security Directorate (CISD) that the required level of security is met prior to issuing call-ups, and contracts. It is the responsibility of the client department to ensure that every person accessing the work site(s) has the proper security clearance. The contracting officer must ensure that the organization security status, at time of contract award, is communicated to the client department. The contracting officer must also communicate to the client department any changes in security statuses during the contract period as identified by CISD.

8.70.1.1 Compliance and Enforcement with Industrial Security Requirements

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  1. In the case of non-compliance with the security requirements during the life of a contract, the Industrial Security Sector (ISS) has put in place a Policy on Compliance and Enforcement with Industrial Security RequirementsThis information is only accessible to federal government employees. (DP 123) that provides Public Works and Government Services Canada (PWGSC) with a mechanism to address private sector non-compliance with Government of Canada (GOC) industrial security requirements and to adopt a progressive and measured approach to handle non-compliance.
  2. ISS will track non-compliance with industrial security requirements on GOC procurement instruments and update the contracting authority(ies), client department(s) and other parties at select points within the compliance and enforcement process. In the event of revocation of a security clearance, the Assistant Deputy Minister of the respective Branch will also be notified so that PWGSC contracting authorities managing other procurement instruments can be advised.
  3. The DP 123This information is only accessible to federal government employees. will be applied when non-compliance has been confirmed.
  4. There are three levels of gradual enforcement, which will require action from the contracting authority.
    1. Level 1: Letter of warning listing corrective measures required by the organization

      ISS will inform the contracting authority and client department by providing a copy of the letter sent to the private sector organization. The contracting authority should start discussion with the client department as to what actions/option may be available if the contractor does not redress the non-compliance issues. Legal counsels should also be involved in the discussions. The organization has 30 calendar days to comply.

      The file must be documented accordingly

    2. Level 2: Letter restating corrective measures and advisement of intent to revoke an organization’s clearances, if not corrected.

      Once again, ISS will inform the contracting authority and client department by providing a copy of the letter sent to the private sector organization. The contracting authority and the client department should discuss the consequences non-compliance with the security requirements may have on the contract. Ensure that the legal counsels are involved in discussions. The organization has 30 calendar days to comply.

      The file must be documented accordingly

    3. Level 3: Letter advising of revocation of the security status.

      At this time, it is really important for the contracting authority and the client department to do a risk assessment that would look at different options like:

      1. amending the security requirements of the contract at the level met by the contractor. In this case there is a need to establish measures that will address the portion of the work the contractor cannot do anymore due to not holding the required security status. Any amendments need to be discussed with the legal counsel as it may not always be considered under the Canadian International Trade Tribunal as contract management;
      2. terminating the contract for default (refer to 8.135.15 Termination for Default). In this case, the Vendor Performance Corrective Measures Policy applies. (See 8.180 Vendor Performance Corrective Measure Policy)

8.70.2 Compliance with the Integrity Provisions

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  1. As stated in the general conditions, the contractor (or offeror or supplier) must diligently update, by written notice to the contracting authority, the list of names of all individuals who are directors of the contractor during the entire period of the contract (or standing offer or supply arrangement). Whenever it is appropriate, the contracting officer should request the contractor to update this information and also provide any required additional consent forms (Consent to a criminal record verification (PWGSC-TPSGC 229)). The Special Investigations Directorate (SID), Operational Integrity Sector, of the Departmental Oversight Branch or the Acquisition Program Integrity Secretariat (APIS), of the Policy, Risk, Integrity and Strategic Management Sector (PRISMS) may request the contracting officer obtain this updated information.
  2. Where the contractor's information has changed, the contracting officer must follow the verification process as indicated in 5.16 Integrity Compliance. In addition, periodically, as SID becomes aware of acts or convictions, contracting officers responsible for impacted contracts/offers/arrangements will be informed of such convictions or acts.
  3. Where such relevant convictions or acts are identified during the period of the contract, including contracts with task authorizations, standing offers or supply arrangements, the contracting officer must, after weighing the impact on operational requirements, consider terminating the contract for default, terminating any task authorizations, setting aside the Standing Offer and terminating any call-ups or canceling the Supply Arrangement and terminating any resulting contracts issued by Public Works and Government Services Canada. In cases where the conviction or act is with respect to an individual who is currently a director of the contractor, and the individual resigns or is dismissed from the board of directors within a reasonable period of time, Canada will continue the contract, standing offer, or supply arrangement with heightened scrutiny, subject to other defaults. Otherwise, the Department will have the discretion to terminate the contract.


    For the approval of procurement instruments, contracts, or call-ups, or revisions or amendments thereto, as well as for contract assignments, where the supplier has committed relevant acts or offences, see section 1.1 Exceptions to Internal Approval Authorities of Annex 6.4.1 Approval Authorities and Additional Signing Authorities in Support of Clients' Programs Only - Other than for Canadian Commercial Corporation.

  4. Contracting officers must continue to verify the Vendor Information Management (VIM) System for any other measures against a supplier.

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 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 Exceptions.

  2. Every effort should be made to avoid:
    1. inadequate initial funding, resulting in an amendment to increase the contract value;
    2. inadequate pre-planning, resulting in an amendments to change the design, specifications or quantity involved; and
    3. improper administrative procedures, necessitating an amendment to change the specifications and delivery or other requirement in order to protect the contractor or government agency involved.

    Contracting officers must carefully analyze the need for an amendment versus the need to issue a new contract.

  3. 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 Definitions 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 Termination for Default and Annex 8.4 Termination for Default.) As with terminations for default, conditional amendments will trigger a VPCM Assessment process under the VPCMP. (See 8.180 Vendor Performance Corrective Measure Policy.)
  4. Integrity Provisions

    Contracting officers must follow the Special Investigations Directorate (SID) verification process for each amendment to a contract with the exception of administrative amendments. See 5.16 Integrity Compliance and 8.70.2 Compliance with the Integrity Provisions for further details on this topic.

  5. 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.
  6. A single amendment may contain many individual changes.
  7. 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.
  8. Amendments should receive the same distribution as the original contract.

8.70.10 Approval of Contract Amendments

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  1. Legal services must be consulted on conditional amendments before being considered.
  2. For Basic and Standard procurements, with the exception of administrative amendments and pre-approved options, contracting officers are to complete the Risk Assessment for Amendments to determine the risks associated with the proposed amendment and the appropriate approval authority required.
  3. For Complex procurements, amendments which are making a significant change, must be approved at the appropriate authority level, except for pre-approved options.
  4. For more information on forms of amendment requests and the appropriate approval levels, see Chapter 6 Approvals and Authorities.

8.70.15 Exercising Options

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  1. Before exercising a contract option, contracting officers must first verify if the option was pre-approved. If not, the appropriate approval authority must be sought, in accordance with Chapter 6 Approvals and Authorities, before amending the contract.
  2. Before exercising the option, the contacting officer should confirm that the prices for the option are still fair and reasonable. It may be appropriate to negotiate a lower price when market prices for such goods or services have dropped significantly since contract award.

8.70.20 Administration of Contracts with Task Authorizations

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  1. The following paragraphs highlight some considerations regarding the administration of task authorizations (TAs). (See 3.35.1 Contracts with Task Authorizations for information on issuing and monitoring contracts with task authorizations.)
  2. A detailed and current record of all authorized tasks must be kept for each contract with a task authorization process. The contractor or the client department is responsible for creating and updating this record, as established in consultation with the client department during the procurement planning stage. This record may contain but is not limited to:

    For each authorized task:

    1. the task number and, as applicable, task revision number(s);
    2. a title or brief description of each authorized task, as applicable;
    3. the total estimated cost specified in the authorized TA of each task, GST or HST extra, as applicable;
    4. the total amount, GST or HST extra, expended to date against each authorized task (as applicable);
    5. as applicable, when a task is completed, the committed amount should be reduced to reflect the actual expenditure and the change should be reflected in the record of task authorizations;
    6. the start and completion date for each authorized task, as applicable;
    7. the active status of each authorized task.

    For all authorized tasks:

    1. the amount (GST or HST extra) specified in the contract (as last amended, as applicable) as Canada's total liability to the contractor for all authorized TAs; and
    2. the total amount, GST or HST extra, expended to date against all authorized task authorizations.
  3. Before authorizing a task, the organization authorized to issue the task to the contractor (normally the client) must ensure that:
    1. the task can be completed on or before the expiry date of the contract with task authorizations. If it cannot be, the task authorization cannot be issued until after the contracting officer amends the period of the contract with task authorizations;
    2. the total estimated cost of the TA, GST or HST extra, is within the client’s authority limit relative to individual task authorizations specified in the contract. (If the total value exceeds that limit, the TA must be forwarded to PWGSC for authorization and issuance); and
    3. the task authorization will not cause the exceeding of the amount (GST or HST extra) specified in the contract as Canada’s total liability to the contractor for all authorized TAs.
  4. When a task is completed, the committed amount may be reduced to reflect the actual expenditure, and such changes must be reflected in the record of task authorizations.
  5. See 3.35.1.35 Separation of Duties relative to the separation of duties in TAs.

8.70.25 Design Change or Deviation

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  1. If there is no design change or deviation provision in the contract, the procedure may be instituted only after an authorization document is received from the client and is incorporated in the contract via an amendment (see 8.70.10 Approval of Contract Amendments). Adequate funds should be authorized and set aside for changes. If additional funds are required, a requisition amendment is required.
  2. Each design change or deviation request must have technical approval by the technical authority or project authority and, as specified in the contract, be approved by the contracting officer.
  3. Whenever possible, a design change requiring a price adjustment should be negotiated before the change in work is made.
  4. Design changes or deviations can result in upward, downward or nil adjustment to contract costs. After approval by the client, the contracting officer is responsible for prompt negotiation of price adjustments, and ensuring that these changes are reflected in the total contract price.
  5. The form PWGSC-TPSGC 9038 Design Change/Deviation, should support deviations and changes.
  6. Surplus materiel resulting from an authorized design change or deviation must be accounted for and reported to the contracting officer.

8.70.25.1 Design Change or Deviation Procedure

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The following is an example of a design change or deviation procedure:

  1. When it is necessary to depart, either temporarily or permanently, from the governing technical data in a contract, the technical authority or project authority or the contractor may originate a request for design change or deviation.
  2. The contractor may initiate the design change or deviation process by completing section 1 of form PWGSC-TPSGC 9038 Design Change/Deviation including a ceiling price for the change, subject to negotiation, and sending three copies to the technical authority or project authority and one to the contracting officer. When required, copies of the supporting technical data should be submitted.
  3. A subcontractor must submit the form through the contractor, who will ensure that all the information required is entered, before submission.
  4. The technical authority or project authority, with the sole right to deny approval, will review the design change or deviation request, and either approves it, and forwards it to the contracting officer, or rejects it, and returns it to the contractor.
  5. The technical authority or project authority may initiate the process by sending five copies of the form to the contractor. After providing the contractual information required, the contractor will retain one copy, and send three copies to the technical authority or project authority and one to the contracting officer.
  6. Where equipment or stores affected by the change are being procured under more than one contract, a separate form is required for each contract, unless the technical authority or project authority has specifically authorized the use of one form for all contracts held by a single contractor. In all cases, the form should show all contract references, including the file number and the serial number assigned by the contracting officer.
  7. The contracting officer will:
    1. negotiate a firm price, if possible, or another pricing basis that is consistent with the existing basis of payment in the contract;
    2. provide contractual authority for the design change or deviation; and
    3. sign the form and send a copy to the contractor and the technical authority or project authority. Upon receipt, the contractor will implement the change.
  8. The contractor should direct enquiries regarding the design change or deviation procedure to the technical authority or project authority. The contracting officer or the technical authority or project authority will provide blank forms to the contractor, who will provide them to the subcontractors.

8.70.30 Loans of Department of National Defence Materiel

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  1. When a contract does not provide for the loan of the Department of National Defence (DND) materiel, the contractor may request such a loan.
  2. Such requests should be directed to DND, Director Disposal, Sales, Artifacts and Loans ( DND/DDSAL).
  3. Returns must be made:
    1. when the materiel is no longer required;
    2. when repairs are beyond the capability of the contractor;
    3. when recalled by DND/ DDSAL, or
    4. on completion of the contract.
  4. The contractor must return the materiel, as directed by DND/ DDSAL, and should request from DND/ DDSAL, in writing, instructions for the disposition of the items to be returned. The request should include a description of the items, identification or NATO stock number, their condition, and the loan agreement number.
  5. DND/ DDSAL will issue disposition instructions, and inform all concerned. The contractor must arrange for the return of the items as directed and confirm action by returning a signed copy of the "Notice to Ship" to DND/ DDSAL.
  6. At their discretion, the local Canadian Forces Quality Assurance Representative will carry out inspection on issue and return of DND-loaned materiel.
  7. The contractor must report lost, damaged or destroyed DND loaned materiel, in writing, to DND/ DDSAL, which is responsible for coming to a resolution with the contractor.

8.70.35 Return of Special Test Equipment and Special Production Tooling

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  1. Contractors must provide DND/ DDSAL with at least 60 days written notice before the date when the production assets will no longer be required. The notice should identify the contract or loan agreement serial number under which the production assets were held, location of the equipment, a brief but adequate description of the surplus production assets and the total estimated value, if applicable.
  2. A decision to retain production assets for future use should be supported by a cost/benefit analysis, which provides an estimate of the storage and transportation costs involved, the duration of the storage, the refurbishing/modification costs that may be required to re-activate the assets, including installation/set-up charges, if applicable, and the remaining operational use or life of the equipment.
  3. DND/ DDSAL will advise the contractor on the most appropriate method of retention and storage of the assets. DND/ DDSAL will arrange for the transfer of production assets to another contractor, or a storage facility; or will prepare the appropriate documentation, declaring the items surplus, and forward it to Crown Assets Distribution Centre.

8.75 Administration of Standing Offers and Supply Arrangements

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8.75.1 Reporting for Standing Offers and Supply Arrangements

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  1. Contracting officers must ensure that the supplier fulfills all reporting requirements in the standing offer (SO)/supply arrangement (SA), as applicable.  Typically, suppliers must report on a quarterly basis on the call-up/contract activities.  Such reports may contain, but are not limited to, the following information:
    1. the standing offer/supply arrangement number;
    2. the supplier name;
    3. the reporting period;
    4. the call-up/contract number for each call-up/contract, including amendments;
    5. the client department;
    6. the contracting authority;
    7. the date of the call-up/contract;
    8. the call-up/contract period;
    9. the line items acquired/services provided;
    10. the value of the call-up/contract, Goods or Services Tax/Harmonized Sales Tax included, as applicable.
  2. Each standing offer/supply arrangement should clearly describe the reporting requirements for the supplier, as applicable, and must indicate the timeframe by which each report must be submitted after the reporting period. For that purpose, contracting officers must insert Standard Acquisition Clauses and Conditions Manual clauses M7010C in their standing offer and S0010C in their supply arrangement.
  3. Reporting Requirements for Client Departments

    Contracting officers must ensure that client departments fulfill all reporting requirements as identified users of the standing offer/supply arrangement, as applicable, in a timely fashion. Client departments may be required to provide more detailed reports than those required of suppliers and include information regarding bid solicitation, supplier responses and selection of successful bidder(s). These reports provide contracting officers with valuable information on the effectiveness of these methods of supply.

8.75.5 Revisions to Standing Offers

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  1. Standing offers are not contracts so cannot be amended or assigned.
  2. Standing offers typically have a provision that an offeror must provide 30 days written notice of its intent to withdraw its RFSO. The contracting officer would then issue a "Revision to the Standing Offer and Call-up Authority", to notify all the identified users and the offeror of the effective date of the withdrawal. Call-ups received by the offeror before the effective withdrawal date are legally binding and must be honored.
  3. The Contracting Officer can issue a "Revision to the Standing Offer and Call-up Authority" for reasons such as to extend the RFSO period or update other relevant instructions in the RFSO.
  4. An offeror may revise their standing offer within the limits established in the RFSO solicitation process. The Contracting Officer would then issue a "Revision to the Standing Offer and Call-up Authority" to reflect the appropriate revisions.

8.75.10 Managing Proportional Basis of Selection

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  1. When proportional basis of selection is used for selecting the contractor among multiple standing offers, the contracting officer must ensure that identified users are aware of their obligation to award call-up activities, in accordance with the predetermined work distributions stated in the SO.
  2. The offeror that is furthest under the ideal percentage in relation to work distributed to the other offerors will be selected for the next call-up. The ideal percentage is stated in the standing offer. A spreadsheet is an acceptable method to track all call-ups and to maintain a cumulative total for each offeror.
  3. For more information on the ranking methodology for multiple standing offers, see 4.10.20.5 Ranking and Methodology for Multiple Standing Offers.

8.80 Employer-employee Relationship

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  1. The client department is responsible for ensuring that an employer-employee relationship does not develop during the performance of the contract.
  2. The contracting officer must ensure that descriptions of the work or changes to the work will not result in an employer-employee relationship. For more information on employer-employee relationships, see 2.55 Employer-Employee Relationships.

8.85 Subcontracting

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  1. As stated in certain Standard Acquisition Clauses and Conditions(SACC) Manual general conditions (e.g. 2030) forming part of the contract, a contractor must, in this case, obtain the consent of the contracting officer before subcontracting, by using form PWGSC-TPSGC 1137 Permission to Subcontract (PDF Version 121 KB)This information is only accessible to federal government employees. - (Help on File Formats). In this case, the contractor must certify that the proposed subcontract is subject to all of the same conditions as contained in the contract. The contracting officer will only consent if satisfied with the subcontractor and the proposed subcontract.
  2. Any deviations are entirely at the risk of the contractor.
  3. The award of a subcontract does not relieve the contractor of any contractual obligations, or impose any liability upon Canada in relation to the subcontractor.

8.90 Assignment of Contracts

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  1. Under the SACC Manual general conditions, the written permission of Public Works and Government Services Canada (PWGSC) is required before any contract assignment.
  2. When the contract contains security requirements, the contracting officer, with the assistance of the Canadian Industrial Security Directorate, must ensure that the assignee meets all security requirements specified in the contract.
  3. In order to comply with the Integrity Provisions, the proposed Assignee needs to provide a signed certification (see sample letter in Annex 8.13 Letter Templates for Integrity) and, if applicable, a list of names of directors. The contracting officer must then proceed to verify compliance as further detailed in section 5.16 Integrity Compliance.

    If the Assignee or its affiliates have been convicted, you may refuse the assignment or request an exception to the ADM/AB for the contract of the Proposed Assignee. See subsection c. of 4.21 Integrity Provisions for details on procurements where the supplier has relevant convictions.
  4. All proposed assignments supported by a contracting officer must be referred to the cost analyst for review, and then, to Legal Services for drafting of the necessary legal documents.
  5. When a contractor assigns a contract, the responsibility for all or part of the performance is transferred to a third party. However, the assignment of a contract must not relieve the original contractor of any obligations under the contract or impose any additional liability on Canada, in relation to the assignee.
  6. In order to protect Canada's interest, the transfer of the liabilities and rights of the contract from the original Contractor under the original contract to the assignee, will be done so that the original contractor is ultimately liable for the performance of the contract.

    An acceptable manner of protecting Canada's interest is to obtain the original contractor's guarantee of performance in the event that the assignee fails to perform.
  7. The contracting officer will forward the assignment agreement to the appropriate PWGSC signing authority, with the reasons for the assignment, the number and value of contracts involved, and the financial condition of the assignee.
  8. In the case of Canadian Commercial Corporation (CCC) contracts, a copy of the approved assignment should be forwarded to Cost and Profit Assurance Group (CPAG), in order to maintain data on supplier financial status, or to the appropriate vice-president of the CCC.

8.95 Financial Security and Contractor Difficulties

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If the contract contains financial security, and the contracting officer becomes aware that a contractor may have difficulty in successfully completing the contract, then the surety company should be informed immediately.

8.100 Bonding Companies

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Whenever a bonding company has failed to honour its undertakings, the matter must be referred to Legal Services for appropriate action, and to the Corporate Secretary who must notify Treasury Board (TB).

8.105 Protecting Canada's Goods

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  1. If a contractor is delinquent in discharging its accrued liabilities, subcontractors or suppliers may attach liens to goods that Canada has taken title to through full or partial payment. Steps should be taken to protect Canada's interests.
  2. This is not required for service contracts, and is generally not cost effective for goods contracts under $25,000.
  3. Where a contractor has given security under section 427 of the Bank Act, a waiver must be obtained for the bank's priority over Canada's title to the goods. The contracting officer must consult with Legal Services.
  4. If the contractor should change bank, and a new waiver is not obtained, or if the contractor fails to disclose that security was given, Canada's title could be affected.
  5. To protect Canada's interest with potentially insolvent or bankrupt contractors, the contracting officer must obtain a waiver when a bank or other financial institution has a prior lien on the contractor's assets. If the waiver is unobtainable, consult with Legal Services, the cost analyst, and Cost and Profit Assurance Group (CPAG), to determine if the contractor's credit position warrants relieving the contractor of the contractual obligation relating to bank liens.
  6. To preclude the attachment of liens, the contracting officer should check that the contractor has met payment obligations under the contract to its workmen, subcontractors and suppliers.
  7. The contracting officer should promptly review all indications of unpaid invoices or wages or unreasonable delays in the payment; and carry out a cost analysis, if appropriate, in cooperation with a cost analyst, in accordance with the Guideline on the Use of Cost and Price Analysis Services (located under the theme of Risk ManagementThis information is only accessible to federal government employees. of the Acquisitions Program Policy Suite).
  8. The frequency, scope and extent of checks will be determined and carried out by the contracting officer, based on cost/benefit, and the contractor's payment record, credit rating and financial strength.
  9. When the financial analysis indicates potentially serious financial problems, a report should be sent to CPAG, who will distribute copies to all procurement sectors/regions. The sectors/regions in turn should compile lists of all open contracts with the contractor involved, including the contract values and anticipated completions dates and return these lists to CPAG.
  10. CPAG will then determine whether a discretionary verification should be carried out, and what would be the scope and extent of the verification.

    Sectors/regions should only enter into new contracts with the contractor with due caution and proper justification.

  11. A discretionary verification is carried out by qualified personnel and approved by CPAG. Discretionary verifications may be commissioned only by CPAG, and will be performed on a timely and prompt basis, so as to lessen potential risks to Canada.
  12. If the total risk exposure is $2,000,000 or over, a discretionary verification will normally be undertaken. A determination will be made, as to the protection provided to Canada by any security deposits (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit), performance bonds, labour and material payments bonds, or registration action taken or intended.
  13. If the total risk exposure is under $2,000,000, CPAG will, in consultation with the sector/region involved, determine the need to commission a discretionary verification, after taking into account any financial security provision or registration action.
  14. When the verification points to a breach of the contractor's specific contractual obligation to effect prompt payment to its workmen, subcontractors, or suppliers, CPAG will provide written advice to the sectors/regions and senior financial officers of the client(s) holding the contracts in default.

8.110 Registering Notice of Interest in Goods

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  1. In provinces other than Quebec, Canada can register notice of its interest in the goods with a view to protecting itself against the risk of liens. The registration requirements differ for each province. The contracting officer must consult with Legal Services.
  2. In practical terms, because of the complexities involved, this action is appropriate only on high dollar value contracts.

8.120 Bankruptcy, Receivership, Insolvency

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  1. The contracting officer must consult Legal Services when:
    1. a contractor proposes a settlement while in an impending or actual receivership, bankruptcy or insolvency condition;
    2. the contract is secured by surety bond guarantees or other securities; or
    3. a contractor has given security to a bank under section 427 of the Bank Act.
  2. Upon receipt of a bankruptcy, receivership or insolvency notice or when there is an indication of such, the contracting officer must:
    1. inform the relevant director;
    2. develop a plan, in consultation with the client, for completion of the work; and
    3. advise Cost and Profit Assurance Group (CPAG) and Legal Services.
  3. When a contractor is in formal bankruptcy, the contracting officer must, in consultation with Legal Services, pursue the rights of Canada, including:
    1. realizing on any contractual securities;
    2. proving title to any Canada property in the contractor's possession;
    3. ensuring payment, if Canada is unsecured, in priority of other unsecured creditors; or
    4. offsetting money payable to the contractor against any amount due to Canada.
  4. After formal bankruptcy or receivership, monies due to the contractor must be sent to the trustee in bankruptcy or the receiver-manager, as applicable.

8.125 Goods or Services not in accordance with the Contract

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It is the responsibility of the client to inform the contractor, as specified in the contract, if the goods or services are not in accordance with the contract. Failure to do so may prejudice any subsequent claims by Canada.

8.130 Timely Performance

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  1. Under SACC Manual general conditions, time is of the essence of the contract. If a contractor fails to deliver the goods or perform the services on time, the contracting officer should ascertain, in consultation with the client and Legal Services, the facts surrounding the delay. If the delay was caused by factors beyond the control and without the fault or negligence of the contractor, the contracting officer should extend the time of performance of the contract for a period equal to the length of the delay. Excusable delays are detailed in general conditions. In all other circumstances, the contractor is responsible for the delivery default. If the contractor is in default in carrying out the delivery commitments, the contracting officer may, upon giving notice in writing to the contractor, terminate the contract fully or partially.
  2. Where the time of delivery is to be extended due to delays beyond the control of the contractor, and if the contract is secured by surety bonds, the contracting officer must:
    1. advise the surety company and obtain its concurrence before the completion dates specified in the contract are actually extended; and
    2. advise the surety company and obtain its concurrence before adjusting the contract price, due to additional work requirements, if applicable.

8.135 Terminations

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To determine which type of termination might be involved, see 8.135.5 Termination for Convenience of Canada, 8.135.15 Termination for Default and 8.135.20 Termination by Mutual Consent. For termination clauses, see subsection 5-J of the Standard Acquisition Clauses and Conditions (SACC) Manual.

8.135.1 Suspension of the Work - Stop Work Order

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When a client wishes to suspend the work under a contract rather than cancel it, SACC Manual clause J0500C or J0502C should be used. The suspension of the work allows the client to obtain a review of the contract status before deciding the type and extent of termination (including a termination for default). If a client wishes to reinstate a contract after a stop work order has been issued, the stop work order must be cancelled (see clause J0501C). In this event, it may be necessary to adjust the delivery terms and/or contract price. It is the responsibility of the contracting officer to determine the reasonableness of all claims for additional costs that the contractor may make. Amendments to cover payment of such costs must be approved in accordance with the contract amendment approval and signing authorities. (See Annex 8.3: Termination for Convenience Process for a detailed description of the termination for convenience process.)

8.135.5 Termination for Convenience of Canada

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  1. Occasionally, Canada may terminate a contract for convenience in accordance with the termination for convenience provision of the general conditions applicable to the contract. See Annex 8.3: Termination for Convenience Process for a detailed description of the termination process. This may be due to curtailment of funds, discontinuation of a government program, or other circumstances, which make the procurement of the good or service unnecessary. To protect the integrity of the bid solicitation process, Canada may also terminate a contract for convenience, if it is determined that it has been mistakenly awarded to other than the lowest-responsive bidder. Clauses related to the termination for convenience notices are in subsection 5-J of the SACC Manual (see clauses J0001C, J0002C, J0003C, J0006C).
  2. Termination for convenience applies when:
    1. the client has requested termination;
    2. a termination for default cannot be considered because the contractor is not in default; and
    3. a termination by mutual consent would not be more advantageous to Canada.

8.135.10 Involvement of the Termination Claims Officer

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The Termination Claims Officer (TCO), Policy, Risk, Integrity and Strategic Management Sector (PRISMS), should be involved immediately in the claim settlement process resulting from contracts that are partially or completely terminated for convenience. Accordingly, the contracting officer should contact the TCO, as soon as the notice of termination for convenience (see SACC Manual clauses J0001C, J0002C, J0003C, J0006C) is issued, and should provide the TCO with a copy of the notice. The telephone number of the TCO is 819-934-1382.

8.135.15 Termination for Default

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Termination for default applies when the contractor is in default in carrying out any of the obligations under the contract, usually through non-performance or delayed delivery. The section "Default by the Contractor" in the SACC Manual general conditions provides the basis for termination for default. For more information on termination for default, see Annex 8.4: Termination for Default.

8.135.20 Termination by Mutual Consent

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  1. On rare occasions both parties may agree to termination without claims or penalties, usually where the client has requested full or partial termination of a contract, the contractor has incurred minor or no expenses and is willing to forego a claim, and the matter may be settled at no cost to Canada.
  2. Termination by mutual consent does not apply when it is in Canada's interest to issue a termination for default or when the contractor claims additional costs following the reduction or cancellation of all or a portion of the contract.
  3. On receiving the client's request for termination by mutual consent, the contracting officer should request the contractor to confirm that no claim is involved, and should refer the matter to Legal Services in accordance with 8.135.1 Suspension of the Work - Stop Work Order.
  4. Since no claim is made, the TCO is not involved in this process.

8.135.25 Request for Termination by the Contractor

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When a contractor requests a termination because of anticipated losses in performing the contract, consent will not be granted. Instead, the contractor should be instructed to carry out its obligations under the contract. The contractor may, on completion of the contract, request an "extra payment" for additional costs incurred or losses suffered, if some responsibility for the additional cost or for the loss can be ascribed to Canada. (See 8.135.1 Suspension of the Work - Stop Work Order).

If the contractor refuses to carry out the contractual obligations, the contract must be terminated for default.

8.135.30 Financial Security Issues Related to Terminations

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  1. If the contract is secured by a security deposit (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit), it should not be terminated without the prior advice of Legal Services.
  2. If the contract is secured by surety bonds, it must not be terminated as this would also terminate the existing contractual relationship with the bonding company. When a contractor fails to perform a contract, or when a claim is received for non-payment of labour or material, and a payment bond is in place, contracting officers must immediately inform the surety company in writing, requesting that corrective action be taken. Contracting officers must not enter into negotiations with the contractor or claimant.

8.135.35 Involvement of Legal Services in Cases of Termination

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  1. The following terminations must not be issued without a written legal opinion:
    1. all terminations for default;
    2. terminations by mutual consent, and
    3. terminations for convenience.
  2. In seeking the opinion of Legal Services, the contracting officer should submit the procurement file with a chronological index of the documents forming the basis for the termination request, together with a short note outlining the events leading to termination. Based on this information, Legal Services will render an opinion and advise as to the appropriate method of termination.

8.135.40 Adjustment to Source Lists

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Terminations for convenience by Canada should not result in any adjustment of the source lists, while terminations by mutual consent may require correction of source lists. Terminations for default are usually the cause for the deletion or suspension of the contractor from the source list.

8.135.45 Public Works and Government Services Canada Offices Outside Canada

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Termination procedures for contracts awarded by Public Works and Government Services Canada (PWGSC) offices outside Canada may differ from those for contracts issued in Canada; therefore, the termination procedures serve only as a general guide.

8.135.50 Signing Authority

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Stop work orders and notices of termination must be approved and signed by a contracting officer with the signing authority for the total contract value at the time of the termination.

8.140 Disputes

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  1. When managing a contract, disputes may arise between parties to the contract. Disputes must be handled expeditiously. All parties must meet their contractual obligations. Proper record keeping is vital for clarification, audit or termination purposes.
  2. If a contracting officer is unable to resolve a contract dispute, the matter should be brought to the attention of the contracting officer's immediate supervisor.
  3. Consultation with Legal Services is recommended to ensure the protection of the interests of Canada. Consultation with the Business Dispute Management (BDM) Program, Departmental Oversight Branch (DOB), is recommended to prevent or limit unnecessary escalation and to create conditions for early resolution.
  4. When any business dispute associated with a contract (i.e. construction, acquisition, letting, leasing and disposal of real property) cannot be resolved through discussion, the contracting officer should immediately advise the contractor, in writing, of the Alternative Dispute Resolution (ADR) services available in the BDM Program.
  5. Any questions concerning the BDM Program or any of its services should immediately be referred to the Manager, Business Dispute Management Program by GestionConflit.ConflictManagement@tpsgc-pwgsc.gc.ca or by phone at 819-956-4064.

8.140.1 Contract Dispute Resolution

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  1. All enquiries, from contractors or contracting officers concerning the options for dispute resolution should be addressed to the Manager of the Business Dispute Management (BDM) Program, Departmental Oversight Branch, by GestionConflit.ConflictManagement@tpsgc-pwgsc.gc.ca or by phone at 819-956-4064..
  2. The BDM Program provides coordination, prevention and Alternative Dispute Resolution (ADR) services upon request to support the management of business disputes with third parties, other government departments and PWGSC employees to facilitate timely and appropriate action. ADR services provided through the BDM Program include consultation, facilitated discussions, mediation and arbitration.
  3. Prevention and Mitigation
    1. When a conflict does arise, the contracting officer must make every effort to resolve the dispute with the contractor as soon as possible.
    2. If the contracting officer and contractor do not resolve some or all of the issues in dispute, they should then attempt to resolve the dispute as soon as possible through the involvement of a senior level contracting authority or a senior project authority.
  4. Conflict Intervention
    1. If involving a senior level contracting authority or a senior project authority (as stated in c. ii.) does not resolve some or all of the issues in dispute, the contracting authority should immediately advise the contractor, in writing, of the ADR services available through the BDM Program, Departmental Oversight Branch. The contracting authority can also enlist the assistance of the BDM Program.
    2. Any party to a PWGSC contract can approach the BDM Program and request assistance in managing a business dispute.
    3. If an ADR service is requested, the BDM Program will inform the other parties of the request and determine their interest in such process. If the parties are interested, the ADR process will be initiated.
    4. If an ADR process does not resolve the dispute, the parties’ rights are not compromised.

8.145 Contract Settlement Board

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This section of the Supply Manual has been removed. The dispute process is replaced as per section 8.140 Disputes.

8.145.1 Contract Settlement Board - Procedures

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This section of the Supply Manual has been removed. The dispute process is replaced as per section 8.140 Disputes.

8.145.5 Contract Settlement Board - Meetings

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This section of the Supply Manual has been removed. The dispute process is replaced as per section 8.140 Disputes.

8.145.10 Contract Settlement Board - Settlement Offer

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This section of the Supply Manual has been removed. The dispute process is replaced as per section 8.140 Disputes.

8.145.15 Contract Settlement Board - Non-acceptance of Settlement

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This section of the Supply Manual has been removed. The dispute process is replaced as per section 8.140 Disputes.

8.150 Contract Dispute Advisory Board

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This section of the Supply Manual has been removed. The dispute process is replaced as per section 8.140 Disputes.

8.155 Final Payments

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  1. The total time charged under a fixed rate contract should be verified for acceptability and accuracy of recording before the final claim is processed for payment. The findings of such verifications will be noted on the procurement file.
  2. The contracting officer, or other qualified personnel designated by the sector/region concerned, should carry out the verification of time for acceptability.
  3. Verification of time for accuracy of recording should be carried out by qualified personnel from the financial division or section in the directorate concerned, or other suitably qualified personnel with the prior approval of the director who is also responsible for setting the standards of verification for the accuracy of recording.

8.160 Cost Submissions Standards for Cost Reimbursable Contracts

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  1. The contractor will be paid, in accordance with the contract, the cost reasonably and properly incurred in the performance of the work. Upon completion of the work, on all cost reimbursable contracts meeting the cost threshold, the contracting officer must place on the procurement file a certification to the effect that the final amount paid represents a reasonable price. This certification should be based on the findings of a cost audit, if one was done.
  2. The agreed final price, after all reconciliations, is then formalized in a contract amendment, generally referred to as "finalization of cost amendment", which adjusts the total contract price to reflect the final price. This amendment should also state that further claims cannot be submitted.
  3. The audit provision in contracts valued over $50,000 with Canadian contractors allows for the determination of the actual costs incurred, to determine the final contract cost of cost reimbursable contracts and the reasonableness of the price.
  4. All cost reimbursable contracts require a cost submission upon the completion of the contract. All multi-year cost reimbursable contracts, except for repair and overhaul (R&O) services, will include a provision for an annual cost submission, as a mandatory deliverable item.

NOTE: For R&O service contracts, an annual cost submission is at the contracting officer and the audit agency's discretion.

8.165 Cost Audit

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  1. The selection of cost reimbursable contracts for audit will be made by the contracting officer after consultation with the Cost and Profit Assurance Group (CPAG) within the Policy, Risk, Integrity and Strategic Management Sector, in accordance with the following:
    1. all contracts associated with Major Crown Projects (MCPs); and
    2. if risks of significant overpayment are apparent.
  2. For those contracts selected for audit, the sectors/regions will supply to CPAG a copy of the contract document, along with copies of all cost submissions received.
  3. A copy of the audit report will be forwarded to the contracting officer, along with an audit notification form prepared by CPAG detailing overpayments and/or comments requiring approval.
  4. The contracting officer will establish a final price with the contractor based on the audit findings. Every effort will be made to do this within 90 days of the audit report being received. The contracting officer will notify CPAG of the terms of the settlement and resolution of all audit issues raised in the contract audit.
  5. When the contractor has agreed to the final price, the contracting officer must certify that the price charged is reasonable and in accordance with the contract.
  6. Reference should be made to section 10.70 Recovery and Disposition of Contract Claims Adjustments Process.

8.175 Contract End and Contract Close Out

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  1. This section provides information on the end of contract activities such as ensuring that all of the necessary conditions are met. This should include the following activities:
    1. verify that the product or work has been completed satisfactorily;
    2. ensure that the contractor has been paid;
    3. commence administrative closure of the project; and
    4. ensure the records are retained on a project file.
  2. Contracting officers should ensure that procurement files are properly documented.

8.180 Vendor Performance Corrective Measure Policy

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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 Manual. 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 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 Acquisitions Branch 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 at the end of the contract or at the expiry date of the standing offer:

      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-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, 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.

      These situations require ADM approval in accordance with 8.120.25 on exceptions.

    3. No call-up can be issued against any existing standing offer.
  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 definition extends to all aspects of performance that the 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. Expiry date of the standing offer: means the date upon which the standing offer has ended or the date the standing offer is permanently set-aside, whichever occurs first.
  5. 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

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8.180.15.1 Conditions that Trigger a Vendor Performance Corrective Measure Assessment

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  1. Contracting officers must enforce the terms of contracts. The same performance issue may support the following: 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 contracting officer must include the following appropriate text in the notification:
    1. For conditional amendments:
      "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 or at the expiry date of the standing offer."
    2. For terminations for default, see SACC Manual clauses J1000C and J1001C for the text that must be inserted.
  4. The procedures on terminations for default are set out in section 8.135.15 Termination for Default and Annex 8.4 Termination for Default. For conditional amendments see section 8.70.5 Amending Contracts. Legal Services are to be consulted for 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 or at the expiry date of the standing offer, the contracting officer will use the form PWGSC-TPSGC 149 (PDF Version 48 KB)This information is only accessible to federal government employees. - (Help on File Formats) 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 on VIM for a contract or a standing offer that was terminated for default and/or for which there was one or more conditional amendment(s) will remain for six years from the date of the termination for default or conditional amendment(s). After that time, the content will be removed from VIM.
  7. A contract terminated for default and/or for which there was one or more 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 Vendor Performance Corrective Measure Assessment 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 Vendor Performance Corrective Measure 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 8.6.1 Required Procedure for Applying a Vendor Performance Corrective Measure (VPCM) for additional guidance on the required procedure for applying a VPCM using the generic process.
  3. As soon as the contract ends or as soon as the standing offer expires 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 (PDF Version 72 KB)This information is only accessible to federal government employees. - (Help on File Formats) 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 Principal Elements of the Vendor Performance Corrective Measure Assessment.

  4. In the case of a joint venture, a VPCM Assessment will be completed for each member. The Current Contract(s) Score will be the same; however, each member will have a distinct history for the purpose of establishing consequences.
  5. The director must present 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 Vendor Performance Corrective Measure

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  1. For the purpose of the VPCMP, there are two types of VPCMs:
    1. Debarment is the refusal by PWGSC Acquisitions Branch to do business with a vendor for a specified period. A debarment renders a vendor ineligible to bid on:
      1. contracts;
      2. standing offers and call-ups; and
      3. supply arrangements and contracts under supply arrangements where PWGSC Acquisitions Branch 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 Acquisitions Branch 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 that (see Annex 8.8 Letter Template Where No Vendor Performance Corrective Measure Will Be Applied At This Time for letter template):
      1. No VPCM is applied at this time.
      2. The category of impact and the associated score for the contract(s) 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 his response could include 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 Letter Template for Notice of Intent to Apply a Vendor Performance Corrective Measure for letter template). In addition to the corrective measure, the notice of intent for applying a VPCM to the vendor must include:
      1. a list of:
        • terminations for default and conditional amendments for the relevant contract or standing offer 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. indication that the vendor has 15 business days to respond in writing and that his response could include 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 in another contract.
  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 Annexes 8.10 Letter Template for Decision to Apply Conditions as a Vendor Performance Corrective Measure and 8.11 Letter Template for Decision to Apply Debarment as a Vendor Performance Corrective Measure for letter templates).

8.180.15.20 Actions Pursuant to a Decision to Apply a Vendor Performance Corrective Measure

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  1. The contracting officer will send a copy of every completed VPCM Assessment form to the VPCM co-ordinator in the Policy, Risk, Integrity and Strategic Management (PRISM) Sector. 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 section 5.55.5 Authority to Reject a 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 any interaction with a sole source vendor. 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 the provisions of section 7.35 Notification to Unsuccessful Bidders/Offerors/Suppliers, 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 date the VPCM is implemented. 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 CoordPMCRF.VPCMPCoord@pwgsc-tpsgc.gc.ca

8.180.20 Standard Acquisition Clauses and Conditions 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 Framework for Developing a Sector/Region Vendor Performance Program 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.

8.1651 Differences of Opinion or Interpretation

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On occasion, differences of opinion or interpretation may arise between the contracting officer and the auditor regarding the legitimacy of audit findings. The relevant director should resolve these differences of opinion or interpretation in concurrence with the Director, Acquisition Program Integrity Secretariat, before the Cost Audit Group will take close out action.

Annex 8.1: Guidelines on File Organization and Make-up

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  1. Overview
    1. This guideline is intended to help procurement staff in organizing their procurement files. Consistent filing methods allow for a more organized approach to procurement and ensure that anyone reviewing the file is able to locate documents with minimal effort. The importance of proper filing techniques is more evident when, for example, information is needed quickly for audits, Access to Information requests, Canadian International Trade Tribunal complaints, or when a contracting officer takes over file responsibility and needs to determine the status of the procurement process, etc.
    2. As a general rule, documents should be filed in chronological order. A proposed format for file organization is set out below. The list of documents is not intended to be comprehensive and is subject to the professional opinion of the contracting officers. All the documents may not be applicable in all cases. Furthermore, file organization and the required documents may vary in accordance with regional/sectoral procedures and guidelines.
  2. Documents proposed for the left-hand side of the file jacket:
    1. requisition and any requisition amendments;
    2. final version of the statement of work, plus any documents that alter the requirement, that is, approved design changes, etc;
    3. Security Requirements Check List (SRCL);
    4. Procurement Strategy Committee (PSC) - Detail Document;
    5. PSC Record of Decision;
    6. signed original Procurement Plan;
    7. signed original Contract Planning & Advance Approval (CPAA) form, for Basic and Standard procurements, the completed Procurement Risk Assessment (PRA) with the results and approval;
    8. Notice of Proposed Procurement (NPP);
    9. Advance Contract Award Notice (ACAN);
    10. approved Contract Summary/Request;
    11. approved Contract Amendment Summary/Request;
    12. signed original Treasury Board submissions/approvals;
    13. signed original contract/contract amendment document;
    14. signed contract/contract acknowledgment amendment copy (as signed by contractor);
    15. letters of authority;
    16. Formal Legal Agreements;
    17. formal notifications (that is, termination);
    18. copy of any relevant acting authority memos;
    19. procurement summary;
    20. Record of Extract and Part Files (PWGSC TPSGC 1015 (PDF Version 73 KB)This information is only accessible to federal government employees. - (Help on File Formats) .
    21. copies of extract file contracts and their contract amendments;
    22. Request for Additional Funds (PWGSC-TPSGC 329 (PDF Version 65 KB)This information is only accessible to federal government employees. - (Help on File Formats) .

    For Canadian Commercial Corporation files: CCC 747 and amendment to CCC74.

  3. Documents proposed for the right-hand side of the file jacket:
    1. acknowledgment of requisition;
    2. request for distribution of technical data;
    3. file index, if more than one volume exists;
    4. original solicitation document, plus document updates or amendments;
    5. letters of interest;
    6. minutes of bidder's conferences;
    7. bidder's questions and answers;
    8. bids received (or can be put in a separate volume);
    9. bid evaluation, including tabulation sheets;
    10. technical evaluation report;
    11. financial evaluation report;
    12. price certification;
    13. price support;
    14. transportation analysis;
    15. legal opinions;
    16. policy opinions;
    17. documentation on environmental considerations, impacts, and mitigation;
    18. any comments provided by quality assurance reviews;
    19. contract award notices;
    20. supplier correspondence;
    21. client department correspondence;
    22. relevant e-mail messages;
    23. notes to file (see below).

NOTE:

Procurement files should tell a story from beginning to end, and notes to file are an important part of this process. Notes to file can provide a file history; provide an explanation of problems encountered; and act as reminders to contracting officers.

Notes to file should be legible, clear, complete and concise. They should state the subject matter along with what was discussed, any action taken, date, name of person, and company name or client department, phone number, and the name of the person making the note.

The use of self-stick notes, phone message slips, and small scraps of paper, etc, should be avoided since they may be easily lost or overlooked.

Annex 8.2: Contract Management Early Warning Indicators

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The following factors, if present with a particular procurement, indicate there may be problems with the file. These factors should warrant further investigation and consideration and, in some cases, referral to more senior levels of authority.

  1. Before Contract Award
    1. Requirement early warning indicators:
      1. requisition transferred several times;
      2. receipt of a requisition for a stand alone procurement when an existing procurement instrument (such as a standing offer) already exists;
      3. urgent requirements without adequate rationale for urgency;
      4. potential situation for employee/employer relationship;
      5. sole source or no substitute requirements without adequate rationale;
      6. contracts with former public servants outside of guidelines;
      7. unclear/vague description of work/requirement;
      8. indications that the "deal is already cut";
      9. complex or innovative requirements requiring the development of new methodology;
      10. work already under way and requiring confirmation and backdating;
      11. unrealistic time frames;
      12. lack of responsiveness from contractor during negotiations;
      13. indication of requirement splitting;
      14. weak financial capacity of contractor.
    2. Sensitive files early warning indicators:
      1. sensitive requirements that may be of interest to various interest or stakeholder groups;
      2. highly visible requirements, especially ones of interest to the media;
      3. contentious requirements that may result in aggressive competition.
  2. After Contract Award
    1. Performance/management early warning indicators:
      1. unusual number and value of amendments without clear rationale;
      2. unexpected/unclear subcontracting activities;
      3. PWGSC excluded from meetings between contractor and client department;
      4. missed deadlines/reports/meetings;
      5. quality of performance/deliverables below expectations;
      6. excessive warranty claim;
      7. excessive maintenance services;
      8. invoices for out of scope items;
      9. frequent and unexplained turn over of contractor staff;
      10. request for amendments for out of scope work;
      11. disputes and difficulty with resolution of issues.
    2. Financial early warning indicators:
      1. contract cost not in line with forecasts;
      2. outstanding claims/invoices;
      3. poor and irregular billing/invoicing practices;
      4. reluctance to submit copies of claims/invoices;
      5. reluctance to supply supporting financial information;
      6. difficulty conducting audits;
      7. indication that business practices are deviating from the policies.

Annex 8.3: Termination for Convenience Process

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  1. Overview
    1. Policy, Risk, Integrity and Strategic Management Sector (PRISMS) was designated to provide termination settlement services including the processing of claims associated with goods and services contracts terminated for convenience by Canada. PRISMS was also designated to handle claims arising from United States and Canadian Commercial Corporation (U.S./CCC) contracts that are terminated for the convenience of the U.S. government. For terminations involving U.S./ CCC contracts, the Director, APIS/PRISMS, will ensure compliance with the certification and termination settlement functions that are required to conform with the U.S. Department of Defense and Department of National Defence Letter of Agreement (see U.S. Defense Federal Acquisition Regulation Supplements 225.870-6 and 249.7000). The DG, PRISMS will also be responsive to requests by the U.S. government for arranging for audits of U.S. government contracts or subcontracts placed directly with Canadian-based suppliers that are terminated for convenience.
    2. The contracting officer and the termination claims officer (see 8.135.10 Involvement of the termination claims officer) are responsible for the following termination activities:
      • The contracting officer:
        • issues Stop Work Order and Notices of Termination; and
        • administrates the non-terminated portion of the contract.
      • The termination claims officer:
        • assesses the contractor's request for any upward adjustment of the contract price for the non-terminated portion of the contract;
        • requests claim from contractor and forwards claim forms;
        • ensures acceptability of claim by assisting contractor with preparation;
        • determines, defines and arranges audit, as required;
        • arranges for inventory verification and screening by client;
        • negotiates final settlement with contractor;
        • prepares Settlement and Release document;
        • disposes of surplus inventory;
        • forwards Settlement and Release document to contractor for acceptance;
        • obtains invoice and signed Settlement and Release document from contractor;
        • submits invoice through client department; and
        • distributes Settlement and Release document.
    3. Occasionally, the client will require a contract status report before making a decision to cancel the contract. In this event, the client will inform Public Works and Government Services Canada (PWGSC) of its intention to reduce or cancel a contract by issuing a "Notice of Intent to Cancel" either by telephone or in writing. The client will usually request all or part of the following contract status information before making a final decision to terminate:
      1. quantity of stores produced against the contract;
      2. quantity of stores in production;
      3. value of raw materials and/or components acquired by the contractor to carry out the specific contract;
      4. the position with respect to tooling and capital equipment, especially where the contractor had to tool-up to carry out the contract;
      5. status of subcontracts;
      6. the most economical point at which to effect termination; and
      7. the approximate amount of termination claims, if known.
    4. The contracting officer must immediately request the information from the contractor and closely follow up to ensure that it is received as soon as reasonably possible. When the information is received, the contracting officer will forward it, together with any recommendations, to the client. Normally, the client's first request will be to cancel all or a portion of a contract, in which case the contracting officer should immediately issue a Stop Work Order. A Stop Work Order is a safeguard to ensure a halt in the work and remove the possibility of further expense being generated by the contractor. To terminate the contract, a Stop Work Order must be followed by the issuance of a Notice of Termination for Convenience.
  2. Stop Work Order – Notice of Termination

    On receiving the client's initial written instructions to cancel all or part of a contract for the convenience of Canada (see 8.135.5 Termination for Convenience of Canada), the contracting officer should immediately issue a Stop Work Order to advise the contractor to "stop work" (see the Standard Acquisitions Clauses and Conditions [SACC] Manual clauses J0500C and J0502C.) The Notice of Termination ( J0001C, J0002C, J0003C, J0006C) cannot be issued until the formal requisition amendment is received, and a legal opinion has been sought. The contracting officer should also contact and provide the termination claims officer with a copy of the Stop Work Order and the Notice of Termination.

  3. No Claim is Involved

    When a contractor advises the contracting officer that a claim will not be submitted following the receipt of a Notice of Termination, the contracting officer must eliminate the funding for the terminated items. Since no claim is made, the termination claims officer is not involved in this process.

  4. Client's Decision
    1. It is the client's responsibility to decide at what stage a full or partial termination should take place. Formal amendments to the requisition, confirming the decision to terminate, must be provided as quickly as possible.
    2. The contracting officer must not issue a Notice of Termination for Convenience until an amendment to the client's requisition has been received.
    3. The contracting officer should ensure that sufficient funds remain in the amended requisition to cover the contract value.
  5. Notice of Termination
    1. When the requisition amendment is received, the contracting officer will prepare the Notice of Termination or Partial Termination by using the clauses provided in subsection 5-J, of the Standard Acquisition Clauses and Conditions (SACC) Manual, and on advice from Legal Services will send the Notice of Termination to the contractor.
    2. After the Notice of Termination or Partial Termination is issued, the contracting officer must immediately forward a copy of the Notice of Termination to the termination claims officer.

      In order to avoid further costs to Canada and hardship to the contractor, a Notice of Termination must be issued as quickly as possible to finalize the implications of a Stop Work Order.

  6. Adjustment of Funds

    The funds in the contract must not be adjusted when the Notice of Termination is issued. The contract funds will be adjusted on the Settlement and Release document.

  7. Adjustment to the Price of the Non-terminated Portion of the Contract

    Whenever a contractor requests an upward adjustment to the cost or unit price of the non-terminated portion of a contract, the resulting claim for adjustment should be referred to the termination claims officer for review, before reaching any agreement with the contractor, concerning such upward cost or price adjustment.

  8. Termination File
    1. For non-complex, fully terminated contracts, the contracting officer should transfer the complete procurement file to the termination claims officer, if a claim is involved.
    2. For complex procurements or partial terminations, where the non-terminated portion of the contract is still active, the contracting officer will forward an electronic copy of each of the following documents to the termination claims officer as applicable: the contract, all amendments, specifications, pricing details, pertinent correspondence and any other information relevant to the termination.
  9. Informing the Contractor
    1. If a claim is involved, the termination claims officer will forward the termination claim forms and the Procedures Guide – Processing Settlement Proposals Related to Contracts Terminated for Convenience to the contractor.
    2. The following claim forms may be obtained from the termination claims officer.
      1. PWGSC 581 (PDF Version 652 KB)This information is only accessible to federal government employees. - (Help on File Formats) – Settlement Proposal for use by Fixed Price Prime Contractor or Fixed Price Subcontractor (Including Inventory Schedules A to D)
      2. PWGSC 582 (PDF Version 315 KB)This information is only accessible to federal government employees. - (Help on File Formats) - Schedule of Accounting Information
      3. PWGSC 583 (PDF Version 371 KB)This information is only accessible to federal government employees. - (Help on File Formats) - Application for Partial Payment
    3. The accompanying letter to the contractor should contain the following instructions:

      "In the event subcontractors are involved with this termination, please advise of the number of subcontractors who will require termination claim forms and their contact information. Please arrange to complete all sections of the claim in as much detail as possible. After signature by your executive authority, return the original and one (1) copy to this office.

      You are hereby requested to forward your completed claim as soon as reasonably possible. In order to assist you in meeting that date, we would be pleased to provide guidance and explanations necessary to ensure that your company takes proper action and that the correct information is included in the forms.

      Please note that all communications and documents with respect to your claim should be directed to: __________. (Insert appropriate name and address of the termination claims officer.)"

    4. After the termination claim forms are forwarded, the termination claims officer will contact the contractor to ensure that the forms have been received and that the necessary action is being taken on the contractor's part to submit a claim. If the contractor has any questions concerning the presentation of the claim, or the details of the termination settlement procedures, the contractor should contact the termination claims officer directly. When the contractor has completed the forms, the signed original is returned to the termination claims officer who will then become responsible for the resolution of the claim.
  10. Audit of Claims
    1. Upon receipt of a claim, the termination claims officer will determine the need for an audit. If the termination claims officer concludes that an audit is required, the termination claims officer will prepare the terms of reference for the audit and arrange for its completion.
    2. When an audit is performed, the termination claims officer reviews the cost factors reported by the auditor, and reconciles the contractor's claim with the auditor's report. The cost implications of any inventory adjustments should be discussed with the auditor, as well as with the contractor.
  11. Inventories
    1. If the claim from a Termination for Convenience involves inventory that is rendered surplus by the termination, the termination claims officer should send copies of the termination inventory schedules to the client in order to obtain instructions as to disposition, which will be either:
      1. Arranging for the verification and shipment of all, or any part, of the inventories to a recipient designated by the client. The costs associated with packaging, routing, shipping, etc., are a proper post termination charge to be added to the contractor's claim; or
      2. Arranging inventory verification (by the termination claims officer with the Inspection Authority of the client) so that the Settlement Offer may be adjusted to reflect any inventory discrepancies; or
      3. Arranging for the disposal of the residual inventory by a Crown Assets Distribution Centre (CADC). In this case, the termination claims officer should prepare a Sales Request (for surplus materiel and equipment) form on the Government of Canada Surplus Client Interface (GCSci)This information is only accessible to federal government employees.. (NOTE: Only approved government employees have access to the site.)
    2. Prior to Submitting the Sales Request (SR) the termination claims officer will obtain the certification of the client department and the Director of the PWGSC Contracting Directorate that the inventories are reasonable in relation to the requirements of the terminated portion of the relevant contract; that their use is not required for other existing PWGSC contracts, due to the nature of the goods; and consequently, that disposal is recommended. The termination claims officer will submit the online Sales Request on GCSci to CADC.
    3. Any proceeds realized from the sale of the surplus inventory are credited (less the CADC commission fee), back to the client, to the Consolidated Revenue Fund or to the revolving fund, as applicable.
  12. Settlement Offer, Close-out and Dispute Resolution
    1. The termination claims officer is responsible for reviewing the audit report, if one was completed, and negotiating a settlement offer with the Contractor. This offer informs the contractor of the amount of the settlement the termination claims officer is prepared to recommend to the Director, APIS/PRISMS for approval.
    2. Once the contractor accepts the proposed settlement offer, the termination claims officer will prepare the Settlement and Release form, and submit it to Legal Services for review, to the Director, APIS/PRISMS for approval and signature, and then to the contractor for acceptance and signature. When the contractor's written acceptance of the Settlement and Release document is received, the original along with the final invoice is placed on the PRISM file, and a copy forwarded to the contracting officer for the procurement file. A copy is also sent to the client to issue payment.
    3. If the contractor rejects the proposed settlement, the termination claims officer will advise the contractor, in writing, of the Alternate Dispute Resolution (ADR) services available in the Business Dispute Management Program within the Departmental Oversight Branch. (see 8.140 Disputes)
  13. Payment of the Settlement

    When a partial payment or final settlement payment related to a claim on a contract terminated or partially terminated for the convenience of Canada is approved and signed by the Director, APIS/PRISMS, the termination claims officer will place the original of the completed document on the PRISM file, and make arrangements to implement the approved settlement payment.

Annex 8.4: Termination for Default

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  1. The decision to terminate a contract for default should be made only after all other possible solutions have been explored. In all cases, the advice of Legal Services must be obtained at an early stage, to ensure that any proposed action will not prejudice Canada's legal position and that the termination is legally enforceable.
  2. Failure to take action may prejudice Canada's interests.

    If a contract is secured by surety bonds, termination of the contract may change the existing contractual relationship with the bonding company.

  3. Canada has the right to terminate all or any part of the contract for default if:
    1. The contractor fails to make progress, so as to endanger performance of the contract.
      1. The contracting officer may provide the contractor in writing with a reasonable period of time, normally ten days, to rectify the situation. If this period must be longer, the contracting officer may require the contractor, within ten days, to show evidence of corrective action.
      2. If the contractor does not rectify the situation, the contracting officer may, subject to the limitations in the default clause, initiate action to terminate the contract for default.
    2. The contractor fails to perform any provision of the contract.

      If the contractor does not rectify such a defect within ten days of receipt of a notice from the contracting officer, the contracting officer may, within the limitations set forth in the default clause, initiate action to terminate the contract in whole or in part for default.

    3. The contractor fails to deliver the goods or perform the services within the time specified in the contract.
      1. In the absence of excusable delays, Canada has the right to terminate the contract immediately, regardless of how slight the delay may be. This includes the right to accept or reject goods shipped, but not yet delivered. In addition, if the contractor does make timely delivery, but delivers defective goods or improperly performs services, and is unable to take corrective action within the unexpired delivery schedule period, Canada also has the right to terminate for default.
      2. Whenever a contracting officer contemplates termination of a contract for failure to deliver on time, the contractor must be so advised, as soon as possible, after the default occurs. Failure to take such action may prejudice Canada's position.
      3. 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 some kind of consideration may be appropriate. This constitutes a conditional amendment (see section 8.70.5 Amending Contracts), which triggers the requirement for a VPCM Assessment.

      This situation would arise when delivery would be further delayed by terminating and placing the contract elsewhere.

    4. the contractor becomes bankrupt or insolvent.

      Upon receipt of a notice of bankruptcy or insolvency, the settlement procedure outlined in 8.155 Final Payments should be followed.

Action to Recover Loss or Damage
  1. After termination, the contracting officer will determine the actual amount or best estimate of loss or damage suffered by Canada, and the distribution of the damages to be recovered from the contractor.

    Estimates of loss or damage should include any amount in excess of the contract price, which Canada may be obliged to pay in procuring the goods or services elsewhere.

  2. The contracting officer must refer claims to Legal Services when a contract is secured by a security deposit (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit), or when Canada has a claim against a contractor that is related to a work package for which, the contractor has a claim against Canada.
  3. In all other cases, the contracting officer will attempt to negotiate a settlement. When a satisfactory settlement cannot be reached, the claim will be referred to Legal Services for action.
  4. When a contractor agrees with the proposed settlement, the recommendation to recover monies will be submitted to Cost and Profit Assurance Group (CAPG), or, in the case of a Canadian Commercial Corporation (CCC) contract, the Director, Finance and Resources Administration (FRA). Cost Audit Group or the Director, FRA, will issue an invoice to the contractor for the monetary recovery.
  5. If payment is not received within 60 days of the date of issue of the invoice, then CPAG or the Director, FRA, will advise the contracting officer to take appropriate follow-up action with the contractor. When normal follow-up procedures have not been successful, the matter must be referred to Legal Services.
  6. Claims must not be removed from departmental records until satisfied by payment or a properly authorized deletion action.
Contract Payment under Surety Bond

When a surety bond is being enforced, payments will be issued as follows:

  1. Performance bond: Upon completion of the contract to the satisfaction of Canada, the bonding company may be paid all amounts to which the contractor would be entitled under the terms of the contract;
  2. Payment bond: The bonding company must not be reimbursed for the payment of creditors from any funds held by Canada until the work is complete, and the surety company has fully discharged its obligations under the bond.

Annex 8.5: Refunds of Excess Profits Earned on Public Works and Government Services Canada Contracts

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  1. All indications from any source of unreasonably high profits realized from any contract placed pursuant to the Defence Production Act, or from any contract other than competitive firm price awarded pursuant to the Department of Public Works and Government Services Act should be reviewed in consultation with the Director, Acquisition Program Integrity Secretariat (APIS).
  2. Negotiated Refunds:
    1. Normally, the first step in negotiating a refund is for the contracting officer and APIS to review the evidence available, and decide whether the profits realized by the contractor can be recommended for acceptance or are in excess of what is considered to be fair and reasonable. In the event that the evidence is incomplete or inconclusive, consideration should be given as to whether the contractor will be approached for a statement of its position or whether a request will be forwarded to Audit Services Canada for additional verification. When all the evidence necessary is assembled, a final review will be made to determine what, if any, amount should be refunded, and the method of payment.
    2. In an attempt to ensure that suppliers are being treated consistently throughout Public Works and Government Services Canada (PWGSC), the Cost and Profit Assurance Group (CPAG) will distribute to the members of the Contract Audit Review Committee the proposed action plan of the contracting officer in respect to a contractor's excess profit, identified through audit. Any comments or concerns with the action plan should be communicated to CPAG within ten working days. CPAG will consolidate the input and forward it to the lead contracting authority for consideration.
    3. In some cases it will be in order to recover excess profits by deduction from current claims, or a part recovery may be affected through an assignment of income tax refunds. Ordinarily, however, the contractor will be expected to remit the full amount by cheque. If it appears that this action will create an unreasonable hardship, extended terms of payment may be considered.
    4. The agreed upon amount to be refunded and the terms of settlement will be set out in a letter to the contractor, approved by Legal Service, and signed by the responsible officer of the sector/region. Copies of this letter are to be sent to the Director, Acquisition Program Integrity Secretariat (APIS).
    5. After settlement is completed, it may be desirable to release the contractor from further obligation by detailing, in a formal agreement, the contract to which the settlement relates. Legal Services should draft this agreement.
    6. Cheques forwarded by the contractor should be made payable to the Receiver General and mailed to the contracting officer. The contracting officer will pass them to CPAG who will forward them to the Chief Financial Officer of the client.
    7. Reference should be made to section 10.70 Recovery and Disposition of Contract Claims Adjustments Process.
  3. Voluntary Refunds:
    1. Where a contracting officer receives notice from a contractor that they desire to return excess profits, or if a contractor voluntarily forwards a cheque in refund of such profits, the contracting officer should request a statement showing:
      1. a summary of the excess profits by contracts; and
      2. an explanation of the principal reasons, which accounts for the excess and how the amount was arrived at.
    2. Pending an appraisal of the information given by the contractor and of the particular circumstances of the case, any cheques received should be sent immediately to the Director, APIS, accompanied where possible, by a statement, showing the distribution of the refund over the contracts affected. The Director, APIS, will then forward the cheques to the Chief Financial Officer for the client.
    3. In deciding how extensive a review should be carried out in each case, the determining factors will be:
      1. the value of the contracts affected, and the total amount of the contracts let to the contractor;
      2. the explanations given by the contractor, as to the procedure followed in arriving at the amount of the refund;
      3. the capacity known to the contractor for assembly and interpretation of costs in accordance with Contract Cost Principles 1031-2, if applicable.
    4. If there is doubt as to the accuracy of the contractor's computations or if it appears that there may be other excess profits which have not been declared, then a full inquiry must be instituted;
    5. A final decision will be agreed upon by consultation between the sector/region concerned and the Director, APIS, and this conclusion will be communicated to the Chief Financial Officer of the appropriate client department.
  4. Refunds from Subcontractors:

    Refunds from subcontractors should be handled in accordance with the above procedures. In addition, however, it will be necessary for PWGSC to keep the prime contractor informed of its negotiations with the subcontractor, and in some cases, it will be preferable to deal with the subcontractor through the prime contractor. If the refund results from a contractual provision in effect between the prime contractor and the subcontractor, then the refund should be effected by the prime contractor. If the refund arises from circumstances not envisaged in the subcontractor's contractual arrangements with the prime contractor, then the refund should be effected by PWGSC, and should not result in a windfall being realized by the prime contractor.

  5. Assignment of Income Tax Refund:
    1. In the event that a settlement from the contractor must be financed partly from the proceeds of its income tax refund, the sector/region concerned will endeavor to obtain a voluntary assignment of the income tax refund in the following terms:

      "Receiver General of Canada
      Ottawa, Ontario

      (Company) ______________ of the City of _________ in the Province of ______________ does hereby authorize and direct that any amounts presently due or accruing due to it in the future from the Canada Revenue Agency, be applied in reduction of its debt to Her Majesty the Queen in right of Canada in the amount of $ ___________ on account of ________".

    2. In the case of a corporation, the direction should be under the seal of the Corporation and the signature of duly authorized officers. The form, which should be a separate document and not embodied in a letter, should then be passed by the sector/region to the Director General, Finance, Corporate Services, for processing in accordance with normal government practice. Treasury Board authorization is not required.
    3. Whether the assignment is voluntary or pursuant to section 155 (Deduction and set-off) of the Financial Administration Act, the Finance Sector assumes the responsibility of notifying Canada Revenue Agency (CRA) of the assignment. The manner in which money is transferred from CRA to PWGSC, or to the Department of National Defence (in the case of refunds to its own votes) is a matter for decision by the Finance Sector. However, the transfer will be made either by means of a Receiver General cheque or an interdepartmental Journal Voucher. Under either method, the transfer advice will be passed to the sector/region concerned who will forward it to the Director General, Finance Sector.

Annex 8.6: Risk Management approach to Vendor Performance Process Chart

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A flowchart representing the full mandatory steps of the Vendor Performance Corrective Measure Policy (VPCMP).

Overview of the Process Chart - Text version

This flowchart shows the full mandatory steps of the Vendor Performance Corrective Measure Policy (VPCMP). The flowchart is divided into the four phases of the procurement process: Phase 1: Pre-Contractual, Phase 2: Contracting, Phase 3: Contract Administration, and Phase 4: Post Contract. The Pre-Contractual and Contracting phases incorporate the risk considerations for applying the VPCMP. The Contract Administration and the Post Contract phases are where the VPCMP process is applied. Each required step is indicated in the relevant phase of the procurement process. For example, it must be determined at the Pre-Contractual Phase if a sector/region program exists.

Risk considerations for applying VPCMP (Phases 1 and 2) Phase 1: Pre-Contractual

In this phase, the impact of vendor performance issues on the procurement strategy must be determined by following these steps:

  • Step 1 - Assess the impact of performance issues that might arise, as part of procurement risk management and commodity research. For sole source contracts, access the Vendor Information Management (VIM) system to verify if a Vendor Performance Corrective Measure (VPCM) applies prior to negotiation of terms and conditions.
  • Step 2 - Decision: Does a sector/region program exist?
    • If yes, follow sector/region program process for evaluating bids. Stop reading the contents of the chart.
    • If no, proceed to Step 3 of Phase 1.
  • Step 3 - Decision: Assess whether a sector/region program is required.
    • If yes, develop a sector/region program using Annex 8.12 of the Supply Manual. Until the program is operational, the contracting officer is to follow the generic process. Proceed to Phase 2: Contracting (risk considerations for applying a VPCMP).
    • If no, proceed to Phase 2: Contracting (risk considerations for applying a VPCMP).
Phase 2: Contracting

This phase gives the right to reject bids at evaluation stage. The right to reject also applies to offer and arrangements. The process is described in following steps:

  • Step 1 - Include performance criteria for evaluating vendor performance over the life of contract.
  • Step 2 - Decision: Determine whether a VPCM in VIM applies to the vendor being considered, once bids have been received.
    • If yes, verify if terms of VPCM apply to vendor. If a VPCM is applicable, reject the bid and notify the vendor. Stop reading the contents of the chart.
    • If no, proceed to Step 3 of Phase 2.
  • Step 3 - Continue evaluation.
  • Step 4 - Re-verify in VPCM that a VPCM has not been applied prior to award of a contract.
  • Step 5 - Award contract if no VPCM has been applied. No call-up contracts can be issued to a vendor subject to a relevant VPCM. Proceed to Phase 3: Contract Administration (VPCMP process).
Application of the VPCMP process (Phases 3 and 4) Phase 3: Contract Administration

Assessment of vendor performance must be done during the contract period. Other performance records are added when significant issues require a note as per paragraph 8.180.15.1 (h) of the Supply Manual. The process is described in the following steps:

  • Step 1 - Monitor and document poor vendor performance with client. See paragraph 8.180.15.1 (b) of the Supply Manual for information on required documentation.
  • Step 2 - Decision: Determine whether performance issues are corrected.
    • If yes, contract ends normally. Stop reading the contents of the chart.
    • If no, proceed to Step 3 of Phase 3.
  • Step 3 - Decision: Determine if there is an operational requirement to continue contract.
    • If yes, offer conditional amendment in lieu of a termination for default and proceed to Step 4 of Phase 3.
    • If no, terminate contact for default and skip to Step 5 of Phase 3.
  • Step 4 - Decision : Is conditional amendment accepted?
    • If yes, issue conditional amendment and proceed to Step 5 of Phase 3.
    • If no, terminate contract for default and proceed to Step 5 of Phase 3.
  • Step 5 - At the end of contract or at the expiry date of the standing offer, proceed to Phase 4: Post Contract (VPCMP process).
Phase 4: Post Contract

Phase leading to the application of a Vendor Performance Corrective Measure (VPCM.) The process is described in the following steps:

  • Step 1 - Inform VPCM coordinator to add note to VIM and obtain authority to proceed with VPCM assessment process.
  • Step 2 - Complete mandatory assessment for a VPCM to mitigate risks.
  • Step 3 - Refer to Annex 8.6.1 of the Supply Manual for information on required procedure for applying a VPCM. Performance information gained must be kept. It will be considered for future procurement processes in the first step of Phase 1: Pre-contractual.

Annex 8.6.1: Required Procedure for Applying a Vendor Performance Corrective Measure (VPCM)

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This flowchart shows the complete sequence of steps involved once the Vendor Performance Corrective Measure assessment was completed by the Contracting Officer.

Overview of the chart

This flowchart shows the complete sequence of steps involved once the Vendor Performance Corrective Measure assessment was completed by the Contracting Officer. Beginning with the first step, this chart identifies the responsibilities of the Contracting Officers based on possible scenarios. For example, it must be determined whether or not the director accepts the assessment results. Once the decision is made, the reader must refer to the next relevant step in the process. The following steps describe the process to follow.

Director review of VPCM assessment results
  • Step 1 - Present VPCM assessment results to the director.
  • Step 2 - Decision: Does the director accept the assessment results?
    • If yes, then proceed to step 3
    • If no, VPCM assessment must be re-evaluated, then return to step 1.
  • Step 3 - Director presents assessment results to the Director General/Regional Director General (DG/RDG).
  • Step 4 - Decision: Does the DG/RDG accept assessment results?
    • If yes, then proceed to step 5
    • If no, VPCM assessment must be re-evaluated, then return to step 1.
  • Step 5 - Decision: Is threshold to apply a VPCM reached?

Stream 1 – Non-application of a VPCM

  • Step 1 - DG/RDG advises vendor of the assessment results (no VPCM), level of impact and no. of points that will be added to vendor contract history. Annex 8.8 provides a letter template.
  • Step 2 - Vendor has 15 business days to respond in writing. In addition the vendor may request a face to face meeting.
  • Step 3 - DG/RDG reviews vendor’s written response and any presentation material.
  • Step 4 - Vendor advised of final decision, category of impact and number of points that will be added to its contract history.
  • Step 5 - Contracting officer advises VPCM co-ordinator to update the note in VIM to indicate the category of impact (minor, medium or major) and number of points to add to the contract history of the vendor.

Stream 2 – Application of a VPCM

  • Step 1 - DG/RDG advises vendor of intent to apply a VPCM and level of impact. Annex 8.9 provides a letter template.
  • Step 2 - Vendor has 15 business days to respond in writing. In addition the vendor may request a face to face meeting.
  • Step 3 - DG/RDG reviews vendor’s written response and any presentation material.
  • Step 4 - DG/RDG informs the Acquisitions Branch DG/RDG Committee.
  • Step 5 - Decision: Does the DG/RDG maintain assessment results?
  • Step 6 - DG/RDG submits the assessment results to the Assistant Deputy Minister (ADM).
  • Step 7 - ADM reviews the assessment results.
  • Step 8 - Decision: Does the ADM apply a VPCM?
  • Step 9 - ADM advises the vendor that a VPCM will be applied and specifies the type and extent of the VPCM. Annex 8.10 and Annex 8.11 provide letter templates.
  • Step 10 - Contracting officer advises VPCM co-ordinator that a VPCM has been applied and the VPCM co-ordinator adds a note to VIM. There is no other steps to achieve. Stop reading the contents of the chart.

Annex 8.7: Principal Elements of the Vendor Performance Corrective Measure Assessment

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  1. Current Contract(s) Impact Score

    This refers to the impact of the poor performance issues over the entire period of the contract or over the entire period of the standing offer that resulted in a termination(s) for default and/or conditional amendment(s). 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:

    Table 1 – Conversion for the Total Current Contract(s) Impact Score

    This table shows how to determine the converted score from the Total Current Contract(s) Impact Score. The column headings identify the variables for determining the number of points to allocate to the Vendor for the current contract: Total Current Contract(s) Impact Score, Category of Impact, Conversion Score. There is no row header. The Total Current Contract(s) Impact Score is used to establish the Category of Impact and the Conversion Score. For example, if the Total Current Contract(s) Impact Score is 17 points, the category of impact will be major and the converted score will be 40 points.

    Total Current Contract(s) 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:

    Table 2 – VPCM consequences based on the frequency of cases

    This table shows the consequences of a Vendor Performance Corrective Measure (VPCM) based on the frequency of cases of the last six years. The column headings identify what determines the severity of a debarment: VPCM History, Consequence. The number of VPCM cases in the last six years is sufficient to determine the duration of a debarment. For example, if there is a previous VPCM case for the supplier, the consequence of a new VPCM will be an 18-month debarment or the imposition of conditions, if more appropriate.

    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 Vendor Performance Corrective Measure 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 or at the expiry date of a standing offer to determine whether a Vendor Performance Corrective Measure (VPCM) will be applied. If the threshold to apply a VPCM is not met, the Director General/Regional Director General (DG/RDG) informs the vendor that no VPCM is applied at that time. This template is a reminder of what the Vendor Performance Corrective Measure Policy (VPCMP) prescribes. Italicized, bold text in blue in the letter template below must be adapted to the specific situation.)

Heading of Public Works and Government Services Canada

REGISTERED MAIL AND COURIER

Date: XXXX

Name of the vendor
Address

Attention: XXXX

Subject:

Result of the Vendor Performance Corrective Measure (VPCM) Assessment
{insert Contract or Standing Offer number, title, and delete this instruction}

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 at the end of the above referenced {insert "contract" or "standing offer" and delete this instruction}. This VPCM Assessment was triggered by the following:

  • {List all terminations for default and conditional amendments of the above referenced contract or standing offer 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 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(s) Impact Score;
  • the Current Contract(s) 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(s) 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 Vendor Performance Corrective Measure

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(Full or partial terminations for default and conditional amendments trigger the mandatory assessment process at the end of a contract or at the expiry date of a standing offer to determine whether a Vendor Performance Corrective Measure (VPCM) will be applied. If the threshold to apply a VPCMis met, the Director General/Regional Director General (DG/RDG) informs the vendor of the intent to apply a VPCM. This template is a reminder of what the the Vendor Performance Corrective Measure Policy (VPCMP) prescribes. Italicized, bold text in blue in the letter template below must be adapted to the specific situation.)

Heading of Public Works and Government Services Canada

REGISTERED MAIL AND COURIER

Date: XXXX

Name of the vendor
Address

Attention: XXXXX

Subject:

Notice of intent to apply a Vendor Performance Corrective Measure
{insert Contract or Standing Offer number, title, here and delete this instruction}

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 at the end of the above referenced {insert "contract" or "standing offer" and delete this instruction}. This VPCM Assessment was triggered by the following:

  • {List all terminations for default and conditional amendments of the above referenced contract or standing offer 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 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(s) 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 Vendor Performance Corrective Measure

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(Full or partial terminations for default and conditional amendments trigger the mandatory assessment process at the end of a contract or at the expiry date of a standing offer to determine whether a Vendor Performance Corrective Measure (VPCM) will be applied. If, as the result of a VPCM Assessment, a decision is made for applying conditions as a VPCM, the Assistant Deputy Minister, Acquisitions Branch (ADM/AB) informs the vendor of the decision. This template is a reminder of what the Vendor Performance Corrective Measure Policy (VPCMP) prescribes. Italicized, bold text in blue in the letter template below must be adapted to the specific situation.)

Heading of Public Works and Government Services Canada

REGISTERED MAIL AND COURIER

Date: XXXXX

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 Director General/Regional Director General (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 Vendor Performance Corrective Measure

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(Full or partial terminations for default and conditional amendments trigger the mandatory assessment process at the end of a contract or at the expiry date of a standing offer to determine whether a Vendor Performance Corrective Measure (VPCM) will be applied. If, as the result of a VPCM Assessment, a decision is made for applying a debarment as a VPCM, the Assistant Deputy Minister, Acquisitions Branch (ADM/AB) informs the vendor of the decision. This template is a reminder of what the Vendor Performance Corrective Measure Policy (VPCMP) prescribes. Italicized, bold text in blue in the letter template below must be adapted to the specific situation.)

Heading of Public Works and Government Services Canada

REGISTERED MAIL AND COURIER

Date: XXXXX

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 Director General/Regional Director General (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.

8.13 Letter Templates for Integrity

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1. Template Letter of Rejection of Bid/Offer/Arrangement for Integrity reasons

This template letter is provided for instances where the contracting officer has to advise the bidder/offeror/supplier that its bid/offer/arrangement has been found non-responsive due to relevant acts or convictions.

The bidder/offeror/supplier should be given 2 business days to respond.

Contracting officers will have to tailor the letter to their situation.


Public Works and Government Services Canada


Date: {insert date}

Attention: {insert contact name}
{insert supplier name and address}

Subject: Solicitation Number {insert solicitation number}


Dear Ms./Mr.{insert name}

We regret to inform you that your {insert bid or offer or arrangement, as appropriate} has been found non-responsive due to a relevant act or conviction which matches one of those identified in the Integrity Provisions of the Standard Instructions {insert applicable Standard Instructions}.

The conviction of {include number and title of conviction} of {insert name of relevant Act in italics} was found against {insert name of company or individual against which the conviction was found}.

As indicated in the Integrity Provisions of the Standard Instructions, the commission of the said acts or offences renders you ineligible to be awarded a contract.

If you have information which may indicate that the findings are not accurate, please provide it to the contracting authority, as indicated below, by 5 p.m. eastern time, {insert the date corresponding to two business days from notification to the supplier}.

If you would like further information on these new measures aiming at strengthening the integrity of the procurement process, see Public Works and Government Services Canada's Integrity Framework website at http://www.tpsgc-pwgsc.gc.ca/ci-if/ci-if-eng.html.


{Insert Contracting Authority’s name}
Contracting Authority, Public Works and Government Services Canada
{Insert contact details}


2. Template Letter for Addition of Provisions to an Existing Contract

This letter is to be used when adding or revising the Integrity Provisions in an existing contract, when a significant contract amendment is to be done such as an increase to the contract value (such as exercising an option), to extend the contract period, to modify the requirement or for the assignment of a contract.

The contractor is required to provide PWGSC with a complete list of names of individuals who are currently directors of the contractor, or the owner name, as defined in this letter. The contractor will be requested to provide, if needed, the corresponding Consent form (Consent to a Criminal Record Verification (PWGSC-TPSGC 229)), for any or all individuals named in the aforementioned list, if required by the Special Investigations Directorate to perform a more thorough verification.

Contracting officers will have to tailor the letter to their situation.


Public Works and Government Services Canada


Date: {insert date}

Attention: {insert contact name}
{insert supplier name and address}

Subject: Contract Number {insert contract number}
Amendment Number{insert amendment number}


Dear Ms./Mr.{insert name}

You are receiving this letter as a result of Public Works and Government Services Canada’s Integrity Framework which has established policies, procedures and governance measures to strengthen the integrity of procurement and real property transactions.

In accordance with the Integrity Framework, PWGSC is to enter into contract only with entities who agree to comply with these new measures and agree that general conditions {insert 2010A or 2010B or 2010C or 2029 or 2030 or 2035 or 2040, as appropriate} ({insert appropriate date}) will be replaced by general conditions {insert 2010A or 2010B or 2010C or 2020 or 202 or 2030 or 2035 or 2040, as appropriate} (2014-03-01 {OR insert date of latest version}) and form part of the above referenced contract.

As the integrity of the procurement process is in the best interests of all, the buyer as well as all of the sellers, we are counting on your collaboration. By taking these steps, you will also be contributing to the transparency and accountability of procurements made on behalf of all Canadian citizens.

If you agree, please return to my attention a signed copy of this letter together with a complete list of directors, or the name of the owner, no later than {insert month, day, year}, by 5 p.m. eastern time. In circumstances where a record suspension (criminal pardon) has been obtained, or capacities restored by the Governor in Council please provide us with a certified copy of confirming documentation from an official source within this time frame. You may later be required to provide signed Consent to a criminal record verification (PWGSC-TPSGC 229) and associated information for each of these individuals as compliance with the certifications is subject to verification during the entire period of the Contract.

Suppliers who are incorporated, including joint ventures, must provide a complete list of names of all individuals who are currently directors of the contractor(s). Suppliers who are contracting as a sole proprietorship, including joint ventures, must provide the name of the owner. Suppliers who are contracting as societies, firms, partnerships or associations of persons do not need to provide lists of names.

CERTIFICATION – INTEGRITY PROVISIONS

For the purpose of these Integrity Provisions, everyone, including but not limited to organizations, bodies corporate, societies, companies, firms, partnerships, associations of persons, parent companies and subsidiaries, whether partly or wholly-owned, as well as individuals and directors, are Bidder's Affiliates if:

  1. directly or indirectly either one controls or has the power to control the other, or
  2. a third party has the power to control both.

Indicia of control, include, but are not limited to, interlocking management or ownership, identity of interests among family members, shared facilities and equipment, common use of employees, or a business entity created following the acts or convictions specified in this section which has the same or similar management, ownership, or principal employees, as the case may be.

I, the Contractor, certify to be aware, and that my Affiliates are aware, that Canada may verify the information provided, including the information relating to the acts or convictions specified herein, through independent research, use of any government resources or by contacting third parties. I also certify that neither myself nor any of my Affiliates have directly or indirectly, paid or agreed to pay, and will not, directly or indirectly, pay a contingency fee to any individual for the solicitation, negotiation or obtaining of the Contract if the payment of the fee would require the individual to file a return under section 5 of the Lobbying Act. Finally, I also certify that neither myself nor any of my Affiliates have been convicted of an offence or received a conditional or an absolute discharge under any of the following provisions, unless the time period, as defined in the Time Period subsection (see the general conditions), has elapsed:

  1. paragraph 80(1)(d) (False entry, certificate or return), subsection 80(2) (Fraud against Her Majesty) or section 154.01 (Fraud against Her Majesty) of the Financial Administration Act, or
  2. section 121 (Frauds on the government and Contractor subscribing to election fund), section 124 (Selling or Purchasing Office), section 380 (Fraud) for fraud committed against Her Majesty or section 418 (Selling defective stores to Her Majesty) of the Criminal Code, or
  3. section 119 (Bribery of judicial officers, etc), section 120 (Bribery of officers), section 346 (Extortion), sections 366 to 368 (Forgery and other offences resembling forgery), section 382 (Fraudulent manipulation of stock exchange transactions), section 382.1 (Prohibited insider trading), section 397 (Falsification of books and documents), section 422 (Criminal breach of contract), section 426 (Secret commissions), section 462.31 (Laundering proceeds of crime) or sections 467.11 to 467.13 (Participation in activities of criminal organization) of the Criminal Code, or
  4. section 45 (Conspiracies, agreements or arrangements between competitors), section 46 (Foreign directives), section 47 (Bid rigging), section 49 (Agreements or arrangements of federal financial institutions), section 52 (False or misleading representation), section 53 (Deceptive notice of winning a prize) of the Competition Act, or
  5. section 239 (False or deceptive statements) of the Income Tax Act, or
  6. section 327 (False or deceptive statements) of the Excise Tax Act, or
  7. section 3 (Bribing a foreign public official), section 4 (Accounting), or section 5 (Offence committed outside Canada) of the Corruption of Foreign Public Officials Act, or
  8. section 5 (Trafficking in substance), section 6 (Importing and exporting), or section 7 (Production of substance) of the Controlled Drugs and Substance Act.

I further certify that no one convicted under any of the provisions under a. or b. are to receive any benefit under this contract, unless a pardon or a record suspension has been obtained or capacities restored by the Governor in Council, as defined in the Time Period subsection (see the general conditions).

I also certify that within the period of 10 years, neither myself nor any of my Affiliates have been convicted of or have received a conditional or an absolute discharge, under any foreign offence that Canada deems to be of similar constitutive elements to the offences listed in these Integrity Provisions.


Contractor's name: ___________________________________
(herein referred to as the "Contractor" by its Authorized Signatory(ies))


Signature: __________________________________________

Print Name: ________________________________________

Title: ______________________________________________


Signature: __________________________________________

Print Name: ________________________________________

Title: ______________________________________________


We are looking forward to hearing from you. If you have any questions, please do not hesitate to contact me.


Regards,


Insert Contracting Authority’s name
Contracting Authority, PWGSC
Insert contact details

9 Chapter 9 - Special Procurements

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9.1 Introduction

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  1. This chapter presents information related to procurement that is unique or specific to a certain commodity, client or area. Therefore, this chapter contains a number of topics and each specific topic contains related subjects. These subjects follow the Supply Manual format identified in 1.5.5 Supply Manual Format. For example, topics covered are Major Crown Projects, Real Property Contracting and United States Foreign Military Sales.
  2. It is recognized that all procurement scenarios such as those listed in this chapter cannot address every possible situation that Public Works and Government Services Canada (PWGSC) may face in its common service delivery environment. However, the types selected are based on historical usage and recommendations from the contracting community.

9.5 Major Crown Projects

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This section describes Major Crown Projects (MCPs), the responsibilities of PWGSC in MCPs, procurement strategy development as well as other key elements related to MCPs.

On April 1, 2012, the Treasury Board Policy on the Management of Major Crown Projects was rescinded and replaced by the Policy on the Management of Projects. However, due to its applicability to pre-existing MCPs, the following sections will remain in the Supply Manual.

9.5.1 General

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  1. MCPs are by their very nature large procurements. The Supply Manual applies to them as it would to any other acquisition. What differs is the notion that participating departments must act in consort with one another in planning and overseeing the work performed by the contractor(s) in achieving the deliverables. No one department can act solely from its legislative point of view to the exclusion of the other participants.
  2. A project is deemed to be an MCP when its estimated cost will exceed $100,000,000 and the Treasury Board (TB) would assess the project as high risk. However, TB may require any project exceeding the sponsoring minister's delegated project approval authority to be managed as an MCP. As well, provision is made in the policy for a sponsoring department to request approval from TB to manage a project exceeding $100,000,000, but of lesser risk within a tailored MCP regime or outside the MCP management framework.
  3. The additional aspects of managing MCPs include obtaining approval-in-principle from Cabinet for an MCP having significant policy or fiscal framework implications, and the following TB mandatory requirements:
    1. that the project leader be a senior manager within the sponsoring department accountable directly to the deputy minister;
    2. that the project leader be viewed as personally and visibly accountable for all aspects of the project;
    3. that a Senior Project Advisory Committee (SPAC) be established with membership consisting of senior representatives of departments participating in the project. The role of this committee is to advise the project leader on all aspects of the project and carry out the procurement review function for the project. SPAC is addressed in more details in 9.5.20 Procurement Review;
    4. that an appropriate project performance measurement system be selected and implemented;
    5. that progress reports be submitted to TB at key events or as directed by TB;
    6. that a project evaluation report be submitted to TB; and
    7. that MCPs be reported to Parliament in accordance with the Management of Major Crown Projects.

9.5.5 Responsibilities of Public Works and Government Services Canada in Major Crown Projects

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In respect to MCPs, the Minister of PWGSC is accountable and responsible to Cabinet for the acquisition of the MCP goods and/or services under the Department of Public Work and Government Services Actand is responsive to the project leader. The Minister of PWGSC is accountable and responsible for all aspects of the contracting process and resulting contracts, including:

  1. participate in the project as a participating department as described in TB policy on Management of Major Crown Projects;
  2. manage the procurement process from solicitation through contract award to contract completion;
  3. support the project in accordance with any existing legislation or general interdepartmental arrangements;
  4. provide any project-specific services such as procurement and scheduling, as described in any agreement or Memorandum of Understanding (MOU), concluded with the sponsoring department;
  5. help to define user requirements/selecting the most effective procurement approach;
  6. ensure the best value for money through the optimum combination of specified quality, specified time and lowest life-cycle cost of the acquisition;
  7. include procurement issues in risk assessments and risk management plans;
  8. establish project files for all procurement related documents and deliverables;
  9. develop a structured approach to document requirements and deliverables, if applicable;
  10. ensure the contract is carried out pursuant to the legal framework and maintain the government standards of prudence, probity and equity, when dealing with the private sector;
  11. develop, with the client, the rules of engagement pre-contract;
  12. develop and release any formal and/or contractually binding communication between Canada's representatives and the bidder/contractor;
  13. provide access and open and competitive bidding to suppliers through the Government Electronic Tendering Service;
  14. pre-qualify suppliers and build supplier working relationships;
  15. manage the solicitation process and documents;
  16. make submissions to the TB for authority to enter into contracts, to seek a pre-approval authority for amounts for anticipated amendments and to amend contracts;
  17. lead all negotiations with contractors that could result in contract implications;
  18. develop, with the client, the rules of engagement for post contract award interaction between the client and the contractor;
  19. monitor Canada's interactions with the contractor to maintain the integrity of the contract; and
  20. manage the contract in order to maintain the integrity of the contractual agreement and compliance with the contract requirements.

9.5.10 Early Involvement

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  1. One of the most important tasks for the PWGSC manager relative to a new MCP is to integrate into the Project Team, as soon as possible, and ensure participation at all levels of the project. One of the key requirements after establishing the operational objectives of the project is the development of the procurement strategy for the equipment, parts and services that will be delivered by the project. This is also one of the key areas of interest for ministers when considering the Memorandum to Cabinet and/or the TB Submission. Therefore, the Project Team must get involved in the project, as early as possible, to ensure best value of the procurement, and that clients consider all possible strategies before committing the project to solutions, which may subsequently conflict with government procurement policies and strategic objectives. Contracting officers should analyze with the client what opportunities may exist to support their obligations as well as their departmental targets related to green procurement. Successful implementation of the Policy on Green Procurement requires the identification and implementation of environmental performance opportunities at both the strategic and operational levels, taking into consideration specific departmental buying patterns, sustainable development targets and other Government of Canada priorities.
  2. Best value is not confined to the contractual process; it is equally important at the requirements definition stage. For many acquisitions, especially for MCPs, it is at this earlier stage that best value may be achieved. Trade-offs should be made among factors such as quality, service, cost, procurability, environmental considerations and socio-economic considerations linked to a particular industry or region of the country. Quality and the desired performance level should be related to intended use. The most desirable technical quality or suitability is not necessarily the most desirable procurement because it may not be the most economical. In complex acquisitions, a cost/benefit analysis may balance technical quality against such factors as initial and operating costs, economic life, service, maintenance and repair.

9.5.15 Memorandum of Understanding with Client Department

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  1. A vital aspect in government contracting is the role played by PWGSC and its relationship with client departments at all stages in the life cycle management of goods and services in a MCP. Details of the PWGSC-client relationship will normally be covered in a signed general Memorandum of Understanding (MOU) between PWGSC and its client departments. These may be adjusted to suit particular PWGSC-client agreements. Acquisitions of a special or significant nature may require specific MOUs and more detailed treatment, such as that outlined in the TB policy Management of Major Crown Projects. Client departments are generally responsible for determining what they want, where and when. PWGSC is normally responsible for determining how goods and/or services will be provided to meet the needs of clients.
  2. In terms of life cycle management, this means that:

    Requirements definition is, in varying degrees, a client responsibility, depending on government policy and the type of goods and/or services. By and large, the more technically complex, special, or unique the requirement, the more it will be a client responsibility to define. Conversely, the more common an item, the less need for client input, except, for example, to specify the quantity. Acquisition is a PWGSC responsibility, use is a client responsibility, and disposal of goods is a PWGSC responsibility.

  3. This does not mean each party function in isolation. On the contrary, in the MOU it is essential that there be well-established lines of communication at all stages in the life cycle, reflecting the PWGSC-client division of responsibilities. In assessing their role and participation in the project, PWGSC must determine the nature and degree of the effect of the proposed project on their operations, asset base or other interests, and ensure that appropriate commitments are made; for example, by means of the MOU.
  4. Unless the MOU for an MCP specifically states otherwise, the division of responsibilities between PWGSC and the client department will be governed by the agreements contained in Annex 1.1: Matrix of Responsibilities between PWGSC and Client Departments for the Procurement of Goods and Services (Generic), which provides a generic division of anticipated types of responsibilities between PWGSC and client departments or in Annex: Specific Division of Responsibilities Agreements, which contains two client-specific agreements with the Department of National Defence.
  5. PWGSC's cost of services provided to client departments in respect to a MCP is recovered directly from the client. The services to be provided and their costs are negotiated with the client department, approved by TB as part of the Program Approval submission, and the results must be included in the MOU.

9.5.20 Procurement Review

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The role and membership of the Senior Project Advisory Committee (SPAC) as well as the responsibility of PWGSC in the development of the procurement strategy for Major Crown Projects (MCPs) are addressed below.

9.5.20.1 Procurement Strategy Development

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  1. PWGSC is responsible for developing and implementing procurement strategies within the framework of its client departments' needs, its legislative mandate and government policy. Operating departments must form a SPAC before initiating discussions with potential suppliers that could raise expectations as to the government's procurement strategy.
  2. The government has confirmed that all procurements in excess of $2,000,000 must be reviewed for potential regional and industrial benefits. To ensure that this review is carried out in an efficient and cost-effective manner, and in recognition of the diverse interests involved, TB has established an interdepartmental procurement review process applying to all such procurements. In the case of MCPs, this is carried out by the SPAC, whose role is defined in 9.5.20.10 Membership of the Senior Project Advisory Committee.
  3. Environmental performance is also embedded as a key consideration of the departmental procurement review process under the Procurement Review Committee. For sources of information, environmental issues and mitigating actions via Green Procurement, consult the Environmental Awareness Tool Kit and the Guideline for Integration of Environmental Performance Considerations in Federal Government Procurement. Consider the various environmental performance considerations listed in the Green Procurement Checklist. Contracting officers may also refer to the online course entitled Introduction to Green Procurement (C215).
  4. Where the procurement strategies proposed for significant projects require Cabinet approval, sponsoring departments must consult with the Treasury Board Secretariat (TBS) in preparing the submission to Cabinet. These consultations must include the analysis of any socio-economic initiatives, and the views of TBS must be specifically included in the submission to Cabinet.

9.5.20.5 Senior Project Advisory Committee

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  1. The Senior Project Advisory Committee (SPAC) provides an interdepartmental senior level forum for orienting a project to achieve relevant national objectives, stimulating agreements between the sponsoring and participating departments, resolution of interdepartmental issues, and review and discussion of project objectives and key project instruments. SPACs do not deliberate purely departmental issues, such as the operational requirement or departmental funding.
  2. A SPAC must be established for all Major Crown Projects (MCPs) or those requirements exceeding $100,000,000. The Project Leader of the client department chairs this committee, and membership includes representation from other government departments with an interest in the project. Committee members from other participating departments act as advisors and facilitators to ensure the views of their departments are made known at the SPAC and to ensure prompt and effective action is taken to meet the obligations of their departments to the MCP.
  3. Whenever a SPAC is convened, it also performs the function of a Procurement Review Committee including all significant associated procurements handled through the project office. SPAC meets at the call of the chairperson.

9.5.20.10 Membership of the Senior Project Advisory Committee

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  1. The Project Leader must determine which departments are potentially affected by, or could have program interests in the MCP. The Project Leader must ensure that these departments are notified in writing as early as possible in the life of the project, so that they may decide whether they should formally participate in the MCP. Whenever an MCP is likely to require private sector involvement, the departments notified must include appropriate contracting authorities and industrial and regional benefit authorities.
  2. The majority of MCPs will be procurement projects, which are subject to the TB Procurement Review Policy. Sponsoring departments should refer to this policy for more guidance. Departments sponsoring procurement projects must, as a minimum, notify the following departments:

    Contracting authorities and service agents:

    1. PWGSC;
    2. Defence Construction Canada.

    Industrial and regional benefit departments and agencies:

    1. Industry Canada;
    2. Western Economic Diversification Canada;
    3. Atlantic Canada Opportunities Agency;
    4. Economic Development Agency of Canada for the regions of Quebec.

    Others:

    1. Privy Council Office;
    2. Treasury Board Secretariat;
    3. Department of Finance Canada;
    4. Human Resources and Skills Development Canada.

    As a minimum, sponsoring departments must assess whether departments listed below should also be notified, particularly for the specific areas noted:

    1. Environment Canada, for environmental assessment considerations (may be required by statute under certain circumstances);
    2. Department of Justice Canada, to ensure timely assistance in resolving any complex legal issues that can arise;
    3. Human Resources and Skills Development Canada, for labour pool considerations;
    4. Canadian Heritage, when remote sites or locations are involved,
    5. Foreign Affairs and International Trade Canada, for international trade and export licensing; and
    6. Indian and Northern Affairs Canada.
  3. Other departments may notify the project leader of their intent to participate in the MCP, at which time they become participating departments.

9.10 Real Property Contracting

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  1. This section describes the responsibilities for real property contracting and provides some of the related procedures and methodologies.
  2. Acquisitions Branch, Public Works and Government Services Canada (PWGSC), provides procurement services related to real property contracting for federal departments and agencies. Real Property Contracting (RPC), Acquisitions Branch, is responsible for contracting real property services such as architectural, engineering and facility maintenance services as well as construction services. It is separate and has different responsibilities from Real Property Branch (RPB), PWGSC, which manages a portfolio of real estate in Canada and is the Government of Canada's real property expert.

9.10.1 Real Property Contracting Procedures

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  1. Although most of the generic practices and policies of the department apply to real property contracting, there are differences. Some of these differences are a result of complying with applicable legislation, or adapting to industry practices, or simply the realities of the services being procured. Many fundamental review processes and trade agreements also do not apply to real property requirements and some examples follow. The Procurement Review Committee does not apply to the acquisition, modification and routine maintenance of real property. The Expense Management Tool (EMT) Application for Registration form PWGSC-TPSGC 514 (PDF 142 KB)This information is only accessible to federal government employees. - (Help on File Formats) does not apply to architectural and engineering nor construction requirements, and the Agreement on Internal Trade does not apply to architectural or engineering service contracts.
  2. Clauses specific for real property contracting can be found in subsection 5-R of the Standard Acquisition Clauses and Conditions (SACC) Manual. Departmental standard procurement templates and many policies exclude some or all of real property contracting requirements and do not apply to real property requirements. SACC Manual clauses identified as mandatory may not apply to real property requirements. Standard Real Property Contracting (RPC) templates provide guidance to their contracting officers.
  3. All real property contracting work performed by Acquisitions Branch (AB) must be in accordance with the Government Contracts Regulations. The Federal Real Property and Immovables Act applies to the sale and purchase of real property, and leases, including all work performed through a lease. Real Property Branch (RPB), not AB, is responsible for requirements carried out under the Act. In order to protect the integrity of AB's system data, no requirements under the Act should be entered into the AB system, that is, the Automated Buyer Environment (ABE).

9.10.5 SELECT

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  1. SELECT is a database of pre-qualified suppliers such as architects, engineers and construction trade contractors identified by their expertise and the services they provide. It is used by Public Works and Government Services Canada (PWGSC) to invite suppliers to bid on real property opportunities for consulting up to the North American Free Trade Agreement (NAFTA) threshold and construction up to the Agreement on Internal Trade (AIT) threshold. When there is a requirement for any of these services up to these thresholds, SELECT provides a systematic rotation functionality that matches the specifics of the requirement with suppliers having the required expertise that are within a geographic range and have the least points of opportunity. Depending on the requirement, a supplier may be given the opportunity to accept or decline the work, or multiple suppliers may be given the opportunity to compete for the requirement.
  2. For consultant services estimated at $10,000 or less, SELECT generates a short list of three qualified suppliers. The most suitable and readily available supplier may be contacted directly. For consultant services estimated between $10,000 and the NAFTA threshold, SELECT identifies a single supplier that meets the discipline and experience profile requirements. In both of these cases, the approval authority is based on non-competitive contract entry. For consultant services below the NAFTA services threshold value, the SELECT system may also be used to pre-select suppliers from which bids can be solicited.
  3. For construction services estimated at $10,000 or less, SELECT generates a short list of three qualified suppliers. The most suitable and readily available supplier may be contacted directly. For construction services estimated between $10,000 and $100,000, SELECT generates a short list of five qualified suppliers; however, the business practice in some locations is to select five to eight qualified suppliers, all of which are issued an invitation to tender. The supplier who submits the lowest-priced responsive offer is usually awarded the contract.

9.10.10 Architectural and Engineering Services

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  1. When determining whether services approval authority apply also to architectural and engineering (A&E) services, the contracting officer should determine if a professional stamp is required for the deliverables. If a professional stamp is required, Treasury Board's approval authorities for A&E services will apply to the requirement. However, if a professional stamp is not required, then the normal service authorities will apply.
  2. The contracting officer must determine the procurement strategy in consultation with the client. The proposed construction implementation methodology should also be discussed, as this will have an impact on the services provided by the A&E team. The main method of supply is the standard contract, but RPC also uses alternative methods of supply like standing offers, supply arrangements and open agreements. An open agreement is issued to only one supplier, which is identified by the SELECT system, and thus must not exceed the NAFTA threshold. Commitments are used to obtain services covered by the open agreements.
  3. Due to the qualitative nature of the A&E industry, the submission of full design proposals represents a large investment of time, effort, and money on the part of consulting suppliers. In order to reduce the possibility of suppliers spending large amounts of money preparing such proposals for PWGSC projects, the Department traditionally utilizes a one-stage, two-phase Request for Proposal for A&E services. This methodology allows for suppliers to be point-rated in the 'first phase', based on their previous achievements and the experience of the proposed consultant team. Based on this rating, suppliers are better positioned to make a business decision, as to whether to continue to the 'second phase' in the process and submit full proposals at their own cost.

9.10.15 Construction Services

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  1. There are three primary methodologies used in the procurement of construction services for projects:
    1. Design-Bid-Build (D-B-B);
    2. Design-Build (D-B);
    3. Construction Management (CM).
  2. The roles, relationships and responsibilities of the contracting parties vary considerably for each methodology. Choosing the optimum methodology is a key consideration for the project team. For construction services, the project team is composed of Real Property Contracting (RPC) of the Real Property Branch (RPB) and the client.
  3. Many variations exist for each approach and the selection of one methodology over another should be carefully analyzed by all stakeholders during the development of the risk management plan, well in advance of the procurement, in order to determine the inherent risks, advantages and disadvantages associated with each methodology. The selection of a particular methodology for the delivery of construction services is based upon an analysis of those risks identified in the plan that may impact the priority objectives of the project during the project's planning and implementation stages.
  4. Each methodology has advantages and disadvantages and one may be more suitable than another for any given project. The project team must weigh both the benefits and the shortcomings of using a specific methodology on their project. Traditionally, PWGSC has accepted the D-B-B methodology as the standard delivery process for construction projects. Although it may be time consuming, D-B-B provides the project team with a better 'comfort level' concerning costs and quality. Since design is 100 percent complete before construction begins, changes should be minimal.
  5. CM and D-B have been used extensively in the private sector, but used sometimes in PWGSC. A bid solicitation, in the form of a Request for Proposal, is used for both these methodologies in order to determine the successful supplier. Design-Build solicitations should also include an honorarium for at least three suppliers that continue to the phase two of the selection process to compensate them for work not normally required in the submission of a proposal.
  6. RPC generally uses an invitation to tender for construction contracts, with a public opening shortly following the specified closing time. The tenders are generally evaluated on the basis of the lowest priced responsive tender. Suppliers must submit their tenders in accordance with the invitation to tender and associated specifications and drawings. Contracting officers should consult the Standard Acquisition Clauses and Conditions (SACC) Manual clause R2710T for information on the submission of bids.
  7. Prequalification of suppliers is not normally done. If required, justification should be provided for prequalification and the criteria established to ensure that the industry can respond appropriately. Although a two-stage prequalification process may be necessary, a two-envelope process is the preferred method in construction. Suppliers are asked to submit two sealed envelopes, where envelope "A" will include the response to the prequalification requirements (almost always a pass/fail type of criteria). If the content of envelope "A" demonstrates that the supplier is qualified, the envelope "B", including the price and bid security, is normally opened publicly with other responsive bids.
  8. For requirements over $100,000, contracting officers must use the construction terms and conditions imposed by Treasury Board Secretariat (see clauses in subsection 5-R of the Standard Acquisition Clauses and Conditions [SACC] Manual). Bid security and contract security (clause R2890D) are also requirements above this threshold. The client should identify if additional or specialized insurance is required in the Insurance Terms for the contractor.
  9. The Federal Contractors Program for employment equity and the review by the Procurement Review Committee do not apply to construction contracts.
  10. The Minister of PWGSC has delegated to Real Property Branch (RPB) the ability to amend construction and maintenance contracts awarded by Acquisitions Branch (AB). This authority must be deducted from AB authorities to ensure that PWGSC does not exceed its overall authority from Treasury Board. The RPB Project Manager will submit, with the requisition, a risk management plan that will identify items that may result during the construction project. This plan will include a suggested dollar value called the "Risk Management Contingency". AB will review the plan and the suggested dollar value, and will establish an amount to seek approval for a Pre-approved Amount for Anticipated Amendments (PAAA).This amount will be used for subsequent amendments to the contract.

9.10.20 Elevator Maintenance Services

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For elevator maintenance services requirements, a request for proposals must be used for Public Works and Government Services Canada (PWGSC) buildings. Only bids from suppliers whose names are on all the applicable Lists of Prequalified Elevator Maintenance Contractor for the province/territory and type of equipment to be maintained can be considered. The term of the contract is generally for a period of 25 years, and the basis of payment is for a fixed monthly rate, which is adjusted on a yearly basis. The total monthly amount is composed of an amount for material, labour and travel. The adjustment for labour will be made according to the hourly total compensation package regular rate, as published each year by the National Elevator and Escalator Association. The adjustment for materials will be according to the index of Electrical Equipment Manufacturing (V53384938), as published by Statistics Canada in Industry Price Indexes, Catalogue no. 62-011-X (see Table 3-19). The adjustment for travel expenses (V41690973) must be made in accordance with The Consumer Price Index, as published by Statistics Canada (see Table 5).

9.15 United States Foreign Military Sales

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This section provides details of the United States (U.S.) Foreign Military Sales (FMS) program and also describes the related responsibilities of Public Works and Government Services Canada (PWGSC) in relation to this program.

  1. The Foreign Military Sales (FMS) is a Security Assistance Program which is administered by the U.S. Department of Defense (U.S. DoD) and which allows eligible foreign governments and international agencies to purchase defence-related articles, defence services and military training from the U.S. Government (USG). The U.S. DoD serves as an intermediary, handling procurement, logistics and delivery and often providing product support and training.
  2. The FMS is a mutually beneficial government-to-government method for selling U.S. defence equipment, services, and training. Responsible arms sales further U.S. national security and foreign policy objectives by strengthening bilateral defence relations, supporting coalition building, and enhancing interoperability between U.S. forces and militaries of friends and allies.

    For more information regarding the FMS program, contracting officers may visit the following Defense Security Cooperation Agency websites: Foreign Military Sales and the Security Assistance Management Material .

  3. The FMS will be considered as a method of procurement when the goods or services required relate to military equipment of U.S. origin and when, on the basis of the information available at the time, those goods and services are available or can be made available from the U.S. DoD.
  4. When Public Works and Government Services Canada Headquarters (PWGSC [H]) determines that a requirement will be sole sourced to the U.S., the requisition must be reallocated to PWGSC Washington ( PWGSC [W]). Decisions by PWGSC (H) to sole source requirements to the U.S. FMS program must be adequately documented.

    As a minimum, the following information must be provided on form PWGSC-TPSGC 1062-1 (PDF 9 KB)This information is only accessible to federal government employees. - (Help on File Formats) or as an attachment to it, when allocating procurement to PWGSC (W):

    1. the Goods and Services Identification Number (GSIN);
    2. the trade agreement(s) applicable to the procurement;
    3. if an Advance Contract Award Notice (ACAN) was published and its result;
    4. the sole source justification for FMS and reference to the applicable rationale from Treasury Board regulations (see 3.15 Non-competitive Contracting Process) or, if applicable, the trade agreements;
    5. any other pertinent information leading to the decision to sole source to FMS such as client's justification, etc.
  5. PWGSC (W), in its capacity as the sole accredited Canadian procurement agency to the U.S. DoD, will be the departmental agency responsible for dealing with the United States Government (USG) on all contractual matters directly related to FMS, and will coordinate all pertinent contract and administrative arrangements in the U.S. on behalf of PWGSC and its clients. Questions can be forwarded to the Director General, at phone number 202-682-7604.

9.15.1 Planning

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  1. Through its security assistance policy, the USG provides for various forms of security assistance to other nations. The FMS program is a large and complex program, which is administered by the U.S. DoD. In Canada, PWGSC, as well as the client, plays an important role in the implementation and maintenance of this program.
  2. Transactions initiated within the FMS program are covered under basic categories of agreements (known as cases in the U.S. military organizations). The main categories are:
    1. Defined Order Cases: Certain defence articles and services can be provided only on defined line cases, which may offer items at individually estimated prices and delivery dates. The USG, where necessary, in turn contracts for defence articles and services that are required to fulfill the Letter of Offer and Acceptance (LOA);
    2. Blanket Order Cases (BOC) including Blanket Open End (BOE) arrangements through the U.S. Army, and Direct Requisitioning Procedures through the U.S. Navy: most repair parts and routine services can be offered under Blanket Order LOAs, which reduce the time needed for processing orders. These LOAs are perfectly suited for addressing subsequent needs, (i.e. where the client will require additional defence articles or services on a periodic basis). These agreements are similar to standing offers, allowing clients to submit requirements directly to the identified U.S. military organization. Support equipment including assemblies, components, special tools, test equipment, training aid devices, minor modifications performed at U.S. installations and repair and return services, training, etc., are usually the subject of BOC; and
    3. Co-Operative Logistics Supply Support Arrangements, commonly referred to as COLOG in Canada and CLSSA in the U.S.: CLSSA is a unique arrangement whereby Canada is able to invest in the U.S. supply system and receive access to U.S. DoD stocks. This arrangement involves two separate FMS cases. The first FMS case covers Canada's investment in specific USG supply system items; the second FMS case is used to requisition these items.
  3. PWGSC(H) will determine, before procurement through the FMS program is initiated, whether the provisions of the North American Free Trade Agreement or the World Trade Organization Agreement on Government Procurement apply and will take action accordingly. When these provisions do not apply, PWGSC will determine whether there is an existing or potential source of supply in Canada and after consultations with the Department of National Defence (DND), or any other client, and will establish whether in the circumstances, it would be more advantageous for the Government of Canada to procure in Canada or directly from the equipment manufacturer in the U.S. or from the U.S. DoD.
  4. Quite often the weapon system can only be purchased through the FMS program. The Arms Export Control Actgives the President discretion to designate which military end item must be sold through the FMS program exclusively. This discretion is delegated to the Secretary of Defence and is executed by the Defence Security Cooperation Agency in close coordination with the Defence Technology Security Administration and the Military Department (MILDEPT) or U.S. DoD component responsible for the end item. The Department of State approves or disapproves all sales, and is responsible for the continuous supervision and general direction of all sales. Four general criteria are used to determine if a sale is required to proceed through the FMS program: legislative/presidential restrictions; DoD/ MILDEPT policy, directive or regulatory requirements, e.g., the National Disclosure Policy, government-to-government requirements and interoperability/safety requirements for U.S. Forces. The PWGSC(W) office will confirm with the client when the FMS program is the only solution.

9.15.5 Contracting Protocol

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Contracting with the U.S. DoD for the supply of material or for the provision of services on a government-to-government basis is affected through the exchange of a Letter of Request (LOR) prepared by PWGSC(W) and of a Letter of Offer and Acceptance (LOA) prepared by the U.S. LORs are sent to the applicable military department, the U.S. Department of State and Defence Security Cooperation Agency, a defence department agency that oversees security assistance programs.

9.15.10 Time Frames

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  1. The standard period of time for a response from the U.S. DoD to an LOR submitted by PWGSC(W) on behalf of Canada, is as follows:
    1. 60 days from the date of receipt of the LOR for an official price and availability;
    2. 120 days from the date of receipt of the LOR for an LOA not requiring notification to Congress;
    3. 180 days from the date of receipt of the LOR for an LOA requiring notification to Congress, applicable to acquisitions of major defence equipment valued at $25M or more, or if the total case value exceeds $100M;
    4. up to nine months in the case of technical data packages due to special inquiries or studies to be carried out.
  2. It is not unusual to have LOAs and amendments exceed the projected targets based on the USG workloads and high priority cases required to support U.S. Foreign Policy.

9.15.15 Pricing and Payment

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  1. An LOA is used to submit price estimates to the purchaser country, as well as include a projected payment schedule. FMS prices may include, but are not limited to, the cost of the item; non-recurring research and development (R&D) and production costs; packing and handling plus administrative surcharges. The item price is the same price that would be charged to any other purchaser, including the U.S. Armed Forces. PWGSC(W) ensures the actual payment schedules correlates to the actual work performed.
  2. Once an LOA has been signed, the applicable MILDEPT buys the item or items from U.S. manufacturers. This purchase normally goes through U.S. DoD procurement channels, and may not happen quickly; the time lag between an LOA and a delivery can take a year or more, particularly for complex weapons systems. The price quoted in the LOA may not match the cost of the items upon delivery, though in fact most final prices fall below the original estimate. The final price is determined from actual contract costs and other surcharges, which must be charged in accordance with U.S. laws and regulations.

9.15.20 Surcharges

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  1. The Arms Export Control Actstates that the United States Government (USG) must manage the FMS program at no cost to the USG. The Act mandates collection of a percentage-based administrative surcharge on FMS cases to recover all applicable U.S. costs to execute, manage, and oversee the FMS program. This surcharge is assessed against the value of the FMS case. The work covered includes case writing, case management/execution (cost, schedule, performance), case closure and periodic reviews.
  2. Small case management line: effective 1 August 2006, any case that would not collect at least $15,000 in administrative surcharges will include a small case management line to charge the difference in value between the administrative surcharge amount and $15,000.
  3. FMS surcharges pay a significant amount of the salaries and operating costs of Security Assistance Organizations and other Defence Department personnel who carry out the FMS program.

9.15.25 Non-recurring Costs

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When requesting a proposal, PWGSC(W) sends a Letter of Request (LOR) to the U.S. DoD requesting them to identify if non-recurring costs (NRCs) are involved in the requirement. If the ensuing proposal/Letter of Offer and Acceptance (LOA) from the U.S. DoD includes NRCs, then PWGSC(W) pursues a waiver with Defence Security Cooperation Agency, before the signing of the LOA.

9.15.30 Release of Information

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The USG does not compete with U.S. industry for foreign sales and does not knowingly provide other governments with "comparison pricing information" especially when it is known that a commercial contract is being negotiated.

9.15.35 Processing of Documents

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  1. When a decision is made to satisfy a requirement through FMS, the file is either wholly reallocated or extracted to PWGSC(W), after the initial requisition review is carried out by the receiving PWGSC organization (headquarters or region). PWGSC(W) will prepare the Procurement Plan/Contract Planning and Advance Approval (CPAA).
  2. Material to be obtained through FMS must be identified by U.S. national stock numbers whenever possible. The second group of digits (country designator) must be 00 or 01. The designation 21, which indicates the presence of a Canadian number, is not acceptable and its use will cause the demand to be rejected.
  3. PWGSC(W) will review each requisition to ensure the adequacy and appropriateness of the information. If satisfactory, PWGSC(W) will prepare and submit an LOR to the applicable U.S. DoD organization.
  4. Upon receipt of the LOA, PWGSC(W) will carry out a verification to determine whether the LOA corresponds to the LOR and, if satisfactory, will request approval/concurrence as well as funding from the client department.
  5. Following the acceptance of the LOA by PWGSC(W), funds are transferred from the Canadian client to the USG via a Canadian account at the Federal Reserve Bank in New York. The U.S. DoD will initiate no action until the transfer of funds has been completed.

9.15.40 Contract Administration

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  1. PWGSC(W) is responsible for contract administration including billing/payments and expediting delivery, except for COLOG.
  2. PWGSC(W) may arrange program management reviews and/or status review meetings to allow clients to discuss related matters with representatives from the U.S. DoD.

9.15.45 Contract Amendments

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  1. PWGSC(W) will negotiate contract amendments, when required.
  2. When funds in certain contracts (cases) have not been fully expended, a case amendment extending the period of time to use up funding may be requested. This normally applies to arrangements where the scope of work is not affected.

9.15.50 Contract Closing

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  1. When delivery is completed and final determination of cost is made, PWGSC(W) will initiate closing action and will seek finalization of accounts. PWGSC(W) will request a cheque payable to the Receiver General for Canada if funds are due to Canada. If funds are owed to the United States Government (USG), funds will be requested from the Canadian client.
  2. Closure of FMS contracts involving procurement from commercial suppliers may take place years after delivery of material because of the need to audit and renegotiate certain requirements peculiar to the U.S. DoD procurement process. A minimum of two years is required to close out an FMS case after final delivery of the goods and/or services.
  3. At the time of final closure, the estimated amounts in the LOA are changed to actual costs and a final statement of account is issued.

9.20 Co-Operative Logistics and Blanket Order Cases with the United States Department of Defense

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  1. This section provides details of the Canada/United States (U.S.) of America Co-Operative Logistics (COLOG) Supply Support Arrangement (CLSSA) and describes specific responsibilities of Public Works and Government Services Canada (PWGSC) in relation to this supply support arrangement.
  2. The COLOG/CLSSA was initially approved in 1965. PWGSC will make the necessary arrangements to establish with the USG the contractual instruments such as COLOG arrangements or blanket order cases (BOC), thus allowing the Canadian Department of National Defence (DND) to obtain directly from the U.S. Department of Defense (DoD), material and services, as required.

9.20.1 Requisition Receipt

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  1. Contracting officers should refer to 9.15 United States Foreign Military Sales or information concerning the requisition process of the U.S. FMS program.
  2. The COLOG Operations Office in the Defence and Major Projects Sector (DMPS), Acquisitions Branch, will review requisitions for COLOG and BOC and provide support to these activities, as detailed under the Referral Program activities (see 9.20.20 Referral Program), on behalf of PWGSC.

9.20.5 Planning

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  1. Under COLOG arrangements, a participating country is required to purchase an equity in the supply system of the appropriate service within the U.S. DoD through a Stock Level Case, which is adjusted as required, up or down, depending on usage. Canada has purchased an equity in each of the three U.S. Forces supply systems, U.S. Army, Air Force and Navy, on an as and when required basis, and pays for only those items it actually draws out of the systems.
  2. Since U.S. law prohibits the U.S. DoD from expending its funds on speculative purchases for other than its own Forces, there is a requirement for deposits to be made usually monthly, in advance, by participating foreign nations. The amount of the deposit should correspond to the anticipated delivery value in the succeeding quarter.
  3. A final accounting is carried out when all items have been delivered or cancelled and all discrepancies have been resolved. This accounting results in a contract amendment requiring either a final payment by Canada or a refund to Canada.

9.20.10 Establishment and Renewal of a Stock Level Case ( FMSO I)

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  1. It is necessary to establish a Stock Level Case, also referred to as Foreign Military Sales Order (FMSO I), to obtain COLOG support from the U.S. DoD. When the U.S. Air Force, U.S. Army or U.S. Navy, as applicable, agrees to supply, through COLOG, spare parts to the Armed Forces of a foreign nation, the U.S. material managers involved will take action to augment the U.S. DoD supply systems to correspond to the client's anticipated requirement.
  2. Stock Level Cases are negotiated as required.

9.20.15 Establishment of a Requisitioning Case ( FMSO II)

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  1. PWGSC establishes annually a Requisitioning Case, also known as a Foreign Military Sales Order (FMSO) II, before Department of National Defence (DND) is allowed to draw spare parts from the U.S. DoD supply systems.
  2. PWGSC has delegated to DND the responsibility for placing orders directly with the U.S. Navy, the U.S. Army and the U.S. Air Force, as applicable, once the appropriate Stock Level Case ( FMSO I) and Requisitioning Case ( FMSO II) are in place. Requisitions for COLOG eligible items are transmitted directly by DND to U.S. DoD by means of a computer terminal linked to the U.S. Defense Automatic Addressing System Center, which provides direct access to the U.S. military supply systems.

9.20.20 Referral Program

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  1. There are three aspects to the Referral Program:
    1. referral of items with an extended price of US $20,000 at the time of requisitioning;
    2. the Quarterly List of all items procured through COLOG;
    3. the Annual List of items procured through COLOG.

    This is not a part of the establishment of the contract but rather action that occurs after the contract is established and throughout the life of the contract as long as COLOG requisitions are submitted against the case.

  2. The following summarizes the Referral Program:
    1. When the extended price of an item is US $20,000 or more, the DND COLOG Office responsible for submitting requisitions through COLOG on the U.S. DoD systems, will provide information on demand to the PWGSC COLOG Operations Office (Defence and Major Projects Sector [DMPS]).
    2. The purpose of this referral is to allow DMPS to review the procurement to determine whether procurement through Canadian and/or other sources is more advantageous to Canada.
    3. The DMPS COLOG Operations Office coordinates the review with input from the PWGSC product managers as required.
    4. If it is determined that the item is available from the Canadian industry, procurement action should be completed in Canada unless it is established that such action is not justifiable from a cost standpoint or that other conditions are unacceptable, particularly as they pertain to operational requirements. Similarly, if it is determined that the item is available at less cost from any other commercial source of supply, procurement action may be completed commercially unless it is established that such action is not justifiable from a total cost standpoint or that other conditions are acceptable, particularly as they pertain to operational requirement.
    5. If the item cannot be procured through the Canadian or foreign-based companies, DND will be advised to demand it from the U.S. DoD through COLOG.
    6. All referrals should be processed as expeditiously as possible. A full reply or at minimum, an interim reply will be provided to DND within 30 days of receipt of the referral.
    7. The second portion of the demand Referral Program is that the DND COLOG Office, responsible for the COLOG program, will forward quarterly to DMPS a printout, which will list all procurement through COLOG over the last quarter, regardless of value or priority.
    8. The third portion of the Referral Program is similar to the second portion except that it is based on an annual list being provided by DND of all procurement through COLOG for the last fiscal year. A similar review as the one performed for the quarterly reports may be conducted.
    9. The purpose of these reviews is to provide an overview of procurement being done through COLOG over a period of time. This would not be visible with only a review of procurement of individual items with a value over US $20,000. This review will allow PWGSC to seek sources based on requirements demanded over time. Often supply of an individual item may not be attractive to a supplier; however, when procurement of individual items over a period of time is collectively viewed, the combined value may be very attractive to a supplier.

9.20.25 COLOG Termination

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If Canada decides to terminate COLOG arrangements, there is a process that varies with the U.S. DoD service involved, which will identify those items that Canada is liable to procure from the U.S. DoD.

9.25 Use of the Defence Production Revolving Fund and Loan Account

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Under section 16 of the Defence Production Act, in particular, the Minister of Public Works and Government Services Canada (PWGSC) is authorized to acquire, utilize, store, maintain, transport, sell, exchange or otherwise dispose of defence supplies, services, projects, real or personal property. The Minister is also empowered to authorize loans or advances and loan guarantees. Expenditures incurred pursuant to the above authority are to be expended from the Consolidated Revenue Fund.

9.25.1 Program Description

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  1. The Defence Production Loan Account (DPLA) provides PWGSC with an account to make loans or advances to aid in defence procurement such as working capital loans or advance payments on contracts and to make payment for such.
  2. Although the Adjustment of Accounts Act of 1980 eliminated the term Defence Production Revolving Fund (DPRF) from the Defence Production Act, PWGSC was advised by Treasury Board that it will continue to designate and operate the DPRF for other than loan transactions. Thus the DPRF provides PWGSC with a budgetary account to purchase defence supplies, to make payment for such, and to get reimbursed out of an appropriation of a client (for example, Department of National Defence) or by an agent of Canada or by an associated government. The DPRF can be used for the following purposes:
    1. finance the stockpiling of "essential" materiel or defence supplies;
    2. advance production of defence supplies/materiel to permit workload smoothing of defence industrial facilities; and
    3. temporarily fund the acquisition of defence supplies to meet urgent requirements, pending appropriation of funds to finance unplanned requirements.
  3. As stated in the Defence Production Act, associated governments are the governments of the British Commonwealth and of the North Atlantic Treaty Organization, or the government of any other country designated by the Governor in Council, as being a country the defence of which is vital to Canada.
  4. The DPRF was established for interim financing purposes, as it has to be reimbursed by a client or an associated government or whoever receives the finished product. As such, the DPRF can be used to make initial payments and subsequently recover such payments from the client. It is simply a temporary accommodation, and it would be illegal and improper to use it for a permanent commitment of any kind. Although the use of the DPRF requires that money expended will be reimbursed at the time delivery is made to the client, such use does not preclude the making of progress payments to suppliers and the interim recovery of these progress payments from the client.
  5. Expenditures charged to the DPRF may be used for the following purposes:
    1. Stockpiling of materials or substances, such as steel and oil, designated by the Governor in Council, as essential to the needs of the community. In such cases:
      1. an order-in-council is required;
      2. a client appropriation is not immediately required for stockpiling essential materials, but the cost of materials used must be recovered from the appropriation of the client.
    2. Stockpiling of defence supplies, which Canada deems it advisable to maintain (certain defence supplies such as ammunition.) In such cases:
      1. an order-in-council is not required;
      2. although an appropriation is not immediately required for stockpiling defence supplies, Department of National Defence (DND) must reimburse the DPRF from an appropriation when the finished goods are delivered to DND.
      3. acquisition, storage or maintenance of defence supplies. In such cases:
        1. an order-in-council is not normally required;
        2. a client appropriation is required.
  6. Loans or advances charged to the Defence Production Loan Account (DPLA) may be used for any purpose other than for capital assistance. When loans are involved:
    1. an order-in-council is not required;
    2. although an appropriation by the client is not immediately required, the liability for any loss must ultimately be covered from the appropriation of the client.
  7. Losses sustained pursuant to a loan or an advance made against the DPLA can only be credited pursuant to an appropriation by Parliament.

9.30 Purchases from CORCAN

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  1. Correctional Service Canada (CSC) has sponsored a rehabilitation program within its institutions designed to train inmates so that after their release, they have a better chance of obtaining employment, based on the experience gained while in the program. This program is known as CORCAN. CORCAN is a key rehabilitation program of CSC. It is mandated to provide employment training and employability skills to offenders in federal correctional institutions in support of the social policy of the Government of Canada. For more information including contacts, contracting officers may refer to the Treasury Board Contracting Policy Notice 1999-2.
  2. Goods and services acquired from CORCAN must be comparable in price, delivery, performance and quality to those that PWGSC would have received from private sector suppliers had they been awarded the same business.

9.30.1 Requisition Receipt

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  1. In compliance with Cabinet Decision 320-74RD, dated May 16, 1974, Public Works and Government Services Canada (PWGSC), along with other federal government departments will, whenever possible, provide CORCAN with stable market outlets for its goods and services. This policy was reviewed and confirmed by Treasury Board on July 25, 1995.
  2. Article 1018 2(d) of the North American Free Trade Agreement allows for the exemption of procurements relating to goods or services of prison labour. See article XXIII of the World Trade Organization Agreement on Government Procurement and article 507(c) of the Agreement on Internal Trade for this exception.
  3. When in receipt of a requisition for which the client has specified that CORCAN is the preferred source of supply, the contracting officer will support the award of the requirement to CORCAN and issue a Stores Transfer Order. The client needs not provide justification for purchasing CORCAN goods and services.
  4. When CORCAN has not been specified as a source of supply but can meet the requirement, the contracting officer, wherever possible and in recognition of the potential benefits to be derived, will recommend to the client that CORCAN be considered as a source of supply.
  5. There are a number of procurement methods available to access goods and services from CORCAN. Because CORCAN is part of the federal government, an order from CORCAN is not a purchase, it's a transfer of Canada assets between departments that is completed by making a request against CORCAN's unique supply arrangement/standing offer E60PQ-050000/001/PQ.

9.30.5 Memorandum of Understanding

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Procurements from CORCAN must be carried out in accordance with the Memorandum of Understanding (MOU) ratified on 2 January 2001 by the Deputy Minister, PWGSC, and the Commissioner of Corrections, Correctional Services Canada. The MOU at Annex 9.1: Memorandum of Understanding Between Public Works and Government Services Canada and CORCAN outlines both PWGSC and CORCAN responsibilities.

9.30.10 Implementation

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  1. Documentation of procurements from CORCAN will take the form of "Stores Transfer Orders", since these procurements are not contracts within the meaning of the Government Contracts Regulations (GCRs) and the Treasury Board (TB) Contracts Directive. Existing contract and amendment forms must be employed, and will be processed in the normal manner, with the following changes:
    1. delete the word "CONTRACT" and substitute the words "STORES TRANSFER ORDER";
    2. insert the following as the first item in the contract under "Description of Supplies and/or Services";

      "Stores Transfer Order. This is not a contract."

  2. Although arrangements with CORCAN are not governed by the GCRs and the TB Contracts Directive, all existing departmental limits governing the approval of entry into and signing of contracts apply.
  3. Authority limits established by the TB Contracts Directive apply to clients purchasing directly from CORCAN.

9.34 Aboriginal Consultation and Accommodation

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The contracting officer should remind the client of its obligation to consult and accommodate and encourage the client to undertake consultation with Aboriginal groups, where required. Please refer to section 2.16 Aboriginal Consultation and Accommodation.

9.35 Comprehensive Land Claims Agreements

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9.35.1 General Information

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  1. During the procurement planning stage, the contracting officer must determine whether any Comprehensive Land Claims Agreements (CLCAs) apply, and, if so, how they will affect the procurement strategy. The contracting officer must also ensure that the procurement file contains adequate documentation on the measures taken to address any CLCA procurement obligations, especially with regards to sections 9.35.25 Requirements Definition, 9.35.35 Notification of Procurement and 9.35.45 Evaluation Criteria.
  2. The federal government, represented by Aboriginal Affairs and Northern Development Canada (AANDC), has negotiated a number of CLCAs with Aboriginal peoples. CLCAs are modern treaties that are based on the concept of continued Aboriginal rights and title to lands traditionally used and occupied by an Aboriginal group, which have not been dealt with by treaty or other legal means. No two agreements are exactly the same.
  3. CLCAs are law. The CLCA obligations are legally binding because they are contained in agreements signed by Canada and backed by legislation. Furthermore, the Aboriginal rights detailed within them are constitutionally protected under Section 35 of the Constitution Act 1982.
  4. Most CLCAs include measures dealing with procurement, and although these measures are not always identical in the various agreements, they are all aimed at enhancing economic opportunities of the Aboriginal group benefiting from the agreement (referred to as "CLCA beneficiaries"), usually through increased possibilities of competing successfully for contracts in their settlement areas, or of participating in employment, training or subcontracting opportunities. Because the CLCAs are not identical, it is important to review each applicable agreement to determine the contracting obligations.
  5. Canada’s procurement obligations vary with each CLCA, but can include:

    1. Separating requirements into commodity or geographic groupings, whenever practical and consistent with sound procurement management, to permit smaller and more specialized firms to submit bids;
    2. Notification of the procurement to the land claimant groups and/or CLCA beneficiary firms;
    3. Use of CLCA business directories/lists (refer to 9.35.60 Business Directories/Lists);
    4. Use of bid evaluation criteria to benefit CLCA beneficiaries, subject to international obligations, and wherever practical and consistent with sound procurement management; and
    5. Right of first refusal for procurements related to certain topics, e.g. archaeology, heritage, parks, surveying (refer to 9.35.40 Right of First Refusal).
  6. A procurement that is subject to CLCAs and one or more of the trade agreements may involve special considerations (see 9.35.70 International Trade Agreements and 9.35.75 Agreement on Internal Trade). Furthermore, a procurement that is subject to CLCAs but not to any of the international trade agreements must adhere to all procurement policies applicable when a procurement is not covered by international trade agreements, e.g. the Canadian Content Policy for requirements over $25,000.
  7. For procurements that may be subject to CLCAs, contracting officers may, after reviewing section 9.35 Comprehensive Land Claim Agreements, seek assistance as follows:
    1. All PWGSC contracting officers, except those in Western Region may consult the Policy, Advice and Aboriginal Considerations Division (PAACD), at telephone number 819-956-0717, or forward enquiries to ncracqbclcapsab.rcnapprertgsaea@pwgsc-tpsgc.gc.ca for assistance with determining how a CLCA may affect the overall procurement strategy. PAACD can assist contracting officers in identifying the CLCA contracting obligations and in developing methods of meeting them on a case-by-case basis. When requesting assistance from PAACD, contracting officers should provide the following information about their procurements, to expedite their requests:

      1. brief description of requirement;
      2. final delivery location(s);
      3. name of client department;
      4. will the goods/services/construction be used by an aboriginal community?
      5. will the procurement be set aside under the Procurement Strategy for Aboriginal Business (see 9.40.1 Decision to Set Aside a Procurement under PSAB)?;
      6. applicable trade agreements, and/or reasons for exclusion from any trade agreements;
      7. type of procurement instrument, e.g. contract, standing offer, supply arrangement;
      8. solicitation method (competitive or sole source);
      9. method of advertising e.g. the Government Electronic Tendering Service (GETS), source list;
      10. estimated dollar value;
      11. anticipated date of issuance of solicitation.
    2. PWGSC Contracting Officers in Western Region may request assistance by sending an e-mail to the Northern Contaminated Sites Program (NCSP) at WST.SSO-CLCA@pwgsc.gc.ca.
    3. When requesting assistance from either of these divisions, contracting officers should do so as early as possible because of the possible need to consult with others (e.g. Legal Services, Aboriginal Affairs and Northern Development Canada, Treasury Board Secretariat) before responding to a request.
    4. The primary sources of policy advice on CLCAs for PWGSC contracting officers are PAACD and NCSP, as detailed above. Contracting officers should share any advice received on CLCAs from other sources with PAACD or NCSP as appropriate, before taking any action, in order to ensure a consistent approach to the implementation of the CLCA contracting obligations. As well, any discrepancy in the information gathered by the contracting officer must be brought to the attention of PAACD or NCSP. Contracting officers must document their files to include any advice received. The approval documents should include the rationale for any key decisions.
  8. An online course on Aboriginal Considerations in Procurement (#C223E) is available by visiting the Canada School of Public Service's Campusdirect website.

9.35.5 Comprehensive Land Claims Agreements in Effect

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  1. At present, there are 24 Comprehensive Land Claims Agreements (CLCAs) (including eleven which fall under the Umbrella Final Agreement – Council for Yukon Indians) that have been given Royal Assent and are in effect. CLCAs affecting federal government procurement exist for areas within the Yukon, the Northwest Territories, Nunavut, northern Quebec, and northern Labrador. Although there are CLCAs for areas within British Columbia, they do not contain procurement obligations. There are currently no CLCAs for areas within Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, the island of Newfoundland, Nova Scotia or Prince Edward Island.
  2. The CLCAs that are in effect are listed below along with their approximate settlement areas. Where available, a link has been provided to the associated Treasury Board Contracting Policy Notice, which includes an excerpt of the CLCA contracting provisions. Otherwise, a link has been provided to the full text of the comprehensive land claims agreement on the Aboriginal Affairs and Northern Development Canada website, along with references to the articles regarding contracting provisions.

9.35.5.1 Quebec

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James Bay and Northern Quebec Agreement (JBNQA) (1975), amended to include the Northeastern Quebec Agreement (1978): from the shores of James Bay and Hudson Bay to Labrador, covering approximately 50 percent of Quebec's land mass, mainly the northern portion of the province. The JBNQA has three aboriginal signatories, representing the Cree, Inuit and Naskapi of Quebec. The JBNQA contains conditions that apply to both the Cree and Inuit, as well as conditions that apply solely to the Cree, conditions that apply solely to Inuit, and conditions that apply solely to the Naskapi. The Nations map shows which communities are inhabited by Cree, Inuit and Naskapi, and therefore which conditions would apply. For communities not detailed on this map, contracting officers should seek assistance in accordance with 9.35.1 g.

Inuit Provisions:

  1. James Bay and Northern Quebec Agreement (JBNQA), section 29.0 (Inuit Economic and Social Development);
  2. Agreement Respecting the Implementation of the JBNQA (PDF 337 KB) - (Help on File Formats) Annex A, Part II (Inuit Employment and Contract Priority).

Cree Provisions: James Bay and Northern Quebec Agreement, section 28.10 (Cree Participation in Employment and Contracts).

Naskapi Provisions: Northeastern Quebec Agreement, Section 18 and paragraph 20.20.

9.35.5.5 Yukon, Northwest Territories, and Nunavut

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  1. The Inuvialuit Final Agreement (1984): the islands and part of mainland along the Beaufort Sea (northwest portion of the Northwest Territories, including western portion of Victoria Island, all of Banks Island, Prince Patrick Island in the northern portion, and the western portion of Melville Island). Includes (but is not limited to) Aklavik, Holman, Inuvik, Mould Bay and Tuktoyaktuk. The Gwich'in Comprehensive Land Claims Agreement also covers Inuvik and Aklavik.
  2. Gwich'in Comprehensive Land Claim Agreement (1992): parts of northeastern Yukon and northwest portion of the Northwest Territories. Includes (but is not limited to) Aklavik, Fort McPherson, Inuvik and Tsiigetchic. The Inuvialuit Final Agreement also covers Inuvik and Aklavik. A Yukon Transboundary Agreement, for the Tetlit Gwich'in claimant group, exists as Appendix C under this final agreement. Notification of procurement opportunities for both the Gwich'in CLCA and the Yukon Transboundary Agreement must be sent to the Gwich'in Tribal Council.
  3. Nunavut Land Claims Agreement (1993): Northern Canada - includes districts of Franklin (central Nunavut), Keewatin (south-central Nunavut, northwest coast of Hudson's Bay area), Baffin Island (southeast portion of Nunavut) and Ellesmere Island (northern portion of Nunavut). Includes (but is not limited to) Arctic Bay, Arviat, Baker Lake, Bathurst Inlet, Cambridge Bay, Canadian Forces Station (CFS) Alert, Cape Dorset, Chesterfield Inlet, Clyde River, Eureka, Gjoa Haven, Grise Fiord, Hall Beach, Igloolik, Iqaluit, Kimmirut, Kugluktuk, Nanisivik, Pangnirtung, Pelly Bay, Pond Inlet, Qikiqtarjuaq, Rankin Inlet, Repulse Bay, Resolute, Sanikiluaq, Taloyoak, Umingmaktok and Whale Cove.
  4. Umbrella Final Agreement – Council for Yukon Indians (1993): This agreement provides a framework for the negotiation of agreements with Yukon First Nations and has so far resulted in the eleven CLCAs listed further below.

    The general contracting obligations of each Yukon First Nation CLCA are contained in Chapter 22 – Economic Development Measures (section 22.5.0 - Contracting), and these obligations are fully addressed in the guidance provided within section 9.35 Comprehensive Land Claims Agreements of the Supply Manual. Access provisions are contained in Chapter 6 – Access (section 6.4.0 - Government Access) of each Yukon First Nation CLCA.

    More specific contracting obligations which apply to only certain procurements relating to special management areas (e.g. wildlife areas, parks, historic sites), heritage resources, surveying of settlement land boundaries or areas, or forest resources may be contained in Chapter 10 – Special Management Areas, Chapter 13 – Heritage (section 13.12.0 – Economic Opportunities), Chapter 15 – Definition of Boundaries and Measurement of Areas of Settlement Land (section 15.7.0 – Employment and Economic Opportunities), and Chapter 17 – Forest Resources (section 17.14.0 - Economic Opportunities) of each Yukon First Nation CLCA. Contracting officers with these types of procurements are encouraged to seek assistance in accordance with 9.35.1 g.

    1. First Nation of Nacho Nyak Dun Final Agreement (1995): Part of Yukon Territory covering Mayo and Stewart Crossing.
    2. Champagne and Aishihik First Nations Final Agreement (1995): Part of Yukon Territory covering Haines Junction, Canyon Creek and Champagne.
    3. Teslin Tlingit Council Final Agreement (1995): Part of Yukon Territory covering Teslin.
    4. Vuntut Gwitchin First Nation Final Agreement (1995): Part of Yukon Territory covering Old Crow.
    5. Selkirk First Nation Final Agreement (1997): Part of Yukon Territory covering Pelly crossing.
    6. Little Salmon/Carmacks First Nation Final Agreement (1997): Part of Yukon Territory covering Carmacks.
    7. Tr'ondëk Hwëch'in Final Agreement (1998): Part of Yukon Territory covering Dawson City.
    8. Ta'an Kwach'an Council Final Agreement (2002): Part of Yukon Territory covering Whitehorse.
    9. Kluane First Nation Final Agreement (2004): Part of Yukon Territory covering Burwash Landing.
    10. Kwanlin Dun First Nation Final Agreement (2005): Part of Yukon Territory covering Whitehorse.
    11. Carcross/Tagish First Nation Final Agreement (2005): Part of Yukon Territory covering Carcross and Tagish.
  5. Sahtu Dene and Metis Comprehensive Land Claim Agreement (1994) - see Chapter 12 - Economic Measures: Northwestern part of the District of Mackenzie, including the communities of Colville Lake, Deline, Norman Wells, Fort Good Hope, and Tulit'a.
  6. Tlicho Land Claims Agreement (2005) - Appendix B of TB CPN 2006-4: Part of the Northwest Territories and part of Western Nunavut. Includes, but is not limited to, Yellowknife, Behchoko (Rae-Edzo), Gameti (Rae Lakes), Wha Ti and Wekweti.
  7. Nunavik Inuit Land Claims Agreement (2008) - see Article 13 – Government of Canada Employment and Contracts and, if applicable, Article 20 – Archaeology (Part 20.7): The settlement areas of the Eeyou Marine Region Land Claims Agreement (EMRLCA) and the Nunavik Inuit Land Claims Agreement (NILCA) overlap and are located within the islands and the marine waters along the Quebec shore in the James Bay and south-eastern Hudson Bay. They are within the boundaries of the Nunavut Territory, but outside the settlement area of the Nunavut Land Claims Agreement.
  8. Eeyou Marine Region Land Claims Agreement (2011) - see Chapter 21 - Government Employment and Contracting and, if applicable, Chapter 26 – Archaeology (section 26.8 – Employment and Contracting): The settlement areas of the EMRLCA and the NILCA overlap and are located within the islands and the marine waters along the Quebec shore in the James Bay and south-eastern Hudson Bay. They are within the boundaries of the Nunavut Territory, but outside the settlement area of the Nunavut Land Claims Agreement.

9.35.5.10 British Columbia

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This section has been removed in Version 2013-7 of the Supply Manual.

9.35.5.15 Newfoundland and Labrador

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Labrador Inuit Land Claims Agreement (2005) - Appendix A of TB CPN 2006-4: Part of Northeastern Quebec and part of Northern Labrador. Includes (but is not limited to) Hopedale, Makkovik, Nain, Postville and Rigolet.

9.35.10 National Park Agreements and Department of National Defence Co-operation Agreements

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  1. Contracting officers should also be aware that a number of National Park Agreements and DND Co-operation Agreements have been signed between individual departments and certain aboriginal groups. These agreements, which are listed below can be found in sections 7 to 10 of TBS Contracting Policy Notice 1997-8:
    1. Section 7: Agreement for the Establishment of a National Park on Banks Island
    2. Section 8: Tuktut Nogait National Park Agreement
    3. Section 9: Co-operation Agreement between the Inuvialuit Regional Corporation and the Department of National Defence concerning the Operation and Maintenance of the North Warning System.
    4. Section 10: Co-operation Agreement between the Inuvialuit Regional Corporation and the Department of National Defence concerning the Restoration and Clean-up of DEW Sites within the Inuvialuit Settlement Region.
  2. When advised by the client department, PWGSC will consider these co-operation agreements in the procurement process.

9.35.15 Comprehensive Land Claims Agreements under Negotiation

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There are currently several Comprehensive Land Claims Agreements (CLCAs) under negotiation. The Policy, Advice and Aboriginal Considerations Division will advise contracting officers when new CLCAs come into effect.

9.35.20 Applicability of Comprehensive Land Claims Agreement Contracting Obligations

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  1. If a procurement, or a portion thereof, includes the final delivery of goods, services, and/or construction, for any department, agency or Crown corporation of the federal government, to locations covered by CLCAs, then the contracting obligations of each applicable CLCA will apply to each associated portion of the procurement. The final delivery point(s), which are not necessarily the destination addresses detailed in the requisition, determine the applicability of a CLCA, not the origin of the requisition (i.e. ordering office).
  2. There are additional cases where the CLCA procurement obligations may apply, for example:

    1. where a procurement is in support of government activities within a CLCA area; and
    2. where a procurement involves the performance of services or associated travel by the resulting contractor within a CLCA area.

    In such cases, contracting officers should seek assistance on whether CLCAs apply in accordance with 9.35.1 g.

  3. Dollar Thresholds – A CLCA applies to any applicable procurement, regardless of dollar value.
  4. Overlaps - Some CLCAs have settlement areas that overlap with the settlement areas of other CLCAs. In these cases, the obligations of both CLCAs will apply. For example, Inuvik, Northwest Territories (NWT) is situated within the settlement areas of both the Inuvialuit Final Agreement and the Gwich'in CLCA, and so the contracting obligations of both CLCAs will apply to the portion of the procurement with deliveries to Inuvik, NWT.
  5. Urgent requirements must continue to be dealt with on a case-by-case basis, in a manner that is consistent with the provisions of the applicable CLCA. For procurements that are for pressing emergencies as defined in accordance with Treasury Board Secretariat Contracting Policy Notice 2007-4 on Non-Competitive Contracting, contracting officers should seek assistance in accordance with 9.35.1 g.
  6. Here are some examples of requirements where CLCAs would apply to the procurement:

    1. Generators for delivery to Yellowknife, Northwest Territories;
    2. Food for delivery by the contractor to a non-CLCA area, for furtherance by the client department to a CLCA area;
    3. Snowmobiles for delivery by the contractor to a non-CLCA area, where the client department would install decals to the snowmobiles and then ship them to Kuujjuaq, Quebec;
    4. An on-line map selection solution that would allow prospectors to acquire mineral claims on Crown lands in Nunavut, where the service would be made available to interested companies via the internet, and the technical infrastructure and hosting environment would be located in a non-CLCA area; and
    5. An aeromagnetic survey to be performed on a CLCA area, with the only tangible deliverable being a final report to be sent to the client in a non-CLCA area.

9.35.25 Requirements Definition

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  1. Under several CLCAs, the requirements definition for a procurement must, whenever it is practical and consistent with sound procurement management:
    1. avoid artificially inflated employment skills requirements (this is consistent with PWGSC's procurement principles);
    2. give consideration to separating requirements into commodity or geographic groupings to permit smaller and more specialized firms to submit a bid/offer/arrangement.
  2. For instance, the Nunavut Land Claims Agreement states the following:

    "24.4.2 In inviting bids on government contracts in the Nunavut Settlement Area, the Government of Canada and the Territorial Government shall provide all reasonable opportunities to Inuit firms to submit competitive bids, and, in doing so, shall take, where practicable and consistent with sound procurement management, the following measures:

    1. set the date, location, and terms and conditions for bidding so that Inuit firms may readily bid;
    2. invite bids by commodity groupings to permit smaller and more specialized firms to bid;
    3. permit bids for goods and services for a specified portion of a larger contract package to permit smaller and more specialized firms to bid;
    4. design construction contracts in a way so as to increase the opportunity for smaller and more specialized firms to bid; and
    5. avoid artificially inflated employment skills requirements not essential to the fulfillment of the contract."
  3. The following CLCAs also contain similar wording:
    1. James Bay and Northern Quebec Agreement (Inuit portion);
    2. Sahtu Dene and Metis Comprehensive Land Claim Agreement (Implementation Plan);
    3. Labrador Inuit Land Claims Agreement;
    4. Nunavik Inuit Land Claims Agreement; and
    5. Eeyou Marine Region Land Claims Agreement.
  4. Contracting officers must also ensure that the procurement file contains adequate documentation on the measures taken to address any CLCA procurement obligations related to requirements definition.

9.35.30 Access to Aboriginal-owned Lands

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Comprehensive Land Claims Agreements (CLCAs) make provisions for access to aboriginal-owned lands. Contracting officers should encourage clients to liaise with the appropriate directorate(s) within Aboriginal Affairs and Northern Development Canada's Implementation Branch to determine whether the location of the contracting activity is subject to access provisions under the CLCA, and, if so, whether any access permits are required.

9.35.35 Notification of Procurement

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  1. The most common obligation is the notification of the procurement to the land claimant group(s). The following information details the Public Works and Government Services (PWGSC) Acquisitions Program procedures for Comprehensive Land Claims Agreements (CLCAs) notification.
  2. Contracting officers must fax or e-mail a copy of a notice describing the procurement to the land claimant group(s) listed for each of the CLCAs that apply to the procurement, as detailed in Annex 9.2 Notification of Procurement to CLCA Claimant Groups, and in accordance with the following paragraphs:
    1. Any notice that will be posted on the Government Electronic Tendering Service (GETS) must be sent to the applicable land claimant group(s) on the date of posting and must indicate that CLCAs apply. This procedure applies to all types of notices, for example:
      1. Notices of Proposed Procurement (NPPs);
      2. Advance Contract Award Notices (ACANs);
      3. Letters of Interest (LOIs);
      4. Price and Availability (P&A) enquiries.
    2. For procurements that will not be posted on GETS, contracting officers must send the applicable land claimant group(s) a notice about the procurement, containing the same information that an NPP, ACAN, LOI, or a P&A enquiry would have contained. In such cases, contracting officers should allow the land claimant group(s) at least 15 calendar days to submit any enquiries before awarding a contract, although the CLCAs do not specify any waiting period.
    3. Contracting officers must notify the applicable land claimant group(s) for all types of solicitation documents, including, but not limited to, the following:
      1. Request for Quotations (RFQs);
      2. Requests for Proposals (RFPs);
      3. Requests for Standing Offers (RFSOs);
      4. Requests for Supply Arrangements (RFSAs);
      5. Solicitations under Supply Arrangements; and
      6. Calls for Proposals.
    4. Notification of the procurement to the land claimant group(s) is not required for individual call-ups against a standing offer. Notification at the RFSO stage is sufficient.

9.35.40 Right of First Refusal

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  1. Dependent upon the requirement, competition for a procurement may be restricted to businesses of the applicable CLCA.
  2. For example, for the Inuit portion of the James Bay and Northern Quebec Agreement, the Agreement Respecting the Implementation of the JBNQA, Annex A (Inuit Employment and Contract Priority), Part II states:

    "8.1 Wherever practicable and consistent with sound procurement management, Canada will first solicit bids from within the Territory."

    WHERE

    "3.11 "Territory" means the area in the province of Quebec north of the 55 th parallel of latitude, as delineated in the JBNQA."

  3. Furthermore, certain agreements contain a "right of first refusal" for the provision of certain commodities, i.e., business opportunities and ventures that are contracted out with respect to Parks and the right of first refusal to any new licenses to carry on economic activities related to wildlife and tourism.
  4. Other agreements make provisions for giving CLCA beneficiaries "first consideration or first priority" in sourcing certain requirements, i.e., silviculture services, management of designated heritage sites, and first consideration in providing technical and support services for contracts related to surveying the land claims settlement area.
  5. Contracting officers with CLCA procurements related to archaeology, forestry, heritage, parks, and/or surveying should seek assistance in accordance with 9.35.1 g.

9.35.45 Evaluation Criteria

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  1. Several Comprehensive Land Claims Agreements (CLCAs) contain provisions requiring the inclusion of socio-economic evaluation criteria in the solicitation document, subject to Canada's international trade agreements (see 9.35.70 International Trade Agreements), and whenever it is practical and consistent with sound procurement management. The purpose of including socio-economic evaluation criteria is to increase the opportunities for CLCA beneficiaries to experience benefits from the procurement such as:
    1. Subcontracting to Land Claim Beneficiary Businesses
    2. Employment opportunities for Land Claim Beneficiaries
    3. Training/skills development for Land Claim Beneficiaries
    4. Existence/establishment of a supplier office location within the CLCA area
  2. The document excerpts in Annex 9.3: Comprehensive Land Claims Agreements Evaluation Criteria specifically detail that consideration of socio-economic evaluation criteria is required for the following CLCAs:
    1. James Bay and Northern Quebec Agreement - Inuit Portion
    2. Inuvialuit Final Agreement
    3. Nunavut Land Claims Agreement
    4. Sahtu Dene and Métis Comprehensive Land Claims Agreement
    5. Tlicho Land Claims Agreement
    6. Nunavik Inuit Land Claims Agreement
    7. Labrador Inuit Land Claims Agreement
    8. Eeyou Marine Region Land Claims Agreement

    In addition, solicitations subject to the Gwich'in Comprehensive Land Claims Agreement should include socio-economic evaluation criteria for the Gwich'in, whenever it is practical and consistent with sound procurement management, and subject to Canada's international trade agreements.

  3. These evaluation criteria can be used as part of the assessment along with price, best value, delivery etc. Proof of efforts and/or commitments made by suppliers should include, but not be limited to, the names of persons or companies contacted and the nature of the undertakings at the time of the submission and as applicable.
  4. Should the contracting officer decide that it is not practical and consistent with sound procurement management to include the CLCA evaluation criteria in a solicitation document, the contracting officer must document the supporting factors leading to this decision on the procurement file, preferably in the Contract Planning and Advance Approval (CPAA) document or procurement plan.
  5. The CLCA evaluation criteria should also be considered in sole source negotiations in order to maximize socio-economic opportunities for CLCA beneficiaries.

9.35.50 Methods of Solicitation

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Contracting officers must use the appropriate method of solicitation, i.e., the Government Electronic Tendering Service (GETS), telephone-buys, source lists, facsimile distribution, newspapers, or a combination of methods. Increased consideration should be given to advertising the procurement opportunity in local newspapers and/or other public venues due to the remoteness of some of the areas.

9.35.55 Solicitation Period

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A longer bidding period should be considered depending on the remoteness of some of the areas.

9.35.60 Business Directories/Lists

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  1. Under several CLCAs, the land claimant groups have to prepare and maintain lists of CLCA beneficiary firms. The business directories/lists identify the types of the goods and services the firms can furnish.
  2. For procurements posted on GETS, contracting officers should notify the CLCA beneficiary firms listed for the applicable commodities, in accordance with 4.75.35 Contacting Suppliers Directly During the Solicitation Period. For procurements not posted on GETS, contracting officers should use the firm lists to invite CLCA beneficiaries firms to submit a bid/offer/arrangement; this must not restrict the ability of any business, not on the list, to submit a bid/ offer/arrangement.
  3. For a list of Inuit businesses for the James Bay and Northern Quebec Agreement and for the Nunavik Inuit Land Claims Agreement, consult the Nunavik Regional and Private Business Directory (PDF 603 KB) - (Help on File Formats) .
  4. For a list of Cree businesses for the James Bay and Northern Quebec Agreement, consult the Grand Council of the Crees telephone directory .
  5. For a list of Inuvialuit businesses in the Inuvialuit Settlement Region, consult the Inuvialuit Business List .
  6. For a list of Gwich'in businesses in the Gwich'in Settlement Area, consult the Gwich'in Business Directory .
  7. For a list of Inuit businesses in the Nunavut Settlement Area, consult the Inuit Firm Registry.
  8. For a list of Sahtu Dene and Metis businesses in the Sahtu Settlement Area, consult the Sahtu Business List .
  9. For more information on Tlicho businesses, visit the Tlicho Businesses website.
  10. "For a list of Inuit businesses in the Labrador Inuit Settlement Area, consult the Nunatsiavut Government website, click on "Departments", then click on "Education and Economic Development", then click on the appropriate business categories under "Inuit Business Directory." .

9.35.65 Application of Comprehensive Land Claims Agreements and the Procurement Strategy for Aboriginal Business

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  1. In certain cases, a procurement subject to CLCA contracting obligations may also set-aside under the Procurement Strategy for Aboriginal Business (PSAB). To the extent that the application of a PSAB set-aside does not interfere with CLCA contracting obligations, then the procedures for both CLCAs and PSAB set-asides can be applied, but when the two are in conflict, the CLCA contracting obligations take precedence, as further explained below.
  2. If a procurement is subject to a CLCA and that CLCA does not include a right of first refusal, the procurement can be reserved for aboriginal businesses across Canada under PSAB while still addressing the CLCA contracting obligations, including any CLCA evaluation criteria.
  3. The act of setting aside a procurement under PSAB does not, by itself, address the CLCA procurement obligations. The various procurement obligations of the applicable CLCAs will still have to be considered.
  4. A solicitation subject to a PSAB set-aside that addresses CLCA evaluation criteria must clearly define what constitutes a CLCA beneficiary to avoid confusion with the definition of "aboriginal business" under PSAB.
  5. If a procurement is reserved for CLCA beneficiaries because of a right of first refusal under that CLCA, then the procurement cannot also be set-aside under PSAB.
  6. To help identify sourcing capacity under a PSAB set-aside, refer to 9.40.35 Sourcing of Requirements under Procurement Strategy for Aboriginal Business (PSAB) Set-asides. As with all procurements, operational requirements, best value, prudence, probity, and sound contracting management must be assured.
  7. For more information on PSAB, contracting officers should consult 9.40 Procurement Strategy for Aboriginal Business.

9.35.70 International Trade Agreements

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  1. Contracting officers must determine whether a procurement subject to a CLCA is also covered by an international trade agreement (ITA), e.g., NAFTA and/or WTO-AGP. (See 1.25.5 NAFTA and 1.25.10 WTO-AGP.)
  2. All ITAs provide for set-asides for minority businesses, e.g. Article 1.(d) of Canada's General Notes of WTO-AGP and Article 1.(d) of Annex 1001.2b of NAFTA.
  3. When a procurement is subject to an ITA, it can only be removed from that ITA under the provision for set-asides for minority businesses if the procurement is reserved solely for aboriginal businesses. The procurement is not considered to be set-aside from the ITAs under this provision if the procurement is also open to non-aboriginal businesses. The sole fact that a procurement is subject to a CLCA does not exempt it from the ITAs.
  4. The following are the options when a procurement is subject to both a CLCA and an ITA:
    1. If the CLCA provides the CLCA beneficiaries with a right of first refusal for the procurement, the inclusion of that right in the procurement terms will constitute a set-aside for minority businesses under the ITAs, such that the provisions of the ITAs do not apply to the procurement.

      OR

    2. If the CLCA does not provide the CLCA beneficiaries with a right of first refusal for the procurement, the contracting officer should encourage the client department to set aside the procurement under PSAB. Setting aside the procurement under PSAB constitutes a set-aside for minority businesses under the ITAs.

      Under options i, and ii., the procurement is set aside from the ITAs for minority businesses and all CLCA contracting obligations can be addressed, including any CLCA evaluation criteria.

      OR

    3. If no right of first refusal for the procurement exists under the CLCA, and setting aside the procurement under the PSAB is not practical due to the specific requirements of the procurement, consult the Policy, Advice and Aboriginal Considerations Division (PAACD), at telephone number 819-956-0717, or forward enquiries to ncracqbclcapsab.rcnapprertgsaea@pwgsc-tpsgc.gc.ca.

9.35.75 Agreement on Internal Trade

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Under Article 1802: Aboriginal Peoples of the Agreement on Internal Trade (AIT), the AIT does not apply to any measure adopted or maintained with respect to Aboriginal peoples. There are two ways in which the CLCAs and AIT interact:

  1. If a procurement is reserved for CLCA beneficiaries because of a right of first refusal under that CLCA, then the contracting authority must indicate in the solicitation document and any tender notice that the procurement is set aside from AIT. In this case, the entire procurement process is not subject to AIT, and the procurement no longer falls under the jurisdiction of the Canadian International Trade Tribunal (CITT). This situation does not eliminate the requirement to comply with the Government Contracts Regulations; and
  2. For a procurement that is subject to AIT, but not to any international trade agreements, any measure for Aboriginals, including CLCA evaluation criteria, is not subject to CITT review, although the rest of the procurement process must be conducted in compliance with the AIT provisions and is reviewable by CITT.

9.35.80 Notices on the Government Electronic Tendering Services

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  1. For procurements subject to CLCAs, contracting officers must insert a statement in the notice on the Government Electronic Tendering Service (GETS), indicating the applicable CLCAs.

    For example, a notice for a procurement that is subject to the Inuvialuit Final Agreement should include the following wording:

    This procurement is subject to the Inuvialuit Final Agreement.

  2. If a CLCA provides its beneficiaries with a right of first refusal for the procurement, and therefore the procurement is reserved for those CLCA beneficiaries, then the contracting officer must insert the following information in the GETS notice:

    "This procurement is reserved for beneficiaries of the following Comprehensive Land Claims Agreement (CLCA): _____(insert the applicable CLCA)) under _____(insert the applicable CLCA chapter, article and paragraph numbers)."

    Instruction to contracting officers: Insert the following sentence, if applicable:

    "This procurement is set aside from all the trade agreements under the provision each has that permits the procurement to be set aside for Aboriginal business."

9.35.85 Solicitations

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  1. Clauses W0001T to W0003D in Subsection 5.W of the Standard Acquisition Clauses and Conditions (SACC) Manual, have been developed for solicitations, contracts and standing offers that involve unspecified final delivery locations within land claims settlement areas.
  2. If a CLCA provides its beneficiaries with a right of first refusal for the procurement, and therefore the procurement is reserved for those CLCA beneficiaries, then the contracting officer must insert clause W0005T at the beginning of the solicitation.
  3. Although additional CLCA clauses are available in Subsection 5.W of the SACC Manual, contracting officers should seek assistance with these clauses in accordance with 9.35.1 g.

9.35.90 Standing Offers, Supply Arrangements and As-and-When-Requested Contracts

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  1. Methods of supply such as standing offers (SOs), supply arrangements (SAs), and as-and-when-requested contracts are also affected by Comprehensive Land Claims Agreements (CLCAs) if any of the resulting contracts or tasks may be subject to CLCAs. Therefore, during the procurement planning stage, contracting officers must determine, in consultation with client departments, whether such a method of supply will need to provide for CLCAs. Examining past, present and future needs will help determine a solution that is of mutual benefit to Public Works and Government Services Canada supply divisions and their client departments.
  2. When such a method of supply will need to provide for CLCAs, various options exist:
    1. an instrument that provides for both CLCA areas and non-CLCA areas;
    2. two streams of instruments - one for CLCA areas and one for non-CLCAs; or
    3. multiple streams for various geographic or CLCA areas.
  3. If an instrument will provide for CLCAs, the applicable CLCA procurement obligations must be addressed at the RFSO/RFSA/RFP stage of the instrument. For supply arrangements, the CLCA procurement obligations also have to be addressed when issuing any bid solicitation under the SA that may be subject to CLCAs.
  4. During the planning stage of the method of supply, if it is determined that either no or few resulting contracts or tasks will be subject to CLCAs, then it may be more appropriate to issue an instrument that does not provide for CLCAs. In this case, the contracting officer must include a clear statement in the instrument detailing that deliveries cannot be made and services cannot be performed within CLCA settlement areas under any resulting contract or task authorization. If later on, the client has a specific requirement that is subject to CLCAs, and no instrument exists which addressed the obligations of the applicable CLCAs, that requirement will have to be handled as a new procurement, outside any existing instrument.
  5. Mandatory SOs/SAs: if a client's requirement is subject to CLCA contracting obligations, and no mandatory SO/SA exists which addressed the obligations of the applicable CLCA(s), the client department is exempted from having to use the mandatory SO/SA.
  6. Furthermore, with respect to PSAB, refer to 9.40.35 c.

9.35.95 Procurement Reporting for Comprehensive Land Claims Agreements

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Contracting officers must ensure that reporting on procurements subject to Comprehensive Land Claims Agreements is done accurately, in accordance with section 7.30.15 Comprehensive Land Claims Agreements Reporting.

9.40 Procurement Strategy for Aboriginal Business

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  1. In accordance with the Procurement Strategy for Aboriginal Business (PSAB) announced on March 27, 1996, requirements designated by client departments as set aside under PSAB will be restricted to qualified Aboriginal businesses.
  2. Even though a procurement is set aside under PSAB, all applicable procurement policies and procedures must be followed.

9.40.1 Decision to Set Aside a Procurement under the Procurement Strategy for Aboriginal Business

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  1. The decision to set aside a procurement under PSAB is the responsibility of the client department.
  2. There are two types of PSAB set-asides:
    1. Mandatory Set-Asides:
      1. It is mandatory to set aside a procurement under PSAB if an Aboriginal population is the primary recipient or end user of the goods or services being procured and the value exceeds $5,000, provided that operational requirements, prudence, probity, best value and sound contracting management can be assured.
      2. In order for an Aboriginal population to be the primary recipient or end user of the goods or services being procured, delivery does not have to be directly to the Aboriginal community. For example, goods may be delivered to a government department site and later distributed to Aboriginal communities, groups or individuals.
      3. For more information and examples of what constitute a mandatory set-aside under PSAB, please refer to Aboriginal Affairs and Northern Development Canada's (AANDC) interpretation bulletin.
      4. Under TBS Contracting Policy Notice 1996-2,


        "Aboriginal Population" means

        1. an area, or community in which Aboriginal people make up at least 80 percent of the population;
        2. a group of people for whom the procurement is aimed in which Aboriginal people make up at least 80 percent of the group.

    2. Voluntary Set-Asides: Client departments may designate any procurement as being restricted exclusively to qualified Aboriginal suppliers. Contracting officers should assist client departments in meeting their performance objectives under the program, by drawing their attention to opportunities for voluntary PSAB set-asides, when qualified Aboriginal suppliers are known to exist in the marketplace.
  3. When a procurement is set aside under PSAB and no aboriginal business submitted a responsive bid/offer/arrangement, then the solicitation must be reissued, either as a set-aside once again (after the necessary adjustments to the solicitation have been made), or open to all bidders in accordance with the procedures for the applicable trade agreement(s), taking into account the relevant thresholds, and all the related applicable components, which apply to the requirement in the absence of a set-aside. This re-solicitation process will also apply when Aboriginal bids/offers/arrangements are received but a contract will not be awarded in order to avoid conflicting with sound contracting principles such as best value, prudence and probity. (See 9.40.25 Sound Contracting Principles.)
  4. PWGSC will not unilaterally declare a procurement set-aside under PSAB. However, following receipt of a requisition above $5,000, for which an Aboriginal population is the primary recipient or end user, but is not designated as a PSAB set-aside, the contracting officer should contact the client department and identify the potential omission. If the client indicates that the procurement is not to be set aside under PSAB, the file should be annotated accordingly, and the procurement may then proceed.

9.40.2 Obtaining Advice on the Procurement Strategy for Aboriginal Business

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  1. The primary source of policy advice on the Procurement Strategy for Aboriginal Business (PSAB) for Public Works and Government Services Canada contracting officers is the Policy, Advice and Aboriginal Considerations Division (PAACD). Contracting officers can contact PAACD at phone number 819-956-9117, or by sending an e-mail to ncracqbclcapsab.rcnapprertqsaea@pwgsc-tpsgc.gc.ca.
  2. Contracting officers should share with PAACD any advice on PSAB received from other sources before taking any action, in order to ensure a consistent approach to the implementation of PSAB. As well, any discrepancy in the information gathered by the contracting officer must be brought to the attention of PAACD. Contracting officers must document their files to include any advice received. The approval documents should include the rationale for any key decisions.

9.40.5 Application of the Procurement Strategy for Aboriginal Business and Comprehensive Land Claims Agreements

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  1. A procurement set aside under the Procurement Strategy for Aboriginal Business (PSAB) may also be subject to Comprehensive Land Claims Agreements (CLCAs). To the extent that the application of a PSAB set-aside does not interfere with CLCA contracting obligations, the procedures for both the CLCA and PSAB set-aside can be applied, but when the two are in conflict, the CLCA contracting obligations take precedence.
  2. If a procurement is subject to a CLCA and that CLCA does not include a right of first refusal, the procurement can be reserved for aboriginal businesses across Canada under PSAB while still addressing the CLCA contracting obligations, including any CLCA evaluation criteria.
  3. The act of setting aside a procurement under PSAB does not, by itself, address the CLCA procurement obligations. The various procurement obligations of the applicable CLCAs will still have to be considered.
  4. A solicitation subject to a PSAB set-aside that addresses CLCA evaluation criteria must clearly define what constitutes a CLCA beneficiary to avoid confusion with the definition of "aboriginal business" under PSAB.
  5. If a procurement is reserved for CLCA beneficiaries because of a right of first refusal under that CLCA, the procurement cannot also be set aside under PSAB.
  6. For more information on CLCAs, contracting officers should consult 9.35 Comprehensive Land Claims Agreements.

9.40.10 Procurement Strategy for Aboriginal Business and Trade Agreements

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  1. All international trade agreements provide for set-asides for minority businesses, e.g. Article 1.(d) of Canada’s General Notes of the World Trade Organization Agreement on Government Procurement (WTO-AGP) and Article 1.(d) of Annex 1001.2b of the North American Free Trade Agreement (NAFTA). Therefore, a procurement set aside under the Procurement Strategy for Aboriginal Business (PSAB) is not subject to the obligations of the international trade agreements.
  2. Under Article 1802: Aboriginal Peoples of the Agreement on Internal Trade (AIT), the AIT does not apply to any measure adopted or maintained with respect to Aboriginal peoples. When the procurement has been set aside for Aboriginal business under PSAB, the entire procurement process is not subject to AIT, and the procurement no longer falls under the jurisdiction of the Canadian International Trade Tribunal (CITT).
  3. Contracting officers must insert SACC Manual clause A3002T in bid solicitations for procurements that have been set aside under PSAB, when the procurement would have been otherwise subject to one or more trade agreements.

9.40.15 Procurement Strategy for Aboriginal Business and Canadian Content

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  1. If the value of the procurement is equal to or greater than $25,000, PSAB and the Canadian Content Policy will be applied simultaneously.
  2. In applying the Canadian Content Policy under a set-aside procurement, it must be recognized that there are two levels of certification. The first level of certification will be to qualify the supplier(s) as eligible for consideration, i.e., a supplier must provide certification that it is an Aboriginal business.
  3. Having established that the procurement will be conducted as a PSAB set-aside, contracting officers must then apply the Canadian Content Policy in the same manner as any other procurement but in the context of the Aboriginal business supplier community. Contracting officers must determine whether there are sufficient eligible firms to carry out the procurement as solely limited (i.e., two or more Aboriginal businesses are able to provide Canadian goods or services), conditionally limited (i.e., there may be two or more Aboriginal suppliers of Canadian goods or services), or open (i.e., there is an insufficient number of Aboriginal businesses able to provide Canadian goods or services; the procurement is open to all Aboriginal businesses regardless of the origin of the goods and services supplied). (See 3.130 Canadian Content.)
  4. A bid/offer/arrangement for a set aside procurement, which includes the Canadian content provision, must be reviewed initially to determine whether the supplier has provided the necessary certificate that it is an Aboriginal business. Bids/offers/arrangements meeting this basic certification are then assessed according to the stated Canadian content criteria.

9.40.20 Subcontracting Plans

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In support of PSAB, client departments may designate that a proportion of subcontracts on projects be reserved for Aboriginal business, or that suppliers are to be encouraged through the use of incentives - e.g., additional evaluation points to hire Aboriginal businesses as subcontractors. The inclusion of Aboriginal businesses as subcontractors must be clearly identified in the solicitation as an evaluation criterion. This is not permitted for procurements subject to the international trade agreements, e.g. NAFTA (Article 1006: Prohibition of Offsets) or WTO-AGP (Article XVI ).

9.40.25 Sound Contracting Principles

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Fundamental to all PSAB procurements is the need to adhere to sound contracting principles. Contracting officers must always be cognizant of the principles of best value, prudence, probity, and operational requirements, in planning their procurement strategy for PSAB set-aside requirements.

9.40.30 Notification to Aboriginal Affairs and Northern Development Canada

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  1. Upon receipt and acceptance of a requisition for a PSAB set-aside procurement, contracting officers must inform Aboriginal Procurement and Business Promotion Directorate, Aboriginal Affairs and Northern Development Canada (AANDC).
  2. Notification to AANDC must be sent, by fax or e-mail, before the release of the solicitation, to:

    Aboriginal Affairs and Northern Development Canada

    Aboriginal Procurement and Business Promotion Directorate

    Telephone: 1-800-400-7677

    Fax: 819-956-9837

    E-mail: saea-psab@aandc-aadnc.gc.ca

    The notification must include the following information:

    1. estimated dollar value;
    2. description of goods/services/construction;
    3. solicitation number;
    4. solicitation closing date; and
    5. buyer (name, and phone/fax numbers).

    In instances of sole source procurements, the notice to AANDC must also include the name and address of the potential contractor.

  3. Within 15 working days after contract award, the contracting officer must advise the Aboriginal Procurement and Business Promotion Directorate of the name of the contractor, the contract number, and the total estimated value of the contract.

9.40.35 Sourcing of Requirements under Procurement Strategy for Aboriginal Business (PSAB) Set-asides

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  1. Procurements set aside under PSAB may be competitive or non-competitive according to current established government sourcing policies (see details on competitive and non-competitive at 3.10 Competitive Contracting Process and 3.15 Non-competitive Contracting Process.) Aboriginal businesses may be invited to submit a bid/offer/arrangement in accordance with Public Works and Government Services Canada (PWGSC) policies and procedures.
  2. Vendor Information Management (VIM) of PWGSC and "SELECT" systems allow for the identification of suppliers that have self-declared as being Aboriginal. The information in VIM and "SELECT" collected from supplier registrations and contract awards is useful to identify potential Aboriginal businesses for sourcing purposes, and establish source lists, regardless of commodity (goods, services, or construction), which would be subject to rotation regimes such as Automated Vendor Rotation System or "SELECT".
  3. When issuing a solicitation for a standing offer or a supply arrangement especially for a commodity falling under the mandatory commodities, the contracting officer should always, when feasible, solicit for a PSAB set-aside stream to allow client departments the possibility of contracting with Aboriginal firms if they wish to do a set-aside procurement under PSAB.
  4. When creating a standing offer or supply arrangement which will include both a source list for Aboriginal set-asides as well as a general source list, the solicitation should clearly indicate that Aboriginal suppliers who qualify for the Aboriginal source list, standing offer or supply arrangement will be automatically placed on the general source list, standing offer or supply arrangement if the procurement requirements are identical. Therefore, in the case of identical requirements, it is not necessary for Aboriginal suppliers to submit two separate bids/offers/arrangements.
  5. Contracting officers may also access other sources, such as Industry Canada's Aboriginal Business Directory for more information on Aboriginal suppliers and to identify potential Aboriginal businesses which may be invited to submit a bid/offer/arrangement. Contracting officers may also contact Aboriginal Procurement and Business Promotion Directorate, AANDC, directly by telephone at 1-800-400-7677, or by e-mail at: saea-psab@aandc-aadnc.gc.ca.
  6. When bids/offers/arrangements are solicited via the Government Electronic Tendering Service, notices (Notice of Proposed Procurement [NPP] or Advanced Contract Award Notice [ACAN]) must contain one of the following statement, prominently positioned, i.e., one of the first statements in the notice:

    "This procurement has been set aside under the federal government's Procurement Strategy for Aboriginal Business (PSAB). In order to be considered, a supplier must certify that it qualifies as an Aboriginal business as defined under PSAB and that it will comply with all requirements of PSAB." ( NPP);

    OR

    "This procurement has been set-aside under the federal government's Procurement Strategy for Aboriginal Business (PSAB). Only Aboriginal businesses as defined under PSAB are eligible to challenge the proposed procurement strategy to award the contract to the named Aboriginal business." (ACAN)

  7. Contracting officers must ensure that for notices on GETS, the appropriate "Agreement Type" is selected for PSAB set-asides. For example, ABE users must indicate "Set-Aside Program for Aboriginal Business (SPAB)" in the "Trade Agreement" box of the Notice of Proposed Procurement.

9.40.40 Legal Entity

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The description of a business as an Aboriginal business does not affect the fact that in order to create an enforceable contract with Canada, the contract must be signed between Canada and a legal entity, which has the capacity to contract. In the event any uncertainty exists concerning the legal status of an Aboriginal business, contracting officers must consult with legal counsel to ensure that the proposed contractor is capable of signing an enforceable agreement.

9.40.45 Certification by Suppliers

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  1. For each procurement under the PSAB, suppliers will be required to provide, with their bid/offer/arrangement, a certification stating that they meet the definition of an Aboriginal business, according to the definition provided, on the date that the bid/offer/arrangement was submitted, and an undertaking that the business will continue to meet this definition throughout the life of the contract.
  2. For a procurement subject to a PSAB set-aside, the contracting officer must insert in the solicitation, the Standard Acquisition Clauses and Conditions (SACC) Manual clauses A3000T, M9030T or S3035T, and A3001T, M3030T or S3036T, as appropriate. These clauses reference Annex 9.4: Requirements for the Set-aside Program for Aboriginal Business, which sets out the definitions of an "Aboriginal business" and an "Aboriginal person".
  3. SACC Manual clauses A3000T, M9030T and S3035T contain a certification that suppliers must complete and submit with their bid/offer/arrangement. Failure by suppliers to submit this completed certification form with their bids/offers/arrangements will render the bid/offer/arrangement non-responsive.
  4. If a bidder/offeror/supplier has indicated in its bid/offer/arrangement that the Aboriginal business has six or more full-time employees, the contracting officer may request, during the evaluation or after, that a bidder/offeror/supplier submit an Owner/Employee Certification (detailed within SACC Manual clause A3001T or M3030T or S3036T), for each owner and/or full-time employee who is Aboriginal.
  5. It is not the responsibility of the contracting officer to verify the supplier's certifications. In instances where the contracting officer questions the validity of a certification, the particulars must be referred to Aboriginal Procurement and Business Promotion Directorate, AANDC, for audit by Audit Services Canada (ASC). (See 9.40.50(e).)
  6. Any resulting contract awarded on the basis of the supplier being Aboriginal must include SACC Manual clause A3000C.

9.40.50 Audits of the Bidder/Offeror/Supplier Certification

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  1. A bidder/offeror/supplier is required to certify in its bid/offer/arrangement that it is an Aboriginal business, as defined under PSAB (see Annex 9.4: Requirements for the Set-aside Program for Aboriginal Business.) The certification includes an undertaking that the business will continue to meet the criteria, which define it as Aboriginal throughout the performance of the contract. A bidder/offeror/supplier's certification that it is Aboriginal is subject to audit, both before and after contract award.
  2. pre-award audit is mandatory for requirements valued at $2M or more. To ensure that the mandatory requirement for pre-auditing is met, it is essential that the contracting officer properly notify AANDC of such requirements, as per 9.40.30(b) above, and that the two best-assessed bids/offers/arrangements be submitted to AANDC as per 9.40.50(f). The contracting officer must not award contracts of $2M or more until AANDC has confirmed eligibility of the proposed contractor.
  3. Pre-award audits of suppliers' certifications will be conducted on a random basis for requirements under $2M. AANDC will advise the contracting officer whether a requirement is subject to pre-award audit no later than the date of solicitation closing (see 9.40.30(a)). Audits of suppliers' certifications are expected to require approximately 10 working days to be completed. When timing of contract award is an issue, this should be indicated in the notification to AANDC, so that it may determine whether the auditing process can be expedited or the procurement excluded from the random selection.
  4. Pre-award audits may be requested either by the requisitioning authority, the contracting officer, or AANDC, whenever there is a doubt regarding the validity of bidders/offerors/suppliers' certifications, regardless of the total estimated expenditure of the procurement.
  5. When AANDC has advised that the requirement will be subject to a pre-award audit, the evaluation of bids/offers/arrangements will continue up to the point that the two "best assessed" bids/offers/arrangements have been identified. This information must be provided to AANDC, minus any pricing information to undertake the pre-award audit of the bidders/offerors/suppliers' certification. Upon receipt of the results of the audit, AANDC will advise the contracting officer. If the audit confirms the validity of the bidders/offerors/suppliers' certifications, award of the contract may proceed. If the audit determines that one or more of the certificates are invalid, the subject bidders/offerors/supplier(s) whose certifications have been declared invalid must be declared non-responsive, and the next-ranked bidder/offeror/supplier becomes the "recommended bidder/offeror/supplier". If the audit reveals that both certifications are invalid, the next-ranked supplier's certification must be referred to AANDC for audit until either a bid/offer/arrangement with a valid certificate is obtained, or no bidders/offerors/suppliers remain. In the event that all bidders/offerors/suppliers are eliminated on the basis of invalid certifications, the solicitation must be reissued, either as a set-aside once again, or not set aside, after consultation with the client department. Whether the contract should be awarded to the next-ranked bidder/offeror/supplier, or the solicitation reissued, is a decision that must be made on a case-by-case basis, in keeping with sound contracting principles.
  6. After contract award, the contractor's certification is subject to audit to confirm its status as an Aboriginal business as well as to confirm that required Aboriginal content is met during the life of the contract. (For more information on Aboriginal content, please refer to AANDC’s interpretation bulletin.) Audits following contract award will normally be performed on a random basis, however where contracting officers believe it to be necessary, audit of the contractor's continued status as an Aboriginal business may be requested of AANDC.
  7. If the Aboriginal business certificate is declared invalid, or if the contractor has not completed its undertaking to continue to qualify as an Aboriginal business, it may be necessary to implement civil or contractual remedies. Contracting officers should consult with Legal Services and Aboriginal Procurement and Business Promotion Directorate, AANDC, in determining the appropriate action to be taken.

9.40.55 Bid Challenge

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Bid challenges should be dealt with according to established internal supplier complaint response procedures for procurements not subject to trade agreements.

9.40.60 Procurement Reporting for Procurement Strategy for Aboriginal Business

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Contracting officers must ensure that reporting on contracts set aside under the Procurement Strategy for Aboriginal Business (PSAB) is done accurately, in accordance with 7.30.20 Procurement Strategy of Aboriginal Business Reporting.

9.45 Industrial and Regional Benefits Program

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  1. Competition remains the cornerstone of the Canadian government procurement process. It is the most efficient way of achieving both the primary and secondary goals of procurement. It gives suppliers the incentive to bring forward their best solution to the operational problem, at a competitive price, as well as to respond more effectively to requirements in support of other national objectives. Moreover, competition ensures that all qualified suppliers are afforded access to government contracts. To this end, procurement initiatives in support of regional industrial development must, to the greatest extent possible, focus on assisting Canadian firms in becoming competitive in domestic and world marketplaces.
  2. The Procurement Review Committee (PRC), in accordance with the Treasury Board (TB) Procurement Review Policy, reviews procurement strategies for goods and services over $2,000,000. For more information on the PRC and TB Procurement Review Policy, see 3.70 Industrial and Regional Benefits (IRB) Program.
  3. Collectively, Industry Canada and the regional agencies/departments are responsible for the management of industrial and regional benefits.
  4. The contracting officer is responsible for the contract in all aspects, including the contractor's commitments to regional and industrial benefits that form part of the contract. Industry Canada Industrial and Regional Benefits (IRB) managers are responsible for the day-to-day requirements of the program, while the contracting officer is responsible for the management of the contract. Should there be any failure to complete the work contracted under the IRB Program, it would fall to the remedies section of the contract to resolve any problems. It is through this process, even though an aspect of the contract may be managed separately, that the contracting officer must remain cognizant of the IRB requirement working with IRB managers early in the program and throughout the delivery of the contract.

9.50 Communication Procurement

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  1. Acquisitions Branch, Public Works and Government Services Canada (PWGSC), provides all optional and mandatory procurement services related to communications to federal departments and agencies.
  2. Unlike most other mainstream PWGSC procurement divisions, the Communication Procurement Directorate operates on cost recovery, charging a fee for its procurement services in the areas of advertising, public opinion research, media monitoring, printing, audio-visual production (including film, video and multi media), event management, expositions and exhibits, graphic design, planning, writing and editing, and other communications services.  The fee is based on the value of the contract, the call-up or the work authorization, and any amendments that increase the value. For more information on communication procurement, visit the Communication Procurement websiteThis information is only accessible to federal government employees..

9.55 Canadian Commercial Corporation

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This section provides information on the roles and responsibilities of Canadian Commercial Corporation (CCC) and PWGSC and the Memorandum of Understanding between PWGSC and CCC.

9.55.1 General Information on Canadian Commercial Corporation Contracts

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  1. The CCC is a Crown corporation of the Government of Canada and acts as Canada's international contracting and procurement agency. As a parent of the Crown corporation under Schedule III, Part I of the Financial Administration Act, CCC reports to Parliament through the Minister of International Trade.
  2. The CCC work mandate is to assist in the development of trade between Canada and other countries in areas where there is a clear role for the federal government. CCC helps foreign government buyers benefit from Canada's export capabilities through the negotiation and execution of government-to-government contracts. CCC accomplishes this by building unique relationships and maintaining international contracting and procurement expertise. For more information about CCC, contracting officers may visit the CCC website.
  3. CCC focuses on sectors where there is a clear role for government: operating in sectors that are sensitive or are outside of the World Trade Organizations' disciplines, such as defence, and where foreign governments require additional capacity to undertake complex and timely procurements, namely in emerging and developing country markets.
  4. CCC offers two contracting options: by selling to foreign governments, taking on the role of prime contractor with a Canadian-based supplier; and by buying for foreign governments, taking on the role of a procurement agent and sourcing Canadian goods and services.
  5. By agreement, the CCC is the prime contractor on all direct United States (U.S.) government contracts (over $25,000) with Canadian-based suppliers. CCC, in turn, subcontracts with the appropriate supplier. CCC guarantees to the U.S. government all commitments, obligations and covenants of CCC in connection with any contract or order issued to them.
  6. Acquisitions Branch, PWGSC, provides contracting, contract management and other services related to CCC requirements. The PWGSC guidelines are provided in 9.55.15 Certification and Signing Authorities and information regarding certification and signing authorities is provided in Chapter 6 Approvals and Authorities.

9.55.5 Subcontracting

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  1. United States (U.S.) contracting officers usually rely on the prime contractor to select capable subcontractors, Canadian or otherwise.
  2. There is no agreement between Canada and the U.S. regarding placement of subcontracts in Canada by U.S. prime contractors for the benefit of the U.S. government. Therefore, Defence Contract Management Agency Americas (Canada) (DCMAA), Ottawa, has no authority to request a Pre-Award Survey (PAS) in the subcontract situation. However, CCC and PWGSC have agreed to evaluate a Canadian subcontractor's capability to produce upon request from DCMAA (Canada).
  3. In support of a request from a Canadian-based supplier, CCC will also procure stores or services from the U.S. government, when such stores or services are not available in Canada or at a reasonable cost from a commercial source outside Canada.
  4. Moreover, CCC also responds to other federal government departments needs for supply arrangements in order to meet the Government of Canada's global development assistance commitments.

9.55.10 Memorandum of Understanding

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CCC requirements must be carried out in accordance with the Memorandum of Understanding (MOU) of January 10, 2005, signed by PWGSC and CCC. The MOU at Annex 9.6: Memorandum of Understanding - Canadian Commercial Corporation / Public Works and Government Services Canada outlines both the responsibilities of PWGSC and CCC in relation to CCC requirements.

9.55.15 Certification and Signing Authorities

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Specific certification and signing authorities apply to CCC contracting documents. For more information, contracting officers should refer Annex 6.4.3: Exceptional Contracting Limits for these authorities.

Annex 9.1: Memorandum of Understanding Between Public Works and Government Services Canada and CORCAN

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Appendix A
(2002-05-24)
Memorandum of Understanding Between
Public Works and Government Services Canada and CORCAN
( SOA of the Correctional Service of Canada)

This Memorandum of Understanding (MOU) supersedes the PWGSC/ CSC agreement ratified on June 14, 1988.

1. Purpose

The purpose of this memorandum is to record agreement between the Department of Public Works and Government Services (PWGSC) and CORCAN ( SOA of Correctional Service of Canada (CSC) with respect to orders placed by PWGSC for goods and/or services from CORCAN.

2. Basis for Preferential Access
  1. In May 1974, in recognition of the social value of the training and employment of federally incarcerated offenders, Cabinet directed that, whenever possible, DSS(now part of PWGSC) and other government departments should provide correctional industries with adequate, stable and continuing market outlets for their manufactured goods.
  2. By buying manufactured goods (office furniture, workstations, filing cabinet, dormitory furniture and furnishings) from CORCAN, the Government is lowering the cost of incarceration, and providing offenders with work related training which is essential for becoming self sufficient, law abiding citizens upon their release. For departments and agencies procuring CORCAN products, they are indeed buying truly Canadian materials and services that are backed by a sister agency, and saving a significant amount of time and energy because of a much simpler procurement process.
3. Requisites for PWGSC Business with CORCAN
  1. PWGSC must maintain good customer and supplier relations. Therefore, in allocating business to CORCAN, PWGSC will consider the impact on customer departments and on Canadian suppliers likely to be affected, particularly small business.
  2. PWGSC recognizes that CORCAN has the mandate to provide employment and training to federal offenders in order to give offenders the skills and attitudes they will need when they return to society and become productive employees. CORCAN does this by marketing the products and services produced by federal offenders.
  3. PWGSC recognizes that the department should assist CORCAN with the promotion of CORCAN products.
  4. CORCAN recognizes that it is the one primarily responsible for marketing its products.
  5. Once business has been accepted, CORCAN must undertake to fulfill its obligations to PWGSC.
  6. For all business allocated by PWGSC to CORCAN, the quality standards and delivery performance must be comparable to those which PWGSC would have demanded and received from private sector suppliers.
4. Pricing Policy

CORCAN product prices are to be comparable to the most recent prices contracted for with private sector suppliers for like products, quality and quantity.

5. Determination of Allocation
  1. On receipt of a requisition for which the client has specified that CORCAN is the preferred source of supply, the contracting officer will support the award of all or part of a requirement to CORCAN.
  2. When CORCAN has not been specified as a source of supply but can meet the requirement, the contracting officer, wherever possible and in recognition of the potential benefits to be derived, will recommend to the client that CORCAN be considered as a source of supply.
  3. Except where a PWGSC analysis can demonstrate a prohibitive impact on a given Canadian industry, the share assigned to CORCAN will normally be limited only by the volume, which CORCAN is willing and able to provide.
6. Review Process

At the request of either party, PWGSC and CORCAN agree to conduct a review of this PWGSC/ CSC Memorandum of Understanding.

7. Implementation

The CEO of CORCAN and the Director General, Supply Program Management Sector, PWGSC, are responsible for the review and implementation of this memorandum.

8. Term of Agreement

This Agreement is effective from date of signatures and will remain in effect until terminated by mutual agreement of both parties (see paragraph REVIEW PROCESS).

9. Signatures

Signed this ___2___ day of ____January___ 2001__, at_ Ottawa__.

______________________
Ranald A. Quail
Deputy Minister, PWGSC

______________________
Lucie McClung
Commissioner of the Correctional Service of Canada

Annex 9.2: Notification of Procurement to Comprehensive Land Claims Agreement Claimant Groups

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(See 9.35.35 Notification of Procurement)

James Bay and Northern Quebec Agreement (JBNQA) Inuit Portion of JBNQA

Makivik Corporation
1111 Dr. Frederik-Philips Blvd., 3rd Floor
St-Laurent, QC H4M 2X6
Telephone: 514-745-8880
Facsimile: 514-745-3700

Makivik Corporation
P.O. Box 179
Kuujjuaq, QC J0M 1C0
Telephone: 819-964-2935
Facsimile: 819-964-2788

Cree Portion of JBNQA

Crees of Oujé-Bougoumou
203 Opemiska Meskino, Box 1165
Oujé-Bougoumou, QC G0W 3C0
Attention: Economic Development Officer
Telephone: 418-745-2519
Facsimile: 418-745-3544

Grand Council of the Crees (of Québec)
81 Metcalfe Street, suite 900
Ottawa, ON K1P 6K7
Telephone: 613-761-1655
Facsimile: 613-761-1388

Naskapi Portion of JBNQA

Naskapi Development Corporation
120-1000 St-Jean-Baptiste Avenue
P.O. Box 5023
Kawawachikamach, QC G2E 5G5
Telephone: 418-871-5100
Facsimile: 418-871-5254

Naskapi Nation of Kawawachikamach
P.O. Box 5111
Kawawachikamach, QC G0G 2Z0
Telephone: 418-585-2686
Facsimile: 418-585-3130

Inuvialuit Final Agreement

Inuvialuit Development Corporation
P.O. Bag # 7
Inuvik, NT X0E 0T0
Telephone: 867-777-2419
Facsimile: 867-777-3256

Inuvialuit Regional Corporation
P.O. Box 2120
Inuvik, NT X0E 0T0
Telephone: 867-777-2737
Facsimile: 867-777-2135

Gwich'in Comprehensive Land Claim Agreement

Gwich'in Tribal Council
P.O. Box 1509
Inuvik, NT X0E 0T0
Telephone: 867-777-7900
Facsimile: 867-777-7919

Nunavut Land Claims Agreement

Nunavut Tunngavik Incorporated
Policy and Planning Division
P.O. Box 638
Iqaluit, NU X0A 0H0
Telephone: 1-888-646-0006
Facsimile: 867-975-4949

Qikiqtani Inuit Association
P.O. Box 1340
Iqaluit, NU X0A 0H0
Telephone: 867-975-8400 or 1-800-667-2742
Facsimile: 867-979-3238

Qikiqtaaluk Corporation
P.O. Box 1228
Iqaluit, NU X0A 0H0
Telephone: 867-979-8400
Facsimile: 867-979-8433

Kakivak Association
P.O. Box 1419
Iqaluit, NU X0A 0H0
Telephone: 867-979-0911 or 1-800-561-0911
Facsimile: 867-979-3707

Kivalliq Inuit Association
P.O. Box 340
Rankin Inlet, NU X0C 0G0
Telephone: 867-645-5725 or 1-800-220-6581
Email: reception@kivalliqinuit.ca (Note: Notifications to be sent by e-mail only)

Sakku Investments Corporation
P.O. Box 188
Rankin Inlet, NU X0C 0G0
Telephone: 867-645-2805
Facsimile: 867-645-2063

Nunasi Corporation
P.O. Box 1559
Iqaluit, NU X0A 0H0
Telephone: 867-979-2175 or 867-979-2160
Facsimile: (867) 979-3099 (Note: Notification by email is preferred)
email: archie@nunasi.com, malaya@nunasi.com

Kitikmeot Inuit Association
Lands Division
P.O. Box 360
Kugluktuk, NU X0B 0E0
Telephone: 867-982-3310
Facsimile: 867-982-3311

Umbrella Final Agreement of the Council for Yukon Indians

Council of Yukon First Nations
2166 – 2nd Avenue
Whitehorse, YT Y1A 4P1
Telephone: 867-393-9200
Facsimile: 867-668-6577
email: reception@cyfn.net

Champagne and Aishihik First Nations Final Agreement

Champagne and Aishihik First Nations
Box 5310
Haines Junction, YT Y0B 1L0
Telephone: 867-634-4200
Facsimile: 867-634-2108
email: vinnes@cafn.ca

Little Salmon/Carmacks First Nation Final Agreement

Little Salmon/Carmacks First Nation
P.O. Box 135
Carmacks, YT Y0B 1C0
Telephone: 867-863-5576
Facsimile: 867-863-5710
email: info@lscfn.ca

First Nation of Nacho Nyak Dun Final Agreement

Nacho Nyak Dun First Nation
P.O. Box 220
Mayo, YT Y0B 1M0
Telephone: 867-996-2265
Facsimile: 867-996-2267
email: main@nndfn.com

Selkirk First Nation Final Agreement

Selkirk First Nation
P.O. Box 40
Pelly Crossing, YT Y0B 1P0
Attn: Betty Baptiste, Personnel Officer
Telephone: 867-537-3331
Facsimile: 867-537-3902
email: GillB@selkirkfn.com

Teslin Tlingit Council Final Agreement

Teslin Tlingit Council
Box 133
Teslin, YT Y0A 1B0
Telephone: 867-390-2532
Facsimile: 867-390-2204
email: admin@ttc-teslin.com

Vuntut Gwitchin First Nation Final Agreement

Vuntut Gwitchin First Nation
P.O. Box 94
Old Crow, YT Y0B 1N0
Telephone: 867-966-3261
Facsimile: 867-966-3800
email: reception@vgfn.net

Tr'ondëk Hwëch'in Final Agreement

Tr'ondëk Hwëch'in First Nation
P.O. Box 599
Dawson City, YT Y0B 1G0
Telephone: 867-993-7100
Facsimile: 867-993-6553
email: reception@trondek.ca

Ta'an Kwach'an Council Final Agreement

Mundessa Development Corporation
117 Industrial Road
Whitehorse, YT Y1A 2T8
Telephone: 867-668-3613
Facsimile: 867-667-4295
email: admin@taan.ca

Kluane First Nation Final Agreement

Kluane First Nation
P.O. Box 20
Burwash Landing, YT Y0B 1V0
Telephone: 867-841-4274
Facsimile: 867-841-5900
email: reception@kfn.ca

Kwanlin Dun First Nation Final Agreement

Kwanlin Dun First Nation
35 McIntyre Drive
Whitehorse, YT Y1A 5A5
Telephone: 867-633-7800
Facsimile: 867-668-5057
email: reception@kwanlindun.com

Carcross/Tagish First Nation Final Agreement

Carcross/Tagish First Nation
P.O. Box 130
Carcross, YT Y0B 1B0
Telephone: 867-821-4251
Facsimile: 867-821-4802
email: reception@ctfn.ca

Sahtu Dene and Metis Comprehensive Land Claim Agreement

Déline District Land Corporation
P.O. Box 156
Déline, NT X0E 0G0
Attention: Diane Andrea
Telephone: 867-589-8100
Facsimile: 867-589-8101
email: dlc_sa@gov.deline.ca

K’asho Gotine District Land Corporation
P.O. Box 18
Fort Good Hope, NT X0E 0H0
Attention: Jacinta Grandjambe
Telephone: 867-598-2519
Facsimile: 867-598-2437
email: jacintag@yamoga.ca

Sahtu Secretariat Incorporated
P.O. Box 155
Déline, NT X0E 0G0
Attention: Ruth Ann Elemie, Executive Director
Telephone: 867-589-4719
Facsimile: 867-589-4908
email: ruth_ann_elemie@gov.deline.ca

Tulita District Land Corporation
P.O. Box 63
Tulita, NT X0E 0K0
Attention: Judith Wright Bird, Executive Director
Telephone: 867-588-3734
Facsimile: 867-588-4025
email: jwright@tutlitalandcorp.ca

Labrador Inuit Land Claims Agreement

Nunatsiavut Government
12 Sandbanks Road
P.O. Box 70
Nain, NL A0P 1L0
Telephone: 709-922-2942
Facsimile: 709-922-2931

Tlicho Land Claims Agreement

Tlicho Government
P.O. Box 412
Behchoko, NT X0E 0Y0
Telephone: 867-392-6381
Facsimile: 867-392-6389

Nunavik Inuit Land Claims Agreement

Makivik Corporation
1111 Dr. Frederik-Philips Blvd., 3rd Floor
St-Laurent, QC H4M 2X6
Telephone: 514-745-8880
Facsimile: 514-745-3700

Makivik Corporation
P.O. Box 179
Kuujjuaq, QC J0M 1C0
Telephone: 819-964-2935
Facsimile: 819-964-2788

Annex 9.3: Comprehensive Land Claims Agreements Evaluation Criteria

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(See 9.35.45 Evaluation Criteria)

1. James Bay and Northern Quebec Agreement (JBNQA)- Inuit Portion

The Agreement Respecting the Implementation of the JBNQA, Annex A, Part II (Inuit Employment and Contract Priority) Article 7.0 states,

"Whenever practicable and consistent with sound procurement management, all of the following criteria, or as many as may be appropriate with respect to any particular government contract, shall be included in the bid evaluation criteria established by Canada for the awarding of government contracts in the Territory:

  1. the contribution by Inuit in carrying out the contract, which will include, but shall not be limited to, the employment of Inuit labour, the engagement of Inuit professional services or the use of Inuit suppliers;
  2. the existence or creation of permanent head offices, administrative offices or other facilities in the Territory; and,
  3. the undertaking of commitments, under the contract, with respect to on-the-job training or skills development for the Inuit."
2. Inuvialuit Final Agreement

Treasury Board Contracting Policy Notice 1997-8, Section 2, paragraph 6.00 states:

"When establishing bid evaluation criteria for the awarding of government contracts, and whenever practicable and consistent with sound procurement management, contracting authorities should consider the potential contribution of the Inuvialuit in carrying out the contract. This may include, as appropriate:

  1. the employment of Inuvialuit, the engagement of Inuvialuit professional services and the use of Inuvialuit suppliers,
  2. the creation of administrative offices or other facilities in the Inuvialuit Settlement Region,
  3. the undertaking of commitments, under the contract, with respect to related on-the-job training or skills development for Inuvialuit."
3. Nunavut Land Claims Agreement

Article 24.6.1 of the Nunavut Land Claims Agreement states,

"Whenever practicable, and consistent with sound procurement management, and subject to Canada's international obligations, all of the following criteria, or as many as may be appropriate with respect to any particular contract, shall be included in the bid criteria established by the Government of Canada for the awarding of its government contracts in the Nunavut Settlement Area:

  1. the existence of head offices, administrative offices or Other facilities in the Nunavut Settlement Area;
  2. the employment of Inuit labour, engagement of Inuit professional services, or use of suppliers that are Inuit or Inuit firms in carrying out the contracts; or
  3. the undertaking of commitments, under the contract, with respect to on-the-job training or skills development for Inuit."
4. Sahtu Dene and Métis Comprehensive Land Claims Agreement

The Implementation Plan for the Sahtu Dene and Metis Comprehensive Land Claim Agreement, Annex A, Project 12-3 states:

"Whenever practicable and consistent with sound procurement management, and subject to Canada's international obligations, all of the following criteria, or as many as may be appropriate with respect to any particular contract, shall be included in the bid criteria for the awarding of government contracts in the Sahtu settlement area:

  1. the existence or creation of head offices, administrative offices or other facilities in the Sahtu settlement area;
  2. the employment of participants labour, engagement of participants professional services, or use of suppliers that are participants or Sahtu Dene and Metis firms in carrying out the contract; or
  3. the undertaking of commitments, under the contract, with respect to on-the-job training or skills development for the participants."
5. Tlicho Land Claims Agreement

The Tlicho Agreement Implementation Plan, Annex A, Sheet 26-3, Article 2, Planning Assumptions, states:

"In order to stimulate socio-economic benefits through the procurement process, and whenever practicable and consistent with sound procurement practices, and subject to Canada's international obligations, all of the following criteria, or as many as may be appropriate with respect to any particular contract, shall be included in the bid evaluation criteria for the awarding of government contracts which are wholly or partly in Môwhì Gogha Dè Nîîtåèè ( NWT):

  1. the inclusion of an Aboriginal Benefits Plan which will assist with socio-economic development projects which are wholly or partly in Môwhì Gogha Dè Nîîtåèè ( NWT); or
  2. the employment of Tlicho First Nation labour, engagement of Tlicho First Nation professional services, or use of suppliers that are Tlicho which can act as sub-contractors in assisting with the carrying out of the contract; or
  3. the undertaking of commitments, under the contract, with respect to on-the-job training or skills development for Tlicho Citizens."
6. Nunavik Inuit Land Claims Agreement

Article 13.3.4 of the Nunavik Inuit Land Claims Agreement states,

"Whenever practicable and consistent with sound procurement management, and subject to Canada's international obligations, all of the following criteria, or as many as may be appropriate with respect to any particular contract, shall be included in the bid criteria established by the Government of Canada for the awarding of its government contracts for the procurement of goods and services in the Nunavik Marine Region (NMR):

  1. the existence of head offices, administrative offices or other facilities in the NMR;
  2. the employment of Nunavik Inuit labour, engagement of Nunavik Inuit professional services, or use of suppliers that are Nunavik Inuit or Nunavik Inuit enterprises in carrying out the contracts; and
  3. the undertaking of commitments, under the contract, with respect to on-the-job training or skills development for Nunavik Inuit."
7. Labrador Inuit Land Claims Agreement

Article 7.10.4 of the Labrador Inuit Land Claims Agreement states,

"Whenever practicable and consistent with sound procurement practices, and subject to Canada's international obligations, the following criteria, or as many as may be appropriate with respect to any particular contract, shall be included in the bid criteria established by the Government of Canada for the awarding of Government of Canada contracts for the procurement of goods and services in the Labrador Inuit Settlement Area:

  1. the existence of the head office, administrative offices or other facilities in the Labrador Inuit Settlement Area;
  2. the employment of Inuit labour, engagement of Inuit professional services or use of suppliers that are Inuit Businesses in carrying out the contracts; and
  3. the undertaking of commitments, under the contract, with respect to on the job training or skills development for Inuit."
8. Eeyou Marine Region Land Claims Agreement

Article 21.3.4 of the Eeyou Marine Region Land Claims Agreement states,

"Whenever practicable and consistent with sound procurement management, and subject to Canada's international obligations, all of the following criteria, or as many as may be appropriate with respect to any particular contract, shall be included in the bid criteria established by Government for the awarding of its Government Contracts for the procurement of goods and services in the Eeyou Marine Region (EMR):

  1. the existence of head offices, administrative offices or other facilities in Eeyou Istchee;
  2. the employment of Cree labour, engagement of Cree professional services, or use of suppliers that are Cree or Cree Enterprises in carrying out the contracts; and
  3. the undertaking of commitments, under the contract, with respect to on-the-job training or skills development for Crees."

Annex 9.4: Requirements for the Set-aside Program for Aboriginal Business

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(See 9.40.45 Certification by Suppliers)

1. Who is eligible?
  1. An Aboriginal business, which can be:
    1. a band as defined by the Indian Act
    2. a sole proprietorship
    3. a limited company
    4. a co-operative
    5. a partnership
    6. a not-for-profit organization

    in which Aboriginal persons have at least 51 percent ownership and control,

    OR

  2. A joint venture consisting of two or more Aboriginal businesses or an Aboriginal business and a non-Aboriginal business(es), provided that the Aboriginal business(es) has at least 51 percent ownership and control of the joint venture.

When an Aboriginal business has six or more full-time employees at the date of submitting the bid, at least thirty-three percent of them must be Aboriginal persons, and this ratio must be maintained throughout the duration of the contract.

The supplier must certify in its submitted bid that it is an Aboriginal business or a joint venture constituted as described above.

2. Are there any other requirements attached to suppliers in the Set-Aside Program for Aboriginal Business?

Yes

  1. In respect of a contract, (goods, service or construction), on which a supplier is making a proposal which involves subcontracting, the supplier must certify in its bid that at least thirty-three percent of the value of the work performed under the contract will be performed by an Aboriginal business. Value of the work performed is considered to be the total value of the contract less any materials directly purchased by the contractor for the performance of the contract. Therefore, the supplier must notify and, where applicable, bind the subcontractor in writing with respect to the requirements that the Aboriginal Set-Aside Program (the Program) may impose on the subcontractor or subcontractors.
  2. The supplier's contract with a subcontractor must also, where applicable, include a provision in which the subcontractor agrees to provide the supplier with information, substantiating its compliance with the Program, and authorize the supplier to have an audit performed by Canada to examine the subcontractor's records to verify the information provided. Failure by the supplier to exact or enforce such a provision will be deemed to be a breach of contract and subject to the civil consequences referred to in this document.
  3. As part of its bid, the supplier must complete the Certification of Requirements for the Set-Aside Program for Aboriginal Business(certification) stating that it:
    1. meets the requirements for the Program and will continue to do so throughout the duration of the contract;
    2. will, upon request, provide evidence that it meets the eligibility criteria;
    3. is willing to be audited regarding the certification; and
    4. acknowledges that if it is found NOT to meet the eligibility criteria, the supplier shall be subject to one or more of the civil consequences set out in the certification and the contract.

    See Standard Acquisition Clauses and Conditions(SACC) Manual clauses A3000T , M9030T or S3035T, as appropriate.

3. How must the business prove that it meets the requirements?
  1. It is not necessary to provide evidence of eligibility at the time the bid is submitted. However, the business should have evidence of eligibility ready in case it is audited.
  2. The civil consequences of making an untrue statement in the bid documents, or of not complying with the requirements of the Program or failing to produce satisfactory evidence to Canada regarding the requirements of the Program, may include: forfeiture of the bid deposit; retention of the holdback; disqualification of the business from participating in future contracts under the program; and/or termination of the contract. In the event that the contract is terminated because of an untrue statement or non-compliance with the requirements of the Program, Canada may engage another contractor to complete the performance of the contract and any additional costs incurred by Canada shall, upon the request of Canada, be borne by the business.
4. What evidence may be required from the business?
  1. Ownership and control
    1. Evidence of ownership and control of an Aboriginal business or joint venture may include incorporation documents, shareholders' or members' register; partnership agreements; joint venture agreements; business name registration; banking arrangements; governance documents; minutes of meetings of Board of Directors and Management Committees; or other legal documents.
    2. Ownership of an Aboriginal business refers to "beneficial ownership" i.e., who is the real owner of the business. Canada may consider a variety of factors to satisfy whether Aboriginal persons have true and effective control of an Aboriginal business. (See Appendix A Set-aside Program for Aboriginal Business for a list of the factors, which may be considered by Canada.)
  2. Employment and employees
    1. Where an Aboriginal business has six or more full-time employees at the date of submitting the certification and is required by Canada to substantiate that at least 33 percent of the full-time employees are Aboriginal, the business must, upon request by Canada, immediately provide a completed Owner/Employee Certification form for each full-time employee who is Aboriginal. See SACC Manual clauses A3001T, M3030T or S3036T, as appropriate.
    2. Evidence as to whether an employee is or is not full-time and evidence as to the number of full-time employees may include payroll records, written offers for employment, and remittance and payroll information maintained for Canada Revenue Agency purposes as well as information related to pension and other benefit plans.
    3. A full-time employee, for the purpose of this program, is one who is on the payroll, is entitled to all benefits that other full-time employees of the business receive, such as pension plan, vacation pay and sick leave allowance, and works at least 30 hours a week. It is the number of full-time employees on the payroll of the business at the date of bid submission that determines the ratio of Aboriginal to total employees of the business for the purpose of establishing eligibility under the Program.
    4. Owners who are Aboriginal and full-time employees who are Aboriginal must be ready to provide evidence in support of such status. The Owner/Employee Certification to be completed by each owner and full-time employee who is Aboriginal shall state that the person meets the eligibility criteria and that the information supplied is true and complete. This certification shall provide the person's consent to the verification of the information submitted.
5. Subcontracts
  1. Evidence of the proportion of work done by subcontractors may include contracts between the contractor and subcontractors, invoices, and paid cheques.
  2. Evidence that a subcontractor is an Aboriginal business (where this is required to meet the minimum Aboriginal content of the contract) is the same as evidence that a prime contractor is an Aboriginal business.
6. Who is an Aboriginal Person for Purposes of the Set-Aside Program for Aboriginal Business?
  1. An Aboriginal person is an Indian, Metis or Inuit who is ordinarily resident in Canada.
  2. Evidence of being an Aboriginal person will consist of such proof as:
    1. Indian registration in Canada;
    2. membership in an affiliate of the Metis National Council or the Congress of Aboriginal Peoples, or other recognized Aboriginal organizations in Canada;
    3. acceptance as an Aboriginal person by an established Aboriginal community in Canada;
    4. enrollment or entitlement to be enrolled pursuant to a comprehensive land claim agreement;
    5. membership or entitlement to membership in a group with an accepted comprehensive claim;
    6. evidence of being resident in Canada includes a provincial or territorial driver's license, a lease or other appropriate document.
Appendix A Set-aside Program for Aboriginal Business

(Excerpt from Treasury Board Contracting Policy Notice 1996-6, Annex A.)

Factors that may be considered in determining whether Aboriginal persons have at least 51% ownership and control of an Aboriginal business include:

  1. capital stock and equity accounts, i.e., preferred stock, convertible securities, classes of common stock, warrants, options;
  2. dividend policy and payments;
  3. existence of stock options to employees;
  4. different treatment of equity transactions for corporations, partnerships, joint ventures, community organizations, cooperatives, etc.;
  5. examination of charter documents, i.e., corporate charter, partnership agreement, financial structure;
  6. concentration of ownership or managerial control in partners, stockholders, officers trustees and directors-based definition of duties;
  7. principal occupations and employer of the officers and directors to determine who they represent, i.e., banker, vested ownerships;
  8. minutes of directors meetings and stockholders meetings for significant decisions that affect operations and direction;
  9. executive and employee compensation records for indication of level of efforts associated with position;
  10. nature of the business in comparison with the type of contract being negotiated;
  11. cash management practices, i.e., payment of dividends - preferred dividends in arrears;
  12. tax returns to identify ownership and business history;
  13. goodwill contribution/contributed asset valuation to examine and ascertain the fair market value of non-cash capital contributions;
  14. contracts with owners, officers and employees to be fair and reasonable;
  15. stockholder authority, i.e., appointments of officers, directors, auditors;
  16. trust agreements made between parties to influence ownership and control decisions;
  17. partnership - allocation and distribution of net income, i.e., provision for salaries, interest on capital and distribution share ratios;
  18. litigation proceedings over ownership;
  19. transfer pricing from non-Aboriginal joint venture;
  20. payment of management or administrative fees;
  21. guarantees made by the Aboriginal business;
  22. collateral agreements.

Annex 9.5: Procurement Strategy for Aboriginal Business Set-aside Checklist

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  1. Has the client indicated that the requirement has been set aside? (See 9.40.1 Decision to Set Aside a Procurement under PSAB)
    1. If no, and:
      1. The procurement is destined primarily for Aboriginal populations, and over $5,000, the contracting officer should draw the client's attention to the potential omission;
      2. Known qualified Aboriginal suppliers exist, the contracting officer should draw the client's attention to the potential for a voluntary Procurement Strategy for Aboriginal Business (PSAB) set-aside; or
      3. Neither (i) or (ii) above apply, or the client confirms that the procurement is not to be set-aside under PSAB, process the requirement according to standard procurement policies and procedures.
    2. If yes, see below:
  2. If the procurement is subject to Comprehensive Land Claims Agreements (CLCAs), determine the extent to which CLCAs and the PSAB set-aside conflict. In cases of conflict, CLCAs take precedence. (See 9.40.5 Application of PSAB and CLCAs.)
  3. Has the client indicated a requirement for subcontracting to Aboriginal business? (See 9.40.20 Subcontracting Plans.)
  4. Notify Aboriginal Procurement and Business Promotion Directorate, Aboriginal Affairs and Northern Development Canada (AANDC), of receipt of set aside requirement. (See 9.40.30(a).)
  5. Solicitation includes the document Requirements for the Set-aside Program for Aboriginal Business ( Annex 9.4: Requirements for the Set-aside Program for Aboriginal Business) and Standard Acquisition Clauses and ConditionsManual (SACC) clauses:
    1. A3002T, if applicable;
    2. A3000T, M9030T or S3035T, as appropriate; and
    3. A3001T, M3030T or S3036T, as appropriate. (See 9.40.10 PSAB and Trade Agreements and 9.40.45(c).)
  6. Source requirement according to established policies and procedures, source list, Government Electronic Tendering Service, etc. (See 9.40.35(b).)
  7. Notice of Proposed Procurement (NPP)/Advanced Contract Award Notice (ACAN): Include a clear statement that the procurement has been set aside and that only Aboriginal businesses will be eligible. (See 9.40.35(e).)
  8. Has AANDC advised that the procurement is/is not subject to pre-award audit of certifications before solicitation closing? (See 9.40.50(f).)
  9. Have all bidders/offerors/suppliers provided signed certificates of eligibility with their bids/offers/arrangements? (See 9.40.45(d).)
  10. Evaluation of bids/offers/arrangements according to established criteria.
  11. Advice to AANDC of two "best-assessed" responsive bidders/offerors/suppliers (without financial information) if procurement subject to pre-award audit. (See 9.40.50(f).)
  12. Has AANDC advised regarding results of pre-award audit of certificates of eligibility? (See 9.40.50(f).)
  13. Award contract in accordance with established evaluation criteria and result of pre-award audit, if applicable. Any resulting contract issued on the basis of the supplier being Aboriginal must include SACC Manual clause A3000C.
  14. Advise AANDC of contract award within 15 working days. (See 9.40.30(c).)
  15. Contract management including advice to AANDC regarding changes in contractor's status as an Aboriginal business, or requests to AANDC to verify continued status (post-award audit). (See 9.40.50(g))
  16. The procurement reporting of the set aside under PSAB has been done accurately. (See 9.40.60 Procurement Reporting.)

Annex 9.6: Memorandum of Understanding - Canadian Commercial Corporation / Public Works and Government Services Canada

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The following is a copy of the Memorandum of Understanding between Canadian Commercial Corporation and Department of Public Works Government Services.

THIS MEMORANDUM OF UNDERSTANDING made in duplicate as of the 10th day of January 2005.

BETWEEN: Canadian Commercial Corporation ("CCC") as represented by the President

AND: Department of Public Works Government Services ("PWGSC") as represented by the Assistant Deputy Minister, Acquisitions Branch

WHEREAS the primary objective of CCC, as legislated by the Government of Canada, is to facilitate increased trade between Canada and other nations, which has principally been done through export contract arrangements for a broad range of goods and services at a minimum risk to both CCC and the Canadian taxpayer;

WHEREAS CCC wishes to employ PWGSC to carry out services in relation to CCC's export activities enabling CCC to fulfill CCC's mandate and to identify, evaluate and manage CCC's risks;

WHEREAS PWGSC is willing to provide value added contracting, contract management and related services on the terms and conditions hereinafter set out.

NOW THEREFORE the Parties agree as follow:

1. DEFINITIONS

1.1 Assets Management Services means the provision of property management services relating to United States (U.S) Government property located at various plants of Canadian suppliers.

1.2 Assist Audit Services means, at the request of the U.S. Government, the conduct of a proposal review, the carrying out a facility evaluation or the performance of an audit related to an export transaction with a Canadian supplier.

1.3 Core Business Activity means:

  1. A CCC export transaction in the defence and aerospace market sectors with:
    • The U.S. Department of Defense, pursuant to the U.S.-Canada Defence Production Sharing Arrangements and the U.S.-Canada Defence Development Sharing Agreement
    • The National Aeronautics and Space Administration
    • The U.S. Coast Guard
  2. A CCC export transaction in any sector and with any Customers where PWGSC possesses the required experience and constitutes the type of transaction in which PWGSC is typically engaged.

1.4 Cost Audit Services means the auditing of the Canadian supplier's costs to be performed by that division of PWGSC commonly known as "Consulting and Audit Canada" (hereafter Consulting and Audit Canada).

1.5 Customer means CCC's international buyer.

1.6 Legal Services means the provision of professional services regarding the application of the law, including legal advice and opinions.

1.7 Major Project means a Core Business Activity that is of significant potential value, duration or complexity and for which CCC expressly requests to have a dedicated PWGSC team perform all or a subset of the PWGSC Services.

1.8 MOU means this Memorandum of Understanding.

1.9 NASA means the National Aeronautics and Space Administration.

1.10 PWGSC Services means the services described in Annex A, Part I that are to be performed by PWGSC.

1.11 U.S. Department of Defence means the U.S. Department of Defence, pursuant to the U.S.-Canada Defence Production Sharing Arrangements and the U.S.-Canada Defence Development Sharing Agreement.

2. TERM

2.1 This MOU becomes effective on the date it is signed and will automatically renew on a yearly basis unless either party sends a six (6) month written notice to the other party terminating the MOU.

3. NATURE OF THE SERVICES

3.1 PWGSC Services for a Core Business Activity

Upon receipt of a written request from CCC, PWGSC shall provide CCC with the specified subset of PWGSC Services that are requested for the Core Business Activity identified.

3.2 PWGSC Services for a Major Project

Upon receipt of a written request from CCC and upon agreement on nature of work and price, PWGSC shall dedicate, at PWGSC's discretion, a PWGSC team who will provide the specified subset of PWGSC Services that are requested for the Major Project identified.

3.3 Assist Audit Services

Upon receipt of a written request to that effect from CCC and upon agreement on a price if applicable, PWGSC shall perform Assist Audit Services.

3.4 Cost Audit Services

3.4.1. For export transactions of a cost reimbursable nature where the Customer is the U.S. Department of Defence, the NASA, the Ministry of Defence of the Federal Republic of Germany or the Ministry of Defence of the United Kingdom, PWGSC shall perform or arrange for the performance of the Cost Audit Services, including discretionary audits at CCC's discretion.

3.4.2. For any other export transactions, upon reception of a written request to that effect from CCC and upon agreement on a price, PWGSC shall perform or arrange for the performance of the Cost Audit Services.

3.5 Assets Management Services

Upon reception of a written request to that effect from CCC together with a list of U.S. Government property located at Canadian suppliers' facilities, PWGSC shall manage the listed U.S. Government property in accordance with the Administration of United States Government Furnished Property Policy contained in Volume 7 of the Supply Policy Manual.

3.6 Legal Services

3.6.1 The services herein described include the provision of Legal Services in a similar manner as provided to PWGSC in relation to the procurement requirements of other Government departments (SPM Section 6E), tailored for the needs of CCC's prime contract and back-to-back contracting arrangements as described in Volume 7 of the Supply Policy Manual.

3.6.1.1 For further clarity, PWGSC and CCC personnel shall have access to PWGSC Legal for Legal Services in relation to the services to be provided by PWGSC under this MOU. Said requests by CCC for Legal Services shall be made by CCC to PWGSC personnel who shall transmit such request to PWGSC Legal.

3.6.2 If PWGSC is of the opinion that a claim by or against CCC may result in litigation or arbitration, upon confirmation of such risk by PWGSC Legal, PWGSC shall notify CCC in writing. PWGSC legal shall continue providing Legal Services. CCC Legal may consult with PWGSC Legal and any differences in points of view or uncertainties will be referred to the Heads of the respective units.

3.6.3 When legal proceedings are actually commenced, either by or against CCC in connection with any contract for which PWGSC has been providing PWGSC Services, PWGSC Legal will turn over the file to CCC Legal who will be the instructing solicitor. PWGSC Legal shall assist CCC in preparing the statement of fact and law and shall render reasonable assistance to CCC and the Civil Litigation Branch of Justice or outside counsel, upon request.

3.6.3.1 For greater clarity, "legal proceedings" does not include conservatory measures or other measures or procedures destined to protect the assets/interests of CCC such as, without limiting the generality of the foregoing, registering liens, chattel mortgage or mortgages, asserting the rights of ownership of CCC and CCC's Customer over work in process or goods, or proof of claim in case of receivership or bankruptcy of the Canadian supplier.

3.6.4 Expenses incurred by PWGSC Legal who travel for the purpose of assisting PWGSC in the provision of PWGSC Services outside of the Ottawa/Gatineau area are deemed included in the firm price negotiated for the PWGSC Services for Core Business Activities. CCC expects that PWGSC Legal will have full opportunity to advise PWGSC personnel outside of the Ottawa/Gatineau area.

3.6.5 The Heads of the two Legal Units shall deal, on a case-by-case basis, with situations that do not fall within the general principles outlined herein.

3.7 Other Services

3.7.1 Upon receipt of a written request from CCC, PWGSC may perform other services for CCC upon agreement on a price.

3.7.2 However, where CCC requests the services of a PWGSC lawyer with respect to such other services being performed by PWGSC pursuant to the preceding subsection, such arrangements, including the managerial and financial aspects, will be by written agreement between the Heads of the two Legal Units.

4. BASIS OF PAYMENT

4.1 PWGSC Services for Core Business Activities

4.1.1 PWGSC shall be paid the firm price negotiated between the parties for a specific fiscal year for all PWGSC Services rendered during the said fiscal year with regards to Core Business Activities, excluding Major Projects.

4.1.2 Three (3) months prior to the commencement of each fiscal year, PWGSC and CCC shall endeavor to negotiate an agreement on (a) the anticipated volume of Core Business Activities for the following fiscal year, (b) the corresponding total level of effort required of PWGSC to carry out the PWGSC Services and (c) the firm price to be paid by CCC regarding PWGSC Services for Core Business Activities of the following fiscal year.

4.2 PWGSC Services for Major Projects

4.2.1 PWGSC shall be paid the firm price negotiated between the parties for the applicable fiscal year for all PWGSC Services rendered during the said fiscal year with regards to Major Projects.

4.2.2 If no agreement has been reached between the parties with regards to a firm price for PWGSC Services for Major Projects for the applicable fiscal year then, upon receipt of a written request from CCC requesting PWGSC Services for a Major Project, PWGSC will submit a quotation to CCC for the PWGSC Services related to such Major Project, based upon the estimated scope, duration and complexity of the Major Project.

4.2.3 PWGSC shall be paid the firm price negotiated in accordance with the quotation accepted by CCC, unless agreed otherwise due to the specificity of a Major Project.

4.2.4 In the event that the scope, duration, or complexity of the Major Project were to be significantly increased or decreased, PWGSC shall notify CCC and shall submit for consideration by CCC a revised quotation. No increase in the price resulting from any modifications in the PWGSC Services to be performed will be authorized or paid to PWGSC unless CCC has approved such modifications in writing prior to their performance.

4.3 Assist Audit Services

4.3.1 Upon receipt of a written request for Assist Audit Services from CCC and copy of a document indicating that the Assist Audit Services are requested by the U.S. Department of Defence or the NASA, the price of such Assist Audit Services will be deemed included in the firm price negotiated for the PWGSC Services for Core Business Activities.

4.3.2 With respect to any other Assist Audit Services requested by CCC, PWGSC will submit, for CCC's consideration and acceptance, a price quotation based upon the specific scope of Assist Audit Services being requested. PWGSC shall be paid the firm price negotiated in accordance with the quotation accepted by CCC.

4.4 Cost Audit Services

4.4.1 Exclusively for export transactions of a cost reimbursable nature, where the Customer is the U.S. Department of Defence, the NASA, the Ministry of Defence of the Federal Republic of Germany or the Ministry of Defence of the United Kingdom, the price of the Cost Audit Services will be deemed included in the firm price negotiated for the PWGSC Services for Core Business Activities.

4.4.2 With respect to any other Cost Audit Services requested by CCC, PWGSC will submit, for CCC's consideration and acceptance, a price quotation based upon the specific scope of Cost Audit Services being requested. PWGSC shall be paid the firm price negotiated in accordance with the quotation accepted by CCC.

4.5 Assets Management Services

4.5.1 The price of Assets Management Services is included in the firm price negotiated for PWGSC Services for Core Business Activities.

4.6 Legal Services

4.6.1 The price for Legal Services is included in the firm price negotiated for PWGSC Services for Core Business Activities.

4.7 Other Services

4.7.1 The price of other services will be negotiated on a case-by-case basis.

5. METHOD OF PAYMENT

5.1 CCC and PWGSC shall budget and endeavor to maintain adequate funding and resource levels to discharge the commitments contemplated under this MOU.

5.2 All payments by CCC to PWGSC shall be made in semi-annual installments upon receipt of an invoice from PWGSC, unless agreed otherwise in the case of a specific Assist Audit Services or Cost Audit Services.

6. SERVICE LEVELS

6.1 PWGSC undertakes to use the best possible means in order to act with prudence and diligence in performing the services described in this MOU and in order to achieve the performance time indicated in Article 6.1.3.

6.1.1 More specifically with regards to certifications:

6.1.1.1 PWGSC shall give CCC priority treatment with regards to certifications when, given specific circumstances where there is a need to respond on an urgent and timely basis to tender calls, requests for proposals and other forms of bid solicitation, CCC express in writing to PWGSC such a need for an urgent treatment.

6.1.1.2 PWGSC agrees to employ the appropriate level of expertise required in each case to properly assess the capabilities of the Canadian supplier and to determine whether there are abnormal risks associated with CCC's endorsement of such Canadian supplier's offer, keeping in mind that CCC must rely solely on that Canadian supplier to discharge all of the obligations of any resultant contract.

6.1.1.3 PWGSC recognizes that CCC's endorsement of an offer to a prospective Customer will be based on PWGSC's certification. CCC's endorsement of the Canadian supplier's offer constitutes CCC's offer to the Customer and CCC's commitment that the CCC will satisfy the solicitation requirements in accordance with the Canadian supplier's offer. Submission of the endorsement is binding upon CCC. PWGSC further recognizes that an accepted offer will obligate CCC to perform any resultant contract.

6.1.1.4 PWGSC shall provide certification of a Canadian supplier's offer when PWGSC considers that both:

  1. the offer is within such Canadian supplier's financial, technical and delivery capability. This documented assessment will require an analysis of that Canadian supplier's financial and technical ability to perform any contract which may result from that Canadian supplier's offer, keeping in mind that CCC must rely solely on that Canadian supplier to discharge all of the obligations of any resultant contract; and,
  2. with regards to the contract cost:
    1. in the case of a request for proposal (RFP) or a request for quotation (RFQ), the cost breakdown of the Canadian supplier's proposed price(s) is/are fair and reasonable, in accordance with CCC Pricing Policy contained in Volume 7 of the Supply Policy Manual, and
    2. in the case of a bid, the Canadian supplier is capable of performing the contract at the price quoted.

6.1.2 With respect to contract administration:

6.1.2.1 In exceptional cases, such as supplier bankruptcy or receivership, Show Cause Notices, Termination Notices, Stop Work Notices or other significant default or anticipatory default situations, PWGSC and CCC shall immediately take jointly the necessary actions, including the assignment of appropriate personnel from each others organizations, to ensure that the interests of CCC are fully protected.

6.1.2.2 CCC or PWGSC may identify contracts, which require special monitoring respecting the timely fulfillment of their contract obligations. PWGSC shall suggest a list of possible monitoring actions to ensure that such Canadian supplier(s) remedy deficiencies and take corrective actions as required. Upon receipt of a written confirmation by CCC, PWGSC shall, as agent for CCC, implement the approved special monitoring actions. PWGSC agrees to provide status reports to CCC on such special monitoring concerning deliveries and the implementation of the remedy to rectify the deficiencies or of the corrective actions required.

6.1.3 And, more specifically with regards to contract award and administration:

6.1.3.1 Canadian supplier contract award notice: Shall be issued by PWGSC, as agent for CCC, to Canadian suppliers within two (2) business days following receipt of such a notice from CCC. CCC shall be sent, by facsimile or other electronic means, an information copy of these notices.

6.1.3.2 Preparation/Execution of contracts with Canadian supplier(s) and amendments thereto: Shall be issued by PWGSC, as agent for CCC, within twenty-one (21) calendar days following receipt of an executed Financial Authority form CCC 747 and relevant documentation from CCC.

6.1.3.3. Approval of claims for progress payments: Shall be verified for accuracy and then sent to CCC within five (5) working days following their receipt by PWGSC.

7. PROCEDURE

7.1 In performing the services identified under Article 3 of the present MOU, PWGSC will follow the procedures contained in Volume 7 of the Supply Policy Manual.

7.2 CCC and PWGSC hereby agree and undertake to jointly review Volume 7 during fiscal year 2005-2006 to reflect changes, which are mutually agreed by both parties. The goal of this joint review is to deploy a renewed CCC Desk Manual encompassing the current agreed to working arrangements between the parties to replace those in Volume 7.

7.3 PWGSC also agrees to incorporate CCC's standard contract clauses and forms in the PWGSC Standard Acquisition Clauses and Conditions (SACC) Manual.

8. AUTHORITY

8.1 CCC hereby delegates to PWGSC the necessary contractual and financial authorities to carry out the requested PWGSC Services on behalf of and as agent for CCC, and it is understood that the Deputy Minister of Public Works and Government Services Canada shall further delegate authority to his/her officials as he/she considers appropriate to perform said PWGSC Services as agents of CCC in a efficient and effective manner.

9. ACCESS TO INFORMATION

9.1 PWGSC shall make available to CCC all past and present CCC files that are still available to PWGSC and that are related to PWGSC Services, Assist Audit Services, Cost Audit Services and Asset Management Services provided under this MOU.

9.2 PWGSC shall provide the same access to CCC as to other PWGSC's client departments, to any of its information systems. CCC agrees to pay PWGSC any standard charges related to this access.

9.3 Where a request is made to CCC under the Access to Information Act or the Privacy Act that relates, in whole or in part, to a matter in respect of which PWGSC is providing PWGSC Services, Assist Audit Services, Cost Audit Services, Asset Management Services or other services on CCC activities to CCC, PWGSC agrees to comply with the Access to Information Act or the Privacy Act in a timely manner.

9.4 Where a request is made to PWGSC under the Access to Information Act or the Privacy Act that relates, in whole or in part, to a matter in respect of which CCC is receiving PWGSC Services, Assist Audit Services, Cost Audit Services, Asset Management Services or other services on CCC activities, CCC agrees to comply with the Access to Information Act or the Privacy Act in a timely manner.

10. CONFIDENTIALITY OF THIRD PARTY INFORMATION AND CLASSIFIED INFORMATION

10.1 To ensure the integrity of the PWGSC Services delivered under this MOU, to protect the interests of Canadian suppliers and Customers, and to protect Canada from legal action, PWGSC and CCC agree to treat all confidential information, such as financial, commercial, scientific or technical information, supplied to PWGSC by a third party in a secure and confidential manner. Subject to the Access to Information Act, neither party shall not release or disclose outside the Government of Canada any information delivered to either party that is confidential information or information that is proprietary to the Canadian supplier of its subcontractors.

10.2 When in receipt of protected/classified information, the respective parties shall handle such information on a need to know basis and provide security for the information to the level of classification designated in accordance with government procedures for protected/classified information.

11. AUDIT

11.1 PWGSC acknowledges that the Auditor General of Canada or his designated representative has full authority to audit the accounts, books, records, files and all documentation maintained and kept by PWGSC with regard to the PWGSC Services, Assist Audit Services, Cost Audit Services, Asset Management Services or other services on CCC activities.

12. TRAINING

12.1 The parties agree to conduct joint and individual training sessions on the roles and responsibilities of PWGSC and CCC to ensure that CCC and PWGSC personnel are conversant with and knowledgeable on appropriate policies and procedures. The parties will strive to sustain and improve the quality of services through appropriate training.

12.2 External training identified as being beneficial to both parties such as the U.S. Government Contract Law, Pre-Award Contracting and Post-Award Contracting courses which are sponsored, from time to time by CCC in Canada, will be offered to PWGSC personnel without charge as part of the parties' mutual commitment to the training and development of personnel.

12.3 The parties have agreed to make use of alternate methods of maintaining an enriched capacity to work together at delivering quality services by establishing mutual exchanges of staff with agreed learning objectives for growth, development and diversity.

13. COMMUNICATION LINKS

13.1 The parties agree to distribute this MOU to all operating levels within each other's organization within fifteen (15) calendar days of the execution of this MOU or any amendment thereto, and copy respective parties on communications relating to these actions.

13.2 The parties agree to adopt and maintain between them compatible e-mail connectivity in order to achieve effective communications concerning the U.S. Department of Defence and especially with the Defence Contract Management Command Americas. It is further agreed that PWGSC and CCC will share electronically contract information that has been identified to be mutually beneficial to both parties.

13.3 The parties agree to keep each other appraised of internal changes that may have an impact upon the relationship and services contemplated under this MOU through the offices of those identified in Article 17.1.

14. REVIEWS

14.1 MOU Reviews

14.1.1 The signatories to this MOU, or their representatives agree to meet as required to discuss issues concerning the current or future operational matters governed by this MOU.

14.2 Service Level Reviews

14.2.1 The parties agree to meet quarterly, commencing on April 1 st, 2005, to review PWGSC's performance against the service levels described in Article 6.1.3 as well as against the turn around time of certifications, Assist Audit Services and Cost Audit Services.

14.2.2 Following the analysis of PWGSC's performance, the parties undertake to identify and implement those changes in the policies, practices, procedures and other work flow arrangements between the organizations proven to be cost effective and having a demonstrated net benefit to CCC's Customers and Canadian suppliers.

15. AMENDMENTS

15.1 This MOU may be amended by written agreement between PWGSC and CCC.

16. ENTIRE AGREEMENT

16.1 This MOU constitutes the entire and sole agreement between the parties with respect to the subject matter of the MOU and supersedes all previous negotiations, communications and other understandings, whether written or oral, relating to it. There are no terms, covenants, representations, statements or conditions binding on the parties other than those contained in the present MOU.

17. PRIORITY OF DOCUMENTS

17.1 The documents specified below form part of and are incorporated into the MOU. If there is a discrepancy in the wording between any documents that appear on the list, the wording of the document that first appears shall prevail over the wording of any document that subsequently appears on the list.

  1. This agreement
  2. Annex A – Responsibility Matrix
  3. Annex B – U.S.- Canada Defence Production Sharing Agreements
  4. Annex C – U.S.- Canada Defence Development Sharing Agreement
18. INTERPRETATION

18.1 Issues regarding interpretation of or compliance with the terms and conditions of this MOU by either party, shall be brought to the attention of the Vice President, Operations, CCC or the Director General, Land Aerospace and Marine Systems & Major Projects Sector, PWGSC or the person assuming these functions, for immediate resolution.

CANADIAN COMMERCIAL CORPORATION

J. Hugh O'Donnell
President

DEPARTMENT OF PUBLIC WORKS AND GOVERNMENT SERVICES

Jane S. Billings
Assistant Deputy Minister
Acquisitions Branch

Annex A to Memorandum of Understanding 9.6.1: Responsibility Matrix

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PART I PWGSC Services Responsibilities:
Annex A to MOU: Responsibility Matrix - Part I PWGSC Services Responsibilities
  Primary Secondary
1. PROJECT IDENTIFICATION PHASE
Identification of:
- Export market opportunities
- Sourcing possibilities
CCC PWGSC
Liaison policy requirements with other department/agencies regarding CCC activities CCC PWGSC
Evaluation of project potential (feasibility, bid time, supply availability, export permit) CCC PWGSC
Availability of support services (training, product support, repair, overhaul) PWGSC CCC
Assessment of Customer's risk (political/social/economic factors/financing) CCC -----
Agents/representatives, boycott, considerations CCC PWGSC
Project funding CCC PWGSC
Insurance and sureties CCC PWGSC
2. REQUIREMENT DEFINITION PHASE
Clarification of Customer's requirements CCC PWGSC
Review and assessment of specifications and technical requirements PWGSC CCC
3. BID SOLICITATION PHASE
Solicitation of Canadian suppliers for bids CCC PWGSC
Definition of bid instructions (special terms, foreign laws/conditions, use of representatives, inspection, bid opening, etc.) CCC PWGSC
Preparation and issue of tenders or bid sets CCC PWGSC
Compliance review of bids from Canadian suppliers (i.e., with delivery, shipping, forms, etc.) CCC PWGSC
Security clearance (facility & personnel) PWGSC ----
Facility surveys, including pre-award surveys PWGSC CCC
Liaison (proposal of pre-award) with:
- Canadian supplier
- Customer

PWGSC
CCC

CCC
PWGSC

Certification of bid PWGSC CCC
Project funding Export Development Corporation, banks, multilateral aid, financing agencies CCC -----
Arrangement of Bid/performance bonds, or guarantees to Customers CCC -----
Examination/endorsement CCC -----
Bid submissions to Customers CCC ------
4. NEGOTIATION/AWARD PHASE
Negotiation of contract
- Canadian supplier
- Customer

PWGSC
CCC

CCC
PWGSC

Preparation of the Financial Authority 747 forms CCC PWGSC
Canadian supplier contract award notice PWGSC CCC
Preparation and arrangement of documents regarding Canadian supplier's guarantees, parental guarantees, security deposits, etc. PWGSC CCC
Execution of bid bonds, performance bonds, other forms of surety/guarantee as required CCC ------
Acceptance/acknowledgement/signing of Customer contract (award) and amendment PWGSC CCC
Preparation and signing of contract with Canadian supplier(s) and amendments PWGSC CCC
5. CONTRACT MANAGEMENT/ADMINISTRATIVE PHASE
5.1 Monitoring Delivery, Technical & Cost Performance
Contract quality control in accordance with PWGSC procedure PWGSC CCC
Monitoring production and delivery
- Obtaining progress reports from Canadian suppliers (as per contract deliverables)
- Delivery status
- Review/approve design change requests/waivers/deviations
- Conduct design/technical/progress reviews meetings
- Manage contract performance issues
PWGSC CCC
Monitoring Cost Performance
- Cash flow and final cost monitoring
- Verification of adequacy of the Canadian supplier/subcontractors accounts
- Verification of special financial considerations (i.e., economic price adjustment, foreign exchange, etc.)
- Management of contract financial securities
PWGSC ------
Special Monitoring (as define in Article 6.1.2.2) PWGSC CCC
5.2 Payment Authorization
Approval of progress claims & invoices
- Invoices and progress claim verification
- Milestone/progress/final payment authorization
- Financial/time audit management (if required)
PWGSC CCC
Processing invoices, progress claims, etc. for payment to the Canadian supplier and collection from the Customer after approval where required CCC ------
5.3 Procurement Progress
Submitting special progress reports to the Customer CCC PWGSC
Contract liaison with the Customer:
- U.S.
- International

PWGSC
CCC

CCC
PWGSC

Technical liaison with the Customer PWGSC CCC
Management of contract funding CCC PWGSC
Inspection and acceptance arrangements PWGSC CCC
Shipping and insurance arrangements PWGSC CCC
Major disputes (contractual) CCC PWGSC
Decision regarding anticipatory default or for termination of contracts or part thereof for convenience of default CCC PWGSC
Termination notice to the Canadian supplier PWGSC CCC
Administration of terminations PWGSC CCC
5.4 Contract Close-out Action
Close-out of contract files:
- Negotiation of final price
- Disposition of surplus assets
- Resolve audit enquiries
- Resolution of warranty claims and contract disputes
PWGSC CCC
6. OTHER PROCUREMENT SERVICES
Action on contract losses CCC PWGSC
Special facility surveys PWGSC CCC
Price analysis/verification PWGSC CCC
Annual rate negotiations with major Canadian firms PWGSC ------
7. OTHER
Media relations regarding activities of CCC CCC -------
PART II OTHER RESPONSIBILITIES
Annex A to MOU: Responsibility Matrix - Part II Other Responsibilities
  Primary Secondary
Cost audits PWGSC CCC
Assist audits PWGSC CCC
Management of U.S. Government assets, GSM/GFE/special tooling test equipment/other PWGSC CCC

Annex B to Memorandum of Understanding 9.6.2: Canada-United States Defence Production Sharing Agreements

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DEFENCE PRODUCTION SHARING AGREEMENT BETWEEN
CANADA AND THE UNITED STATES OF AMERICA

Reproduced for presentational purposes. Not original documents.

AMENDMENT TO CANADIAN LETTER OF AGREEMENT
Dated 27 July 1956

Change Paragraph 2. (a) of the Letter of Agreement as it appears in the Defence Acquisition Regulation (DAR) Section M Part 1406.1 (a) and substitute the following language:

2.(a) The Corporation agrees that it will cause all first-tier subcontracts, under contracts covered by this agreement to be placed in accordance with the practices, policies and procedures of the Government of Canada covering procurement for defence purposes; and agrees that if the aggregate profit realized under such subcontracts by any first-tier subcontractor exceeds that which is allowed by the Government of Canada under the above mentioned practices, policies, and procedures, the amount of such excess will be refunded by the Corporation to the Military Departments. There shall also be refunded profits on any subcontract in excess of amounts which the Minister of Defence Production (Canada) in the exercise of said practices, policies, and procedures considers to be fair and reasonable, recovered by the Minister pursuant to Section 21 of the Defence Production Act (Canada) from any individual subcontractor of any tier. It is recognized that the practices, policies, and procedures of the Government of Canada referred to above permit various rates of profit in accordance with the terms of the said practices, policies, and procedures as from time-to-time amended; however, in no case will the rate of profit be allowed to exceed any limit prescribed by statute of the Government of the United States. For the purpose of this paragraph, the Corporation will cause to be conducted such audits in accordance with the Costing Memorandum (DDP-31) of the Department of Defence Production (Canada) and such verifications of cost as are in accordance with the said practices, policies, and procedures. The Corporation will render to the Military Departments its certificate that the provisions of this paragraph have been observed.

For the Government of the United States of America

(signed)

___________________
Caspar Weinberger
Secretary of Defence

For the Government of Canada

(signed)

___________________
Herb Gray
Ministry of Industry, Trade and Commerce

DEPUTY MINISTER OF DEFENCE PRODUCTION
SOUS-MINISTRE DE LA PRODUCTION DE DÉFENSE
CANADA

Text of Agreement dated 27 July 1956, as amended 17 December 1956, 31 May 1957, 6 January 1961, and 15 October 1962, between the Department of Defence Production (Canada) and the U.S. Departments of the Army, the Navy, the Air Force, and the Defence Supply Agency, sets forth policies and provides procedures with respect to all contracts for supplies and services placed with the Canadian Commercial Corporation on or after 1 October 1956.

Letter of Agreement

1.This agreement applies to all contracts placed, on or after October 1, 1956, by any of the Military Departments with the Corporation. It shall remain in force from year to year until terminated by mutual consent; however, it can be terminated on the 31 st day of December or the 30 th day of June in any year by either party provided that six months' notice of termination has been given in writing. In addition, this agreement provides for certain reciprocal arrangements facilitating procurement by each of the parties in the country of the other.

2. (a)The Corporation agrees that it will cause all first-tier subcontracts under contracts covered by this agreement to be placed in accordance with the practices, policies and procedures of the Government of Canada covering procurement for defence purposes; and agrees that if the aggregate profit realized under such subcontracts by any first-tier subcontractor exceeds that which is allowed by the Government of Canada under the above-mentioned practices, policies, and procedures, the amount of such excess will be refunded by the Corporation to the Military Departments. There shall also be refunded profits on any subcontract in excess of amounts which the Minister of Defence Production (Canada) in the exercise of said practices, policies and procedures considers to be fair and reasonable, recovered by the Minister pursuant to Section 21 of the Defence Production Act (Canada) from any individual subcontractor of any tier. It is recognized that the practices, policies and procedures of the Government of Canada referred to above permit varying rates of profit not exceeding in the case of cost reimbursement type contracts 7 ½ percent of estimated cost plus, in certain cases, a bonus where cost savings have been demonstrated, and not exceeding in the case of negotiated fixed price contracts 10 percent of estimated cost. For the purpose of this paragraph, the Corporation will cause to be conducted such audits (in accordance with the Costing Memorandum DDP-31 of the Department of Defence Production (Canada)) and such verifications of cost as are in accordance with the said practices, policies and procedures. The Corporation will render to the Military Departments its certificate that the provisions of this paragraph have been observed.

(b)Contracts for communication and transportation services, and the supply of power, water, gas and other utilities shall be excepted from the provisions of sub-paragraph (a) above, provided the rates of charges for such services or utilities are fixed by public regulatory bodies; and provided further the Military Departments are accorded any special rates that may be available to the Canadian Government with respect to such Contracts.

(c)The Canadian Government, its Departments and Agencies, including but not limited to the Corporation, and Canadian Arsenals Limited, a Crown Company wholly owned by the Canadian Government, shall not be entitled to any profit on any contract or contracts covered by this agreement. Any profits, which may be realized shall be returned to the Military Departments except as hereinafter provided:

Before refunding profits realized from the following sources:

  1. net profits of the Canadian Government, b Departments and Agencies as defined above, with respect to contracts and subcontracts covered by this agreement;
  2. excess profits referred to in paragraph (a) above; and
  3. renegotiation recoveries from subcontracts of any tier under contracts covered by this agreement, which recoveries the Military Departments would otherwise be entitled to receive in accordance with the provisions of subparagraph (a) above; the Corporation shall be entitled to deduct any losses it may sustain with respect to contracts covered by this agreement.

(d)Interim adjustments and refunds under this paragraph 2 shall be made at such time or times as may be mutually agreed upon but at least once a year as of June 30 th. Such interim adjustments shall apply only to completed contracts. The final adjustment and refund shall be made as soon as practicable after the expiration of this agreement.

(e) The profit and loss provisions of this paragraph 2 shall not apply to contracts awarded to the Corporation as the result of formal competitive bidding (initiated by Invitation for Bids).

3. (a)All contracts placed by the Military Departments with the Corporation, except those placed as the result of formal competitive bidding, shall provide for prices or cost reimbursement, as the case may be, in terms of Canadian currency, and for payment to be made in such currency. Therefore, quotations and invoices shall be submitted by the Corporation to the Military Departments in terms of Canadian currency, and such cost data, vouchers, etc., as the contracts require shall also be submitted in terms of Canadian currency. However, the Corporation may elect in respect of any such contracts to quote, submit the said cost data, vouchers, etc., and receive payment in United States currency, in which event such contracts shall provide for payment in United States currency and shall not be subject to adjustment for losses or gains resulting from fluctuations in exchange rates.

(b)All formal competitive bids shall be submitted by the Corporation in terms of United States currency and contracts placed as a result of such formal competitive bidding shall not be subject to adjustment for losses or gains resulting from fluctuation in exchange rates.

4 & 5.The Military Departments and the Corporation shall avoid, to the extent consistent with the declared policies of the Military Departments and the Canadian Government, the making of any surcharges covering administration costs with respect to contracts placed with the Corporation by any of the Military Departments and contracts placed by the Military Departments in the United States for the Canadian Government. To the extent that contracts placed with the Corporation by the Military Departments provide for the audit of costs and profits, such audit shall be made without charge to the Military Departments by the Cost Inspection and Audit Division of the Treasury of Canada in accordance with Costing Memorandum Form DDP-31 of the Department of Defence Production (Canada).

6.The Canadian Government shall arrange for inspection personnel of the Department of National Defence (Canada) to -act on behalf of the Military Departments with respect to contracts placed by the Military Departments with the Corporation and with respect to subcontracts placed in Canada by United States contractors which are performing contracts for the Military Departments and for the use of inspection facilities of the Departments of National Defence (Canada) for such purposes, such personnel and facilities to be provided without cost to the Military Departments. The Military Departments shall provide and make no charge for inspection services and inspection facilities in connection with contracts placed in the United States by the Military Departments for the Canadian Government and with respect to subcontracts placed in the United States by Canadian contractors, which are performing contracts for the Department of Defence Production (Canada). The Department of National Defence (.Canada) or any Military Department may provide liaison with the other's inspection personnel in connection with the foregoing. It is understood that either the Department of National Defence (Canada) or any Military Department may in appropriate cases arrange for inspection by its own inspection organization in the other's country.

7.Because of the varying arrangements made by the Canadian- Government and the Military Departments in furnishing Government-owned facilities (including buildings and machine tools) to contractors, it is recognized that the matter of inclusion in contract prices of charges, through amortization or otherwise, for use of such facilities will be determined in the negotiation of individual contracts. However, there shall be avoided, to the extent consistent with the policies of the Canadian Government and Military Departments, any such charges for use of Government-furnished facilities.

8. (a)The Corporation agrees that the prices set out in fixed-price type contracts covered by this agreement will not include any taxes with respect to first-tier subcontracts; nor shall prices include customs duties to the extent refundable in accordance with Canadian law, paid upon the import of any materials, parts, or components incorporated or to be incorporated in the supplies, with respect to first-tier subcontracts.

(b)The Corporation agrees that under cost-reimbursement type contracts the Corporation shall, to the extent practicable with respect to first-tier subcontracts, exclude from its claims all taxes and to the extent refundable in accordance with Canadian law, customs duties, paid upon the import of any materials, parts of components, incorporated or to be incorporated in the supplies and that any amounts included in such claims representing such taxes and duties shall be refunded or credited to the Military Departments.

(c)The Corporation agrees that, to the extent that such taxes and duties can be reasonably and economically identified, it will use best endeavors to cause such taxes and duties to be excluded from all subcontracts below the first-tier and, if found to be included, to be recovered and credited to the Military Departments.

9.The Corporation recognizes that existing law of the United, States prohibits the use of the cost-plus-a percentage-of-cost system of contracting.

10.Each contract covered by this agreement shall be deemed to include the provisions required by:

  1. Public Law 245, 82 nd Congress of the United States (65 Stat. 700; 41 USC 153© and
  2. Section 719 of Public Law 458, 83 rd Congress of the United States (68 Stat. 353) or similar provisions that may be required by subsequent legislation.

The Assistant Secretary of the Army (Logistics)
The Assistant Secretary of the Navy (Material)
The Assistant Secretary of the Air Force (Material)
The Pentagon,
Washington 25, D.C.
U.S.A.

Annex C to Memorandum of Understanding 9.6.3: Canada-United States Defence Development Sharing Agreement

()

Defence Development Sharing Agreement

This Memorandum of Understanding complements the U.S.-Canadian Defence Production Sharing Program by establishing a cooperative agreement in defence research and development between the United States Department of Defence (DoD) and the Canadian Department of Defence Production (CDDP), called the Defence Development Sharing Program.

1. Objectives:

The principal objectives of the Defence Development Sharing Program are:

  1. To assist in maintaining the Defence Production Sharing Program at a high level by making it possible for Canadian firms to perform research and development work undertaking to meet the requirements of U.S. armed forces.
  2. To utilize better the industrial, scientific and technical resources of the United States and Canada in the interest of mutual defence.
  3. To make possible the standardization and interchangeability of a large amount of the equipments necessary for the defence of United States and Canada.
2. Description of the Program:
  1. The Defence Development Sharing Program will consist of research and development projects (such program being here and after referred to as "projects"):
    1. which are performed by Canadian prime contractors;
    2. which are designed to meet specific DoD research and development requirements;
    3. in which the Military Department of DoD which is the United States party to the project agreement acts as the design authority; and
    4. which are jointly funded by DoD and CDDP, (where DoD undertakes the research and development of a weapons system composed of several components, work funded by CDDP on one or more of such components will be considered to be jointly funded).
  2. The Defence Development Sharing Program will not include efforts referred to in paragraph 13.
3. Funding

The financial contribution of DoD in each project will not be less than 25 percent of the costs incurred subsequent to the date of the project agreement provided that in the case of work referred to in the parenthetical sentence of paragraph 2.a (iv), the financial arrangements shall be as agreed to by DoD and CDDP in the project agreement.

4. Selection of Projects

A proposal to initiate a project may be made by CDDP to any of the Military Departments of DoD or by any of the Military Departments of DoD to CDDP. Each proposal will contain a complete and detailed description of the scope of the project and work to be performed and of the suggested cost sharing arrangement. Projects will be selected by mutual agreement of CDDP in the Military Department of DoD concerned.

5. Project Agreements:

The specific terms and conditions of each project will be governed by a project agreement between the Military Department of DoD and CDDP. The project agreement will inter alia set forth the scope of the projects, the work to be performed, types of reports to be submitted, the time and funding schedules, and the cost of sharing arrangements.

6. Selection of Prime Contractors:

The selection of prime contractors for work to be performed under a project shall be subject to mutual agreement.

7. Contract Clauses for Projects:

The Canadian Government agencies responsible for placing and administering research and development contracts with Canadian firms, will insert suitable provisions in such contracts obtaining for DoD the same production rights, data, and information that DoD would obtain for itself if DoD were solely funding and placing the contract under its Armed Services Procurement Regulation.

8. Competitive Research and Development:

DoD will not engage in research and development, which duplicate the work being carried out under any project unless DoD considers such research and development to be in the United States national interest. The appropriate DoD agency will notify CDDP before undertaking such duplicative research and development and will, if requested by CDDP, promptly enter into consultations with CDDP.

9. DoD Procurement of Researched Developed items:

Procurement by DoD from Canadian firms of items developed in a project will be made under the Defence Production Sharing Program and in accordance with the DoD Armed Services Procurement Regulation. Pursuant to that Regulation, procurement of item developed by Canadian firms under the Defence Development Sharing Program will not be "set aside" for small business or for labor surplus areas.

10. Security:
  1. Information and materials developed within projects will be considered to be jointly developed, and classification and declassification thereof will be determined jointly.
  2. Classified information and materials exchanged in connection with or developed within projects will be safeguarded in accordance with the United States-Canadian Security Agreement of January 30, 1962, in the United States Canadian Industry Security Agreement effected by an exchange of letters dated February 6 and March 31, 1952, as amended.
11. Disclosure of Classified Information:
  1. Classified information and materials received by either Government under the Defence Development Sharing Program but not developed within a project will not be disclosed or transferred to third countries, or nationals of third countries, without the consent of the originating Government.
  2. Jointly developed classified information materials will not be transferred or disclosed to any third party by either Government or nationals thereof without the consent of the other Government.
12. Sales:
  1. Sales or transfer to any third party of items developed in a project containing classified information or materials will be subject to the provisions of paragraph 11.
  2. Sales or transfers to NATO, Commonwealth, and SEATO countries, or nationals thereof, of jointly developed unclassified items may be made in accordance with any applicable arrangements between Canada and the United States regarding munitions control. Sales or transfers to any other third party of jointly developed unclassified items will not be made without the consent of both parties to this agreement.
  3. Sales or transfers to any third party of jointly developed unclassified rights information, or data necessary for the production of an item developed in a project will not be made without the consent of both parties to this agreement.
13. Other Research and Development Efforts not in the Defence Development Sharing Program:
  1. Consistent with normal DoD source selection procedures, Canadian firms may bid for DoD research and development contracts which are to be funded solely by the United States. DoD will evaluate proposals from qualified Canadian firms on a parity with proposals received from United States firms. CDDP undertakes to ensure that Canadian firms comply with DoD procurement procedures.
  2. CDDP may award and solely fund research and development contracts to Canadian firms for the purpose of satisfying existing or anticipated DoD requirements. DoD and its Military Departments will not act as Design Authority for such contracts. In the event that the results of any such contract become of sufficient interest to DoD to warrant joint funding, the contract work may, upon mutual agreement, be made the subject of the Defence Development Sharing Program project.
14. Canadian Access to United States Information:

Subject to United States legislation and national policy, the Government of Canada will have access to information on the future requirements of DoD research and development programs and Canadian firms will have the same access to DoD research and development program information as United States firms.

15. Supersession of Prior Arrangements:

This Memorandum of Understanding supersedes the memoranda between CDDP and the United States Departments of the Army, and Air Force, respectively, dated July 26, 1960 and December 22, 1961, except with respect to projects already entered into thereunder.

16. Effect and Duration:

This Memorandum of Understanding will remain in force indefinitely, subject to modification or termination at any time by mutual agreement or to termination six months after receipt by either party of written notice of the intention of the other party to terminate it.

Robert S. McNamara
Secretary of Defence
Date: 16 November 1963

Charles M. Drury
Minister of Defence Production
Date: 21 November 1963

10 Chapter 10 - Cost and Profit

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10.1 General Information

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  1. When a contract must be awarded on a non-competitive basis, or when, following a competitive process, price negotiations with the successful bidder are required, contracting officers must determine the contract price based on the procedures outlined in this Chapter.
  2. The calculation of prices and costs depends on the circumstances of each contract. Before referring to the general sections the establishing of costs (see 10.5 Establishing Costs) and profit (see 10.65 Calculation of Profit on Negotiated Contracts), contracting officer must determine that the following special circumstances do not apply:
    1. Travel and Living Expenses (see 10.10 Travel and Living Expenses);
    2. Prices for Out of Plant Services of Individuals (see 10.15 Prices for Out of Plant Services of Individuals);
    3. Surplus Materials in Cost-Reimbursable Contracts (see 10.20 Surplus Materials in Cost Reimbursable Contracts);
    4. Costing of Lease Transactions (see 10.25 Costing of Lease Transactions);
    5. Service Contracts (see 10.30 Service Contracts);
    6. Joint Ventures (see 10.35 Joint Ventures);
    7. Research and Development Contracts with Universities and Colleges (see 10.40 Research and Development Contracts with Universities and Colleges);
    8. Non-competitive Contracts with Non-profit Organizations, excluding Universities and Colleges (see 10.45 Non-competitive Contracts with Non-profit Organizations, excluding Universities and Colleges);
    9. Non-competitive Acquisitions of Manufactured Products and Repair and Overhaul Services from Agency and Resale Outlets (see 10.50 Non-competitive Acquisitions of Manufactured Products and Repair and Overhaul Services, from Agency and Resale Outlets);
    10. Transfer Pricing (see 10.55 Transfer Pricing);
    11. Special Production Tooling and Special Test Equipment (see 10.60 Special Production Tooling and Special Test Equipment).

    Contracting officers should also refer to the requirements for audit. (See  4.70.35 Audit)

10.5 Establishing Costs

()

  1. Whenever a contract price is negotiated based on costs, the costs will be determined using Contract Cost Principles 1031-2 of the Standard Acquisition Clauses and Conditions (SACC) Manual.

    In particular, for non-competitive contracts valued at $50,000 and over, with a firm price or fixed time rate basis of payment, except in cases for the acquisition of commercial goods and services, the price or rate will be negotiated based on the estimated costs computed in accordance with the Contract Cost Principles 1031-2.

    For non-competitive contracts valued at $50,000 or over, with a cost reimbursable basis of payment, except in cases for the acquisition of commercial goods and services, the price will be determined based on actual costs incurred computed in accordance with the Contract Cost Principles.

    In both of the above cases, the Contract Cost Principles will be included as a condition of the contract. Annex 10.4: Reasons for the non-applicability of certain costs when utilizing Contract Cost Principles 1031-2 explains why certain costs are considered non-applicable when utilizing Contract Cost Principles 1031-2.

    For determining costs in accordance with the Contract Cost Principles, the Cost Interpretations Bulletins issued by Policy, Risk, Integrity and Strategic Management Sector should be taken into consideration at the time of negotiations. There are currently Cost Interpretation Bulletins on:

    1. Excess Facilities - Annex 10.5.1: Cost Interpretation Bulletin - Number 01 Excess Facilities
    2. Depreciation - Annex 10.5.2: Cost Interpretation Bulletin - Number 02 Depreciation
    3. Lease Costs - Annex 10.5.3: Cost Interpretation Bulletin - Number 03 Lease Costs
    4. Travel Costs - Annex 10.5.4: Cost Interpretation Bulletin - Number 04 Travel Costs
    5. Head Office Expenses - Annex 10.5.5: Cost Interpretation Bulletin - Number 05 Head Office Expense
    6. Pension Costs - Annex 10.5.6: Cost Interpretation Bulletin - Number 06 Pension Costs
    7. Research and Development Expenses - Annex 10.5.7: Cost Interpretation Bulletin - Number 07 Research and Development Expenses
    8. Bid and Proposal Expenses - Annex 10.5.8: Cost Interpretation Bulletin - Number 08 Bid and Proposal Expenses
    9. Selling and Marketing Expenses - Annex 10.5.9: Cost Interpretation Bulletin - Number 09 Selling and Marketing Expenses
    10. Severance Payments - Annex 10.5.10: Cost Interpretation Bulletin - Number 10 Severance Payments
    11. Pension Plan Refunds - Annex 10.5.11: Cost Interpretation Bulletin - Number 11 Pension Plan Refunds
    12. Company Funded Costs - Annex 10.5.12: Cost Interpretation Bulletin - Number 12 Company Funded Costs
    13. Executive Compensation - Annex 10.5.13: Cost Interpretation Bulletin - Number 13 Executive Compensation
    14. Mobile Repair Party Requirements - Annex 10.5.14: Cost Interpretation Bulletin - Number 14 Mobile Repair Party Requirements
    15. Environmental Costs - Annex 10.5.15: Cost Interpretation Bulletin - Number 15 Environmental Costs
    16. Take Out Rates - Annex 10.5.16: Cost Interpretation Bulletin - Number 16 Take-out Rates
    17. Government Supplied Materials - Annex 10.5.17: Cost Interpretation Bulletin - Number 17 Government Supplied Materiel
    18. Incentive Remuneration Profit Sharing Plans - Annex 10.5.18: Cost Interpretation Bulletin - Number 18 Incentive Remuneration Profit Sharing Plans
    19. Purchased Labour B Personnel Procured from Outside Sources - Annex 10.5.19: Cost Interpretation Bulletin - Number 19 Purchased Labour - Personnel Procured From Outside Sources.
  2. The Contract Cost Principles 1031-2 are not required for commercial goods and services, since these are used regularly for other than government purposes, and are sold by the supplier in the course of carrying out its normal business operations; and there is a sufficient number of buyers, other than the government, to establish a going price for the good or service.

10.10 Travel and Living Expenses

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  1. Normally, traveling and living expenses incurred by a contractor in the ordinary course of business are to be treated as indirect costs chargeable to overhead. Contracts bear their proportionate share of such overhead, and this overhead is profit bearing. Therefore, no special provision with respect to these incidental travel and living expenses is required for such contracts.

    However, some contractors consistently charge travel and living expenses directly to contracts. Where a price is negotiated with suppliers, these charges will be acceptable as direct charges against the contract if:

    1. the expenses are directly attributable to the performance of the work under the contract, and these expenses are deducted from indirect costs; and
    2. the practice of direct charging is consistently followed by the contractor in the costing of both government and commercial work; and
    3. the expenses referred to in (i) above are eliminated from indirect costs allocated to contracts.
  2. When travel and living expenses are to be directly charged to the contract, these expenses will attract administrative overhead either at full rates, where adequate support for the claimed general and administrative rate can be demonstrated, or at a lower negotiated rate where such substantiation cannot be provided. Alternatively, where industry practices so dictates, a contract may provide for travel and living expenses to be charged at cost with no allowance for overhead or profit.

    When travel and living expenses, plus profit and/or overhead, as applicable, are to be directly charged to a contract on a cost reimbursable basis, contracting officers must use Standard Acquisition Clauses and Conditions (SACC) Manual clause C4000C; when there is no allowance for profit and/or overhead, clause C4001C must be used.

    The Treasury Board (TB) Travel Directive applies to travel expenses incurred on contracts with persons outside the Public Service, when these expenses are a specific element of the contract. For more details, consult the TB Travel Directive and Special Travel Authorities.

    The contracting officer may accept the contractor's travel and living rates, if they are lower than the TB rates.

    For additional information, contracting officers should consult Annex 10.5.4: Cost Interpretation Bulletin - Number 04 Travel Costs.

  3. Department of National Defence (DND) service establishments may be able to provide transportation, mess and lodging facilities to the contractor's employees performing work at or near these establishments under mobile repair party and maintenance-type contracts. The commanding officer of the establishment must, upon request, advise the contractor as to the availability of these facilities, which must reduce direct contract expenses.

    Any costs incurred by the contractor for the use of these facilities, plus any incidental expenses incurred, will be reimbursed under the contract, together with allowances for profit and/or administrative overhead. In order for the contractor to be reimbursed, contracting officers must use C4004C in the contract.

10.15 Prices for Out of Plant Services of Individuals

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  1. The following methods are applicable to all negotiated charge-out rates, irrespective of whether any subsequent contract is fixed price, fixed unit price, cost reimbursable, etc. and covers out-of-plant services of individuals or groups of individuals, with or without equipment.

    Services include field service representatives, out-of-plant technical services and mobile repair parties away from the contractor's plant.

  2. When rates have not been established commercially or when they are considered excessive, the Contract Cost Principles 1031-2 must be used as a basis for negotiating out-of-plant charge-out rates (including applicable overhead). Profit must be negotiated in accordance with 10.65 Calculation of Profit on Negotiated Contracts. Travel and living expenses must be determined in accordance with 10.10 Travel and Living Expenses.
  3. Contracting officers are responsible for negotiating fair and reasonable charge-out rates which would normally be on a fixed time rate, i.e. hourly, per diem, monthly, etc. Charge-out rates will be shown as a separate line item in the basis of payment.

    In determining charge-out rates, some items to be considered are:

    1. normal industrial practice/commercial rates;
    2. whether the company usually provides the service;
    3. availability of the service from other sources;
    4. wages of the individuals;
    5. whether the plant overhead should apply or whether a separate overhead should be negotiated;
    6. equipment utilized;
    7. use of the facilities of Canada.

    Before contract award, contracting officers are advised to seek guidance and cost interpretations from the sector/region cost analyst with respect to negotiated charge-out rates, in accordance with the Guideline on the Use of Cost and Price Analysis Services (located under the theme of Risk ManagementThis information is only accessible to federal government employees. of the Acquisitions Program Policy Suite).

  4. Full plant overhead should not be applied to out-of-plant charge-out rates, unless the out of plant technical services are a relatively minor part (less than 10 percent) of the contractor's total business (volume/direct labour) in any one year.
  5. Dislocation/displacement pay allowances may be allowed provided that the amount of the displacement pay is reasonable; the displacement pay is for justifiable purposes; and/or displacement pay is in accordance with the contractor's established practice.

    For removal, living, car allowances and outside Canada expenses, contracting officers must consider the following:

    1. Only one removal from and back to the original residence will be paid for any one representative. Where removal expenses to the site of the work have been paid by the Canada on a previous contract and the services are being extended for a further period, such contract amendment or subsequent contract should provide for reimbursement only for expenses incurred for moving the representative back to the original residence.
    2. Removal expenses should not be paid on assignments of less than six months, and any removal by an employee with dependents for assignments exceeding six months must be carried out during the first 90 days, and by an employee without dependents during the first 60 days.
    3. Reimbursement for living expenses for an employee with dependents on an assignment exceeding six months should cease when the family is moved (whether or not removal expenses have been paid) to permanent quarters at the location of the work.
    4. Reimbursement for living expenses for an employee without dependents on an assignment exceeding six months should cease when the employee's effects have been moved (whether or not removal expenses have been paid) to the location of the work or in any event after the first 60 days of such assignment.
    5. Reasonable car allowances in accordance with the contractor's practice may be paid for the use of personally owned motorcars by the contractor's personnel for essential on-base traveling where local Canada transportation is not available.
    6. Cases where the representative is required to go abroad must be dealt with individually and considered on their merits.

    For additional information, contracting officers should consult Annex 10.5.14: Cost Interpretation Bulletin - Number 14 Mobile Repair Party Requirements.

10.20 Surplus Materials in Cost Reimbursable Contracts

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  1. Surplus materials resulting from the performance of a contract may be disposed of in several ways:
    1. declared surplus at a Crown Assets Distribution Centre (CADC);
    2. transferred to the client, or to another contract with the same contractor, or to another contractor; or
    3. returned to the original supplier.

    Each of these has implications on the terms of the contract relating to costs and profits.

  2. Costs of surplus materials are allowable costs in a production contract if the surplus is due to:
    1. normal accumulation of stores, during or on completion of a contract, and which are declared surplus to CADC, or transferred to the client or to another contract with the same or a different contractor;
    2. major design changes or other major adjustments of a substantial nature not including termination;
    3. minor design changes or other minor adjustments in the scope of the work provided the contract does not specifically exclude such items.
  3. When the surplus is due to excess purchasing by a contractor, the costs are not allowable in a contract.
  4. Handling costs associated with the surplus materials are allowable costs in a contract whenever the costs of surplus materials are allowable.
  5. General and administrative overhead costs associated with surplus materials are allowable costs in a contract only when the surplus materials consist of work-in-process and finished goods resulting from design changes and minor cutbacks.
  6. Profit will be allowed on the following categories ( 10.20(b), 10.20(d), 10.20(e)) of allowable costs, except that:
    1. in the case of surplus materials arising from the normal accumulation of stores, during or on completion of a contract, profit will be allowed only if the inventories acquired for a contract were financed by the contractor;
    2. in the case of surplus materials arising from major design changes, or other major changes of a substantial nature, profit will be allowed only if the inventories were either purchased by the contractor or, if not purchased by the contractor, were manufactured by the contractor and rendered surplus as the result of the changes.
  7. For cost reimbursable with fixed fee or cost reimbursable with incentive fee contracts, and contracts containing a ceiling price, allowable costs of surplus materials will be treated as an extra direct cost to the contract, outside the area of fixed fee, incentive fee or ceiling price considerations. It may be necessary to renegotiate the principal terms of the contract.
  8. Where incentive fee contracts require negotiation of targets, the costs of surplus materials should be included in the revision of a target only where other reasons make it essential to re-open the calculation for the protection of either the contractor or Canada. Alternatively, when a contract so provides, these costs may be paid for as an extra to the target or other arrangements, e.g. at cost plus a fixed fee at whatever rate of profit is appropriate.

10.25 Costing of Lease Transactions

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  1. When a contractor proposes to include, in the cost of a contract, costs relating to the leasing by the contractor of an asset, the amount of allowable charge depends on the type of lease.
  2. The necessary information for contracting officers is in Annex 10.5.3: Cost Interpretation Bulletin - Number 03 Lease Costs.

10.30 Service Contracts

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  1. Fees for all services not established by price competition, except repair and overhaul, are negotiated on the basis of the prevailing rates for the type of work required and recognizing the circumstances of each contract. Considerations are:
    1. requirements of the task: an assessment of skill level, expertise necessary, or complexity of the task requirements;
    2. bidder qualifications: fees will vary in terms of factors like the calibre of proposed personnel, knowledge or expertise, previous experience, personnel utilization rate, use of facilities, or the area of specialization;
    3. market conditions: a determination as to whether there is a commercial or going rate for a particular expertise or service capability in private industry should be made. If these rates cannot be determined, the fee scales recommended by provincial professional associations may be used as a reference point from which the reasonableness of a negotiated rate can be compared;
    4. costing/fee practices: the costing structures of individuals, bidders and universities are different and will vary significantly. Some costs that would otherwise be charged separately are sometimes charged to overhead, thus increasing the total rate.
  2. Fees should include only those elements of cost properly associated with the actual time expended on the work. These are the direct labour costs and their fair share of overheads, general and administrative expenses and profit. Other direct costs such as charges for publication of reports, special computer or test services, travel and living, should normally be shown separately. Each case must be taken on its own merits to arrive at an assessment of which amounts are reasonable charges, either as a fee element, or as a separately charged item.
  3. In all contracts for services with a cost reimbursable or fixed time rate basis of payment, the time rates of payment must be specified for the entire period required for performance of the contract, including all phases and specified option periods. When this is not possible, payments for each year or phase must be based on a pre-agreed rate or formula that is to be specified in the contract.

10.35 Joint Ventures

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  1. For non-competitive contracts intended to be awarded to a joint venture, special costs that may be attributed to the joint venture arrangement alone, such as legal, accounting and consulting fees in connection with the setting up of the joint venture, are not acceptable charges.
  2. Ongoing operational costs related to the joint venture arrangement are acceptable to the extent that they are considered reasonable and can be allocated to the contract using the Contract Cost Principles 1031-2.
  3. When materials, supplies or services must be transferred to the joint venture under subcontracts issued to a representative of the joint venture, the contracting officer should negotiate acceptable subcontract costs with the representative in accordance with the establishment of costs policy stated in 10.50 Non-competitive Acquisitions of Manufactured Products and Repair and Overhaul Services, from Agency and Resale Outlets to 10.50.5(b).
  4. The joint venture cannot submit a price bid based on average rates. Each joint venture member's workload must be priced separately using appropriate costing procedures. The total of all the joint venture member prices must be the total proposed contract price.

10.40 Research and Development Contracts with Universities and Colleges

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  1. Research and development work carried out by universities or colleges is priced at direct costs plus a contribution to overhead. This contribution is a maximum take-out rate of 65 percent of direct payroll costs for on-campus work, and 30 percent of direct payroll costs for off-campus work. In addition, a contribution equivalent to 2 percent of applicable and acceptable travel and living expenses must be made.
  2. Contract Cost Principles 1031-2 must not be called up in the contract, and post-contract audits of overhead charges must not be carried out. Direct costs must be subject to cost verification or audit.
  3. Allowable direct costs are:
    1. Direct Payroll Costs
      1. professional salaries
      2. clerical salaries
      3. technicians' wages
      4. fellowships - daily rate of personnel working directly on a contract
      5. fringe benefits including:
        1. unemployment insurance
        2. workers' compensation
        3. Canada or Quebec Pension Plan
      6. university pension plan (current service only)
      7. university portion of medical plans
      8. sick leave

      Annual salaries must be prorated over annual working days, taking into account statutory holidays and annual vacation.

    2. Materials and Supplies
      1. stationery
      2. postage
      3. materials issued from stores
      4. materials, parts and components purchased specially for the contract at "laid-down cost"
      5. long distance telephone charges
      6. telegrams and cables
      7. freight and express
      8. publication charges as agreed in contract
    3. Direct expenses - those costs which can be specifically identified and measured as having been used or to be used in the performance of the contract, and which are so identified and measured by the institution's cost accounting system. These expenses may include such items as:
      1. travel expenses
      2. consultant services
      3. apparatus and equipment acquisition. (This must remain Canada's property and be subject to Crown Assets Distribution Centre procedures.)
      4. other costs as agreed and negotiated, including charges for computer time.
  4. Consultants are to be considered in three separate categories:
    1. in-house standard rate of pay: the 65 percent overhead is applicable;
    2. external type consultant, which is in-house personnel working additional hours at increased rates, but using university equipment: direct charge without overhead;
    3. outside consultant: direct charge without overhead.
  5. Manufactured equipment is to be considered as a "make" or "buy" decision for the contracting officer. If it is a "buy", it must be a direct charge, and be Canada's property: a decision regarding disposal must be made later. If it is a "make", the university would be allowed the cost of parts and labour as laid out in the bid, including the 65 percent overhead, with ownership and disposal the same as for a buy. This should be a separate item under the contract.
  6. Allowable overhead costs are:
    1. maximum of 65 percent applicable to Direct Payroll Costs for on-campus work;
    2. maximum of 30 percent applied to Direct Payroll Costs for off-campus work;
    3. an administration charge of 2 percent on travel and living expenses incurred directly against the contract is allowed.
  7. Costs incurred by the university or college that have no direct bearing on the research activity are not acceptable as direct charges against Canada research contracts. These include:
    1. university annual reports
    2. contingency reserves
    3. convention expenses - unless applicable to specific contract
    4. post service lump-sum payments
    5. termination allowances not earned during the course of the contract
    6. admissions department
    7. grants - unless for services rendered for a specific contract
    8. finance charges (bank, debenture, bond interest, etc.)
  8. Additional special facility charges must not be included in the price, since these are accounted for in the contribution to overhead.
  9. Charges for use of a computer centre must be directed to a contract at a predetermined rate per hour, including general overhead, and computed at a break-even level for the centre. These charges must be in line with normal policies of the university for internal use.
  10. Departments and agencies of the United States (U.S.) Government negotiate directly with Canadian universities and colleges towards research and development contracts. Public Works and Government Services Canada may be asked for assistance in developing an appropriate overhead rate. These requests will be handled by the Services and Technology Acquisition Management Sector, which must develop the overhead rates from the latest certified financial statements of the university or college, with indirect costs prorated over the direct cost base in conformity with the costing principles set out in the applicable U.S. Government directive on the subject.

10.45 Non-competitive Contracts with Non-profit Organizations, excluding Universities and Colleges

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  1. Non-profit organizations incur financing charges for working capital, over and above normal operating costs as determined in accordance with the Contract Cost Principles 1031-2. They are also subject to business and contractual risk, though less than profit-oriented organizations.
  2. The price is based on costs incurred, computed using the Contract Cost Principles 1031-2 plus an allowance in lieu of profit.
  3. For financing charges on working capital employed, the allowance depends on the basis of payment:
    1. if there is a provision for progress payments or milestone payments: 1.5 percent of costs incurred;
    2. if there is no provision for progress payments or milestone payments: 3 percent of costs incurred.
  4. For general business risk, the allowance is based on contract costs:
    1. direct materials, subcontracts and direct charges: up to 1 percent of such costs;
    2. direct labour and overhead: up to 2 percent of such costs.
  5. The allowance that may be included in recognition of contractual risk depends upon the basis of payment selected for the contract or part thereof:
    1. firm price: up to 4 percent of costs incurred;
    2. fixed time rate with ceiling price: up to 3 percent of costs incurred;
    3. cost reimbursable with ceiling price: up to 3 percent of costs incurred;
    4. fixed time rate with no ceiling price: up to 2 percent of costs incurred;
    5. cost reimbursable with no ceiling price: 0 percent.

10.50 Non-competitive Acquisitions of Manufactured Products and Repair and Overhaul Services, from Agency and Resale Outlets

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  1. The procedures detailed in 10.50.1 Non-competitive Requirements of Commercial Goods and/or Services to 10.50.15 Price Analysis provide for the establishment of fair and reasonable prices, when the competitive process cannot be used for:
    1. acquisitions from Canadian agency and resale outlets, and
    2. acquisitions of manufactured products and repair and overhaul services, from Canadian suppliers, except Canadian agency and resale outlets.
  2. There are key differences between these two types of acquisitions in the determination of what costs are allowed, and how profits are determined. The procedures also differ depending on whether the good or service is commercial or non-commercial.

10.50.1 Non-competitive Requirements of Commercial Goods and/or Services

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  1. The contracting officer must negotiate a fair price on the basis of at least one of the following criteria:
    1. recent prices paid;
    2. latest published price lists or catalogues;
    3. prices paid by others, such as other governments, Crown corporations, hospitals, universities and large private sector corporations or companies.
  2. For requirements valued at $50,000 or less, the contracting officer may, at its discretion, request additional price justification by way of a price certification signed by the bidder; but for requirements valued at $50,000 or more, price certifications must be obtained in all cases.

    Contracting officers must include the following applicable price certification Standard Acquisition Clauses and Conditions (SACC) Manual clause in non-competitive bid solicitations:

    1. C0002T: for commercial goods and/or services, other than petroleum products with Canadian suppliers, other than agency and resale outlets;
    2. C0004T: for commercial goods and/or services with Canadian agency and resale outlets, including subsidiaries of foreign manufacturers;
    3. C0006T: for petroleum products;
    4. C0600T: for commercial services (Canadian bidders).

    Contracting officers must include the discretionary audit clause C0100C in contracts.

10.50.5 Non-competitive Requirements of Non-commercial Goods and/or Services

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  1. For non-competitive requirements of non-commercial goods and/or services valued at $50,000 or less, a fair price may be negotiated in accordance with the guidelines for commercial goods and/or services given above, provided the data required to follow this guideline is available.

    For acquisitions from agency and resale outlets only, if the data is not available, then the guideline presented in 10.50.10 Agency and Resale Outlets - Additional Requirements should be followed.

  2. The contracting officer must request the bidder to submit an itemized breakdown of the price quoted. In the case of agency and resale outlets, the contracting officer will analyze the price breakdown in accordance with 10.50.15 Price Analysis. The depth of the analysis required will depend on the value of the requirement and the quality and completeness of the support data provided by the bidder. The cost of performing the analysis versus the potential benefit in the form of cost savings on the requirement should be taken into account.

    For more details on the bases of payment, see 4.70.20 Basis of Payment. A firm price basis of payment is generally used for contracts with agency and resale outlets.

    Contracting officers must include the price certification SACC Manual clause C0003T in non-competitive bid solicitations, for non-commercial goods and/or services with Canadian suppliers; include the discretionary audit clause C0101C in contracts, and rate certification clause C0601T in non-competitive bid solicitations for fixed time rate contracts, for non-commercial services valued at $50,000 or more, submitted by a Canadian bidder.

10.50.10 Agency and Resale Outlets - Additional Requirements

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The two chief types of agency and resale outlets encountered when purchasing for Canada are:

  1. those engaged in manufacturing, which also act as agency or resale outlets representing other manufacturers (type 1); and
  2. those not engaged in any form of manufacturing, which act solely as agents, distributors, wholesalers, jobbers or retailers. They may conduct the functions of purchasing, receiving, storing, shipping and accounting (type 2).

10.50.15 Price Analysis

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  1. The following should be considered when analyzing the price breakdown:
    1. Laid-down costs

      Ensure that the necessary support for the price of the good/service quoted by the principal is provided by the bidder and that all trade discounts have been deducted. The applicability and amount of any added costs for transportation, foreign exchange, customs duty and brokerage should be verified. Transfer prices representing fair market value, constitute laid-down cost for the purposes of price analysis and profit calculations.

    2. Cost of necessary services and overhead

      Establishment of the cost of necessary services rendered by the bidder is dependent upon requirements, the type of organization the bidder operates, and the degree of sophistication in the bidder's cost accounting system.

      Types of services that may be considered for costing purposes:

      1. purchasing;
      2. internal handling including unpacking, incoming inspection, inhibiting, warehousing, and re-packing for delivery to one or more destinations, but excluding costs related to the bidder's own manufacturing or other related costs;
      3. general and administrative expenses applicable to the activity required.

      After-sales activity, such as on-site installation and test should be taken into account in establishing the overall price structure.

      An examination of the overhead costs allocated to the particular buy should be made to ensure that the allocation represents a reasonable and justifiable distribution of overhead costs in accordance with the Contract Cost Principles 1031-2.

      If Canada's requirements can be met by direct shipment from the principal, the bidder's charges are normally confined to the costs of purchasing and invoicing, and in such cases, a special direct shipment rate of overhead should be developed.

      The negotiated rates established in accordance with the foregoing are generally applied as a percentage additive to the laid-down costs.

    3. Profit

      Agency and Resale Outlet (type 1)

      A reasonable rate of profit is allowed on the total of laid-down costs and the cost of services required by Canada. The rate must be commensurate with the risk, the volume of resale business to Canada and other circumstances. For example, if the services required include the maintenance of an inventory, a higher rate of profit is permitted.

      Agency and Resale Outlet (type 2)

      The profit amounts should be calculated by application of the following:

      1. Profit on laid-down costs:

        Recognizing the cost of financing and risks associated with the maintenance of stocks, the maximum rates of profit applied to laid-down costs vary in accordance with the method of supply as follows:

        1. supplied from stocks maintained and financed by the bidder: up to 4 percent.
        2. supplied from stocks held by the bidder on consignment from the principal: up to 3 percent.
        3. supplied by the principal through the bidder, only when ordered by Canada: up to 3 percent.
        4. supplied by the principal in direct shipment to Canada: up to 2 percent.
      2. Profit on cost of necessary services and overhead:

        Recognizing the associated general business risk, the rates of profit applied to the cost of necessary services and overhead may vary in accordance with the services provided and are:

        1. where the services include those of purchasing and invoicing only: up to 7.5 percent.
        2. where the services include other than purchasing and invoicing: up to 10 percent.
    4. Price certification and discretionary audit:

      Subsequent to the price negotiation, the bidder should resubmit its price proposal based on the agreement reached and include a price certification. In addition, all contracts for non-competitive acquisitions from agency and resale outlets valued at $50,000 and over must contain a discretionary audit clause. (See 10.50.1(b) and 10.50.5(b).)

10.55 Transfer Pricing

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  1. When materials, supplies or services are transferred to a supplier to Canada from divisions, subsidiaries or affiliates under common control, the transfer price must be established in conformity with standard criteria, to avoid the payment of a rate of profit exceeding departmental norms.

    Considerations of materiality and practicality must govern in the application of these criteria. Consistency is also an objective - consistency between government and commercial work, consistency among the various kinds of firm price and cost reimbursable contracts, and consistency from one year to the next. In order to ensure consistency, personnel from all sectors/regions should consult early, in the negotiation process, a repository of applicable data maintained by the Policy, Risk, Integrity and Strategic Management Sector.

  2. The following criteria apply to the establishment of acceptable inter-company and intra-company transfer prices on non-competitive contracts for which a price is negotiated with the bidder through a process involving analysis of costs and determination of profit.

    These criteria do not apply if the transfer price can be verified to be reasonable by reference to comparable third party prices involving transactions between the Canadian subsidiary (agency or resale outlet) or its parent and a third party, or between unrelated parties.

  3. Intra-company transfer prices (that is, for transfers between divisions of the same legal or corporate entity) must be charged under the contract at cost according to the Contract Cost Principles 1031-2 without allowances for profit or an allocation of corporate general and administrative expenses. These allowances must apply on the cost of the finished product sold to Canada.
  4. Inter-company transfer prices (that is, for transfers between a company and its subsidiary or affiliate enjoying separate legal status but otherwise under common ownership control) charged under the contract must not be, whenever possible, greater than those which approximate fair market value. In those situations where approximate fair market value cannot be determined, inter-company transfer prices must be those that can be considered as reasonable under the circumstances if the parties to the transaction had been dealing at arm's length.

    Fair Market Value means the price that would be agreed to in an open and unrestricted market between knowledgeable and willing parties dealing at arm's length who are fully informed and not under any compulsion to transact.

    If the good or service has a going price at which significant quantities are known to sell in the market in arm's length transactions, such a price will represent fair market value. Examples: regulated prices, posted prices, catalogue prices and other prices actually available and given in past transactions to arm's-length parties for the size, quality, timing and location of the transaction, after all discounts have been considered. An inter-company transfer price representing fair market value will be used as "laid-down cost" for that item for the purposes of computing mark-up, profit and contract price.

    In any case where the circumstances described in the last paragraph do not apply, it must be deemed that the transfer prices of the company are established at cost calculated in accordance with Contract Cost Principles 1031-2 without allowance for profit and without an allocation of corporate general and administrative expenses.

    In interpreting the term "reasonable under the circumstances," the following considerations apply:

    1. If the supplier to Canada can prove that the transfer price is at cost, then a normal profit at rates as set out in 10.65 Calculation of Profit on Negotiated Contracts must apply to the final product cost.
    2. If the supplier to Canada can provide satisfactory price support for a transfer price in excess of cost, the profit element in such transfer price must be limited to a return (at a rate not exceeding the corporate bond rate periodically published by the Policy, Risk, Integrity and Strategic Management Sector), on the fixed and working capital used in the production of the goods and services. The formula for computing profit is as follows:

      (R/12) x M (a x (b/c)) = P

      R = corporate bond rate
      M = period (in months of capital use)
      a = fixed and working capital employed
      b = transfer price less profit
      c = total company annual cost of sales and transfers
      P = profit amount to include in transfer price

      It should be noted that satisfactory price support originating from the transferor must be capable of being verified by reference to instances of transactions in similar goods either between the Canadian subsidiary or its parent and a third party, or between unrelated parties.

    3. In situations other than (i) and (ii) above, profit must not be allowed on the transfer price component of the total costs of the final product sold to Canada.
  5. Where necessary, common ownership control must be determined by reference to the latest issue of appropriate trade surveys (e.g. Financial Post Survey of Industrials, Moody's Industrials, etc.), as confirmed by means of a certification from the company as to control (use SACC Manual clause A9112C for this purpose). Ownership control is presumed in cases where at least 50 percent of the voting rights are held by the affiliate.

10.60 Special Production Tooling and Special Test Equipment

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  1. No profit is allowed on Special Production Tooling (SPT) or Special Test Equipment (STE) which is purchased by a contractor for use under a contract, or purchased or otherwise acquired by its subcontractors for use under approved subcontracts.
  2. When the production of the end product involves prior or concurrent expenditures for SPT or STE under a separate agreement, or pursuant to a clause in a contract or subcontract, a profit of up to 5 percent may be allowed on all SPT fabricated in a plant owned or operated by a contractor.

    No profit is allowed on the cost of purchased equipment incorporated or built into the STE.

  3. Expenditures incurred by a contractor in connection with purchased SPT or STE(other than the cost of such tooling or equipment) are usually recovered as preproduction expenses or factory overhead.

    Administrative overhead is not accepted on STE.

    Purchased tooling should be included in the cost of sales base for the distribution of administrative overhead.

  4. Since the cost of SPT or STE represents part of the cost of the end product being acquired by a client, payment is made out of the client's funds appropriated for the purchase of that end product.
  5. SPT may be acquired on a firm price or a cost reimbursable basis irrespective of the price arrangement for the end product for which the tooling is required.

    When SPT is to be provided on a cost basis:

    1. the cost of such tooling is to be in accordance with the Contract Cost Principles 1031-2;
    2. a dollar limit is to be placed on the cost of the tooling with the provision that the cost is not to exceed this limit until further authorization is obtained.

10.65 Calculation of Profit on Negotiated Contracts

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  1. The policy and guidelines for the calculation of the amount of profit applicable to negotiated contracts and parts thereof with Canadian suppliers, for both goods and services are detailed in 10.65(b) to 10.65.35 Total Profit. Contracts valued under $50,000 do not require negotiation of profit under this section.

    There are differences in the guidelines for contracts with total costs between $50,000 and $249,999, and for contracts with total costs of $250,000 or more.

    For agency and resale outlets, the procedures for profit determination in 10.50.15 Price Analysis apply.

  2. When for any reason it is not possible to establish an acceptable basis of price by competition or a fair and reasonable price assessment, the price must be negotiated. The object of price negotiation is to duplicate a fair market price, while establishing a realistic division of responsibilities and risks between the contractor and Canada.

    A fair market price for non-competitive contracts for the procurement of goods or services (other than commercial goods or services) must be negotiated. The object of such negotiation is to arrive at a price which is considered to be fair and reasonable in the circumstances based upon an estimate of the costs, to be incurred in the performance of the contract, computed in accordance with the Contract Cost Principles 1031-2, plus a fair profit. A fair profit is an amount no greater than that calculated under this section.

    There are the following exceptions:

    1. Generally, all contracts placed on behalf of the Canadian Commercial Corporation (CCC). However, if the ultimate client for the CCC contract is the United States Department of Defense or National Aeronautics and Space Administration (NASA) or the United Kingdom Ministry of Defence, the profit may be calculated in accordance with this section.
    2. Contracts or parts thereof for which the price is based on catalogues, price lists or fee schedules where only discounts are subject to negotiation.
  3. Profit levels will vary:
    1. to recognize the cost of money associated with the capital employed by the contractor in performance of the contract;
    2. to recognize the levels of general business and contractual risk assumed by the contractor in performance of the contract.

    The calculation of the amount of profit attributable to each of the above factors must normally be made in accordance with the following guidelines.

10.65.1 Return on Capital Employed

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The return on capital employed will be determined in two parts:

  1. return on fixed capital employed, and
  2. return on working capital employed.

The determination is different for contracts with total costs between $50,000 and $249,999 and for contracts with total costs of $250,000 or more. (See 10.65.10 Return on Working Capital Employed (between $50,000 and $249,999).)

10.65.5 Return on Fixed Capital Employed (between $50,000 and $249,999)

()

  1. For contracts with total costs between $50,000 and $249,999, the return on fixed capital employed is calculated as follows:

    If machinery and/or equipment owned by the contractor are used on a regular basis in the manufacture of the product(s) or provision of the service(s) being acquired under the contract, an amount equivalent to 1 percent of total allowable costs will be awarded as a return on fixed capital employed.

10.65.10 Return on Working Capital Employed (between $50,000 and $249,999)

()

The following rates applied to the total contract costs will be used to provide for a return on working capital employed:

  1. if there is no provision for progress payments, advance payments or milestone payments - 3 percent;
  2. if there is a provision for progress payments or milestone payments - 1.5 percent;
  3. if there is a provision for advance payments - 1.5 percent ( Note: The profit factor of 1.5 percent will apply only to total costs less amount of advance payments.);
  4. if there is a provision for both progress payments and advance payments - 0 percent.

10.65.15 Return on Fixed Capital Employed ($250,000 or more)

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  1. For contracts with total costs of $250,000 or more, the return on fixed capital employed is calculated as follows:

    The provision of a return on fixed capital employed is intended not only to compensate contractors for the cost of money associated with the fixed capital employed on the contract but also to encourage investment in new capital equipment, the result of which is generally greater productivity and consequently reduced costs to Canada.

    1. For the purpose of this section, the fixed capital employed is defined as the net book value of fixed assets, less:
      1. land and any intangible assets,
      2. any fixed assets not in use such as idle plant, and
      3. any surplus value arising from re-appraisal.
    2. The determination of fixed capital employed will be as follows:
      1. Determine the percentage:

        (A/B) x 100%

        A = overhead recovery base allocated to the contract
        B = total budgeted amount of recovery base

      2. Apply the percentage in (A) to the net book value of fixed assets.

        Such determination will be performed in accordance with the format set out in Annex 10.1: Determination of Fixed Capital Employed Applicable to a Contract.

    3. The rate of return to be applied to the fixed capital employed applicable to the contract will be 1.7 times the corporate bond rate, which will be published monthly by the Policy, Risk, Integrity and Strategic Management Sector (PRISMS). The rate used will be the latest rate published at the date that the contractor's price proposal is firmed up. In the event that the published rate at the time of contract award has changed by more than one full point, up or down, this rate will be used to recompute the return.
    4. The rate used in the contractor's price proposal will be the latest figure published at the time the price proposal is submitted. In order to conform to (iii) above, it is necessary that the following clause be included in the price proposal:

      "The price quoted includes an amount of profit using a corporate bond rate of ____ percent. In the event that the corporate bond rate, as published by the Policy, Risk, Integrity and Strategic Management Sector, at the time of contract award, has changed by more than one full point, up or down from this rate, the price will be adjusted to reflect such rate."

10.65.20 Return on Working Capital Employed ($250,000 or more)

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  1. The amount of working capital employed applicable to a particular contract is defined as all allowable contract costs (exclusive of depreciation where considered significant) less contract revenue (exclusive of profit).

    For contracts with total costs of $250,000 or more, the return on working capital employed is calculated as follows:

    1. During negotiations, a schedule of the estimated net working capital for the contract, as defined above, on a month-by-month basis, will be determined and agreed to between the contracting officer and the contractor.
    2. The rate of return to be applied to the cumulative monthly amounts of working capital is defined below. However, as this is an annual rate of return, one-twelfth only of the rate is applicable to each monthly amount. For ease of calculation, the equivalent formula, to be used for determining the return on working capital employed on a particular contract, is as follows:

      (A/12) x B

      A = sum of the cumulative monthly working capital amounts
      B = prescribed rate

    3. The rate of return to be applied to working capital employed applicable to the contract will be the chartered bank prime rate. PRISMS will publish this rate weekly. The rate used will be the latest rate published at the date that the contractor's price proposal is firmed up. In the event that the published rate at the time of contract award has changed by more than one full point, up or down, this rate will be used to recompute the return.
    4. The rate used in the contractor's price proposal will be the latest figure published at the time the price proposal is submitted. The following clause must be included in the price proposal:

      "The price quoted includes an amount of profit using the chartered bank prime rate of _____ percent. In the event that the chartered bank prime rate, as published by the Policy, Risk, Integrity and Strategic Management Sector, at the time of contract award, has changed by more than one full point, up or down from this rate, the price will be adjusted to reflect such rate."

  2. Specific guidelines in regard to the cost base for purposes of all profit calculations are as follows:
    1. Direct material costs should include the costs of all materials purchased specifically for the contract together with the costs of any other materials issued specifically for the contract from the contractor's own inventories except Accountable Advance (AA) spares embodied. Direct materials must not include the value of Government Furnished (GF) nor Contract Issue (CI) materials. However, direct labour and overhead costs associated with the acquisition, stocking and handling of GF and CI materials and AA spares embodied may be included under the appropriate cost element for profit purposes.
    2. Overhead in this context includes not only plant or factory overhead, but engineering, material handling, general and administrative or any other overheads as appropriate to and allowable on the contract.
    3. All other allowable costs are those costs not considered to be direct material, direct labour or overhead but nevertheless are an appropriate and allowable direct charge to the contract. Royalty payments and the goods and services tax or the harmonized sales tax, although they may be an appropriate and allowable direct charge to the contract, must not be included for the purpose of profit calculation.

    For more information, contracting officers should consult Annex 10.2: Examples to Determine the Working Capital Employed.

10.65.25 General Business Risk

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  1. The award of profit under this factor is intended to recognize the level of effort a contractor makes in the management of all the resources required to perform the contract in an efficient and economical manner.
  2. The level of effort is considered to vary according to the elements of cost and is reflected in the following rates of profit to be applied to the costs in each element:
    1. direct materials: 1.5 percent
    2. subcontracts: 2 percent
    3. accountable advance spares embodied: 2 percent
    4. direct labour: 4 percent
    5. overhead: 4 percent
    6. all other allowable costs: 1.5 percent

10.65.30 Contractual Risk

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  1. The rates of profit to be paid for contractual risk will depend upon the basis of payment selected for each individual line item of the contract, or part thereof, and the cost base associated with each distinct basis of payment.
  2. The basis of payment determines the maximum level of profit, and requires the following consideration of different factors in arriving at the appropriate profit level.
    1. firm price and firm base price with economic price adjustments (7 percent maximum) - consider:
      1. the ability of Canada to state its requirements in the form of a well-defined specification;
      2. the ability of the contractor to convert Canada's specification into a comprehensive statement of work;
      3. the ability of Canada and the contractor to precost the statement of work;
      4. the duration of the contract and its effect on the predictability of labour and material costs and overhead distribution, taking into account whether protection in this regard is provided to the contractor by the inclusion in the contract of a provision for economic price adjustment (firm base price with economic price adjustments basis of payment);
      5. whether the final determination of the firm price takes place before or after a portion of the contract period has elapsed.
    2. fixed time rate with ceiling price (4.5 percent maximum) and without ceiling price (3.5 percent maximum) - consider:
      1. the duration of the contract and its effect on the predictability of the labour and overhead rates;
      2. if a ceiling price is included, the familiarity of the contractor with the work being performed under the contract resulting from the previous manufacture of the same or similar products, or the provision of the same or similar services;
      3. whether the final determination of the fixed time rates takes place before or after a portion of the contract period has elapsed.
    3. cost reimbursable with incentive fee (4.5 percent maximum) - consider:
      1. the degree to which the difference between the target fee and the maximum fee will provide an incentive for more effective cost control and contract performance by the contractor;
      2. whether the agreement on target costs and target fee was reached before or after a portion of the contract period has elapsed.

      To calculate the bonus on target incentive fee contracts: the maximum fee for cost reimbursable with incentive fee contracts must consist of the target fee plus an added amount which brings the total profit for the General Business Risk and Contractual Risks Factors to a maximum of 10 percent of target costs.

    4. cost reimbursable with fixed fee with ceiling price (4.5 percent maximum) and without ceiling price (1 percent maximum) - consider:
      1. the reliability of the cost estimate used for determining the fixed fee, taking into account the duration of the contract and its effect on the predictability of costs, and provided that no "swing points" at which the fixed fee will be renegotiated are included in the contract;
      2. if a ceiling price is included, the familiarity of the contractor with the work being performed under the contract resulting from the previous manufacture of the same or similar products, or the provision of the same or similar services;
      3. whether the fixed fee was determined before or after a portion of the contract period has elapsed.
    5. cost reimbursable with no fixed fee and no ceiling price (0 percent): there is no business or contractual risk.

10.65.35 Total Profit

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  1. The total allowable amount of profit must be the lowest of:
    1. sum of supportable amounts by factor; and;
    2. 20% of the total cost.
  2. The total amount of profit awarded under all factors must in no event exceed 20 percent of the total contract costs.
  3. The amount of profit for all factors should be calculated separately and included in the price of each line item with a distinct basis of payment in the contract (see examples in Annex 10.1.1: Examples to Determine the Fixed Capital Employed and Annex 10.3: Examples of Profit Calculations).

10.70 Recovery and Settlement of Contract Claims

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  1. Introduction
    1. The recovery and settlement of contract claims adjustments refers to overclaims detected and reported in assurance engagement reports prepared for the Cost and Profit Assurance Program (CPAP). CPAP is a professional advisory program provided by the Contract Cost Analysis, Audit and Policy Directorate (CCAAPD) to assist contracting officers in safeguarding the Crown from overpaying on major contracts. Assurance engagements are commissioned as a result of either an assurance strategy developed with the assistance of CCAAPD assurance advisors, or as a response to a contracting officer’s concerns of overbilling.
    2. CCAAPD cost auditors examine the support for a contractor’s claims against the contractor’s terms and conditions related to basis of payment and compares amounts claimed against the contractor’s records. Assurance engagement reports can identify amounts in excess of what the contract allows and matters of compliance, such as related to retention of records or maintenance of proper accounting systems and controls.
    3. The level of assurance ranges from high assurance (audit engagements), to no assurance (compilations). Descriptions of the various types of assurance engagements follow:
      1. Audit engagements are designed to allow the Cost Auditor to obtain reasonable assurance about whether "contractor-submitted" financial information is free from material misstatement, whether due to fraud or error, thereby enabling the Cost Auditor to express an opinion on whether the financial information is prepared, in all material respects, in accordance with financial terms and conditions of the contract.
      2. Review engagements are designed to add a measure of credibility to the subject matter being reported on. The objective is to assess whether the information being reported on is plausible within the framework of the appropriate criteria, which may involve review and evaluation of systems documentation, analytical review of financial information and interviews of contractor staff.
      3. Specified audit procedure engagements are restricted in scope, such that assurance offered may be limited to specific transactions examined or tasks performed.
      4. Compilations offer no assurance other than the involvement by the accountant in the preparation of the information. A compilation engagement consists of the accountant receiving information from a client and then arranging it into the form of a financial statement. The accountant ensures that the assembly of information is arithmetically correct, but does not perform an audit or a review.
  2. Throughout the assurance engagement, there is close collaboration and regular communication among all key stakeholders, specifically the Assurance Advisor, the Cost Auditor, PWGSC contracting officer, the client department representative, and the Cost Analyst, if the Cost Analyst was involved in negotiating the pricing arrangements relevant to the contract(s) subject to examination.

  3. The process for the recovery and settlement of contract claims adjustments starts upon receipt of the assurance engagement report by the Assurance Advisor.

  4. Notification Report and Action Plan
    1. A notification report is initiated, drafted and prepared by the assurance advisor, CCAAPD. Its purpose is to explain the key findings and recommend actions that should be taken by contracting officers in dealing with the contractor’s claims for payment, its accounting practices, or its internal controls. The Assurance Advisors sends this notification report, along with a copy of the Cost Auditor’s assurance engagement report, to the contracting officer and the client department representative. While the notification report summarizes and incorporates all matters raised in the assurance engagement report, unlike the assurance engagement, it contains advice on actions required by the Crown.
    2. The notification report is intended to support the contracting officer’s:
      1. negotiations with the contractor on final settlement of financial claims for payment;
      2. follow-up on matters of contractor compliance, as it relates to records, internal controls, cost accounting or billing practices; and
      3. documentation and approval of the disposition of findings raised in the assurance engagement report.
    3. The notification report includes:
      1. A plain language description of proposed adjustments to contractor claims for payment with details on its findings, time period and contract(s) covered by the engagement, and, if observed, information on internal control or accounting system weaknesses, etc.;
      2. Recommendations requiring response by the contracting officer;
      3. A request for an action plan in response to recommendations contained in the notification report with expected timelines for completion.
    4. The action plan is prepared and approved by procurement and responds to recommendations contained in the notification report, as prepared by CCAAPD.
    5. The contracting officer must provide the action plan to the Assurance Advisor within 30 calendar days of receipt of the notification report. The appropriate director of contracting must approve the action plan.
    6. The contracting officer should provide updates to the Assurance Advisor on progress made against the action plan on a monthly or as required basis.
  5. General Assistance

    Once the action plan is received from the contracting officer, assistance will be provided by the Assurance Advisor. This could include pursuit of recoveries, recommendations for changes in internal control in the contractor's accounting systems and so forth. Also, assistance relates to clarifying any questions that the contracting officer may have and obtaining additional details from the Cost Auditor related to the basis of support for adjustments to contractor claims and other matters, as may be required.

  6. Technical Support in Negotiation of Adjustments

    Given the technical complexity of the Cost Auditor’s findings, procurement may require assistance of a professional accountant to support the contractor negotiations. If such assistance is required, please contact CCAAPD.

  7. Rejection of Adjustments to Contractor Claims

    Any plans to reject proposed adjustments to contractor claims must be approved prior to discussion with the contractor. Approvals are in accordance with subsection k. below and must include the client department, the Public Works and Government Services Canada (PWGSC) contracting authority and the Policy, Risk, Integrity and Strategic Mangement (PRISM) Sector.

  8. Reporting
    1. CCAAPD closely monitors, tracks and reports on recovery and settlement actions and follows-up with the respective contracting authorities until all recommendations contained in the notification report have been resolved.
    2. CCAAPD prepares monthly status reports, which are distributed to the Senior Directors and Directors Generals of Contracting.
    3. On a quarterly basis, CCAAPD will report to the Acquisitions Branch Management Committee on the status of recovery and resolution of adjustments as well as lessons learned through the course of this process.
  9. Repayment of Overclaimed Amounts

    When the contractor provides a cheque(s) to the contracting officer in repayment of overclaimed amounts, the contracting officer must provide the following items to the Assurance Advisor within 7 calendar day of deposit:

    1. Copy of contractor’s cheque(s);
    2. Copy of the Official Receipt from PWGSC’s Revenue & Receivables Cashier’s Office; and
    3. Copy of PWGSC’s Refund Coding Form indicating the financial general ledger account coding.
  10. Closeout

    CCAAPD is responsible for the final administrative closeout of this recovery and settlement of contract claims process. Once the tasks contained in the action plan have been completed, the Assurance Advisor prepares a report summarizing the disposition of contract claims adjustments and matters related to contractor compliance for the contracting officer’s concurrence. Closeout is finalized upon the report’s approval, as delineated below, under subsection k.

  11. Approvals of Disposition of Assurance Engagement Report

    Sign-off thresholds with tiered delegations are required from all three parties, namely the client department, the PWGSC contracting authority and PRISM. The management level required for sign-off is determined by the total dollar value of the contract claims adjustments, as stated in the notification report. The sign-off thresholds are as follows:

    1. Senior Directors: up to and including $200,000
    2. Director Generals: $200,001 to $999,999
    3. Assistant Deputy Minister, Acquisition Branch: $1,000,000 and over.

    NOTE: As an interim measure until April 1, 2014, the Assistant Deputy Minister, Acquisition Branch, must authorize the final report on the disposition of all contract claims adjustments and matters related to contractor compliance.

Annex 10.1: Determination of Fixed Capital Employed Applicable to a Contract

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Contracts of $250,000 and more
Line No. Details A B C D E F Total
1. Amounts for depreciation.              
2. Net Book Value of Fixed Assets as at beginning of fiscal year.

$
             
3. Re-allocation of cost centres to other cost centres as required by the entrepreneur's cost accounting system.

$
             
4. Adjusted Net Book Value of Fixed Assets by cost centres.

$
             
5. Bases used for recovery of overhead.              
6. Total amount of each overhead recovery base for the fiscal year.              
7. Amount of each overhead recovery base allocated to this contract.              
8. Percentage of Line 7 to Line 6.

%
             
9. Net Book Value of Fixed Assets applicable to the contract. Line 8 by Line 4.

$
             

Notes:

Line 1
Amounts for depreciation taken from the contractor's overhead budget in total or by cost centre as agreed during negotiations.
Line 2
Total amount of the Net Book Value of Fixed Assets (excluding land, and any intangible assets) as found in the contractor's balance sheet as at the end of the fiscal year previous to that being negotiated. If this balance sheet is not available at the time of negotiations, the amount may be estimated. Subsequently, the amount is allocated to cost centres either in accordance with the contractor's records or, if not recorded, in accordance with the depreciation amounts at Line 1 (allocation required only in the event that depreciation by cost centre was agreed during negotiations).
Line 3
The necessary re-allocation of the amounts at Line 2 if required by the contractor's cost accounting system.
Line 4
The amounts for Net Book Value of Fixed Assets at Line 2 as adjusted by Line 3.
Line 5
The base for recovery of overhead costs in total or for each cost centre as per the contractor's cost accounting system.
Line 6
The total amount of each overhead recovery base included in the contractor's budget for the fiscal year as agreed during negotiation.
Line 7
The amount for each overhead recovery base allocated to the particular contract as agreed during negotiations.
Line 8
The percentage of Line 7 to Line 8.
Line 9
The amounts determined by applying the percentages at Line 8 to the amount for the Net Book Value of Fixed Assets at Line 4. The total amount on this line is the equivalent of the Fixed Capital Employed Applicable to the contract in the particular fiscal year.

If the contract period extends over more than one of the contractor's fiscal years, the calculation will have to be made for each fiscal year involved, and the sum of the Fixed Capital Employed Applicable to the contract determined for each fiscal year will be the equivalent of the Total Fixed Capital Employed Applicable to the particular contract.

If a contractor does not accumulate overhead by cost centre, the above calculation should be done in total only.

Two examples of the calculation could be found in Annex 10.1.1: Examples to Determine the Fixed Capital Employed.

Annex 10.1.1:  Examples to Determine the Fixed Capital Employed

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(Contracts of $250,000 and more)

Examples of Calculation Example 1 - Assumptions:
  1. The period of contract performance is from April 1, 1982 to March 31, 1983.
  2. The contractor's fiscal year ends on March 31.
  3. The contractor accumulates costs in 5 cost centres and the amount of depreciation included in the agreed budget in the first year 1982/83 are as follows:
    Example 1 Assumptions: Depreciation Included in Agreed Budget in the first year 1982/83
    Cost CentreAmount of Depreciation
    Repair and Overhaul$28,500
    Material Handling$500
    G & A$1,000
    Engineering$3,000
    Occupancy$7,000
  4. The costs accumulated in the Occupancy cost centre are subsequently re-allocated to all other cost centres on the basis of area occupied which is as follows:
    Example 1 Assumptions: Re-allocated Costs
    Cost CentreRe-allocated Percentage
    Repair and Overhaul65%
    Material Handling15%
    G & A10%
    Engineering10%
    Occupancy100%
  5. The costs accumulated in the Engineering cost centre are subsequently re-allocated to the Repair and Overhaul cost centre.
  6. The Net Book Value of Fixed Assets (excluding land and any intangible assets) appearing in the contractor's balance sheet as at March 31, 1982 is $285,000.
  7. The recovery base in each cost centre and the amounts thereof for fiscal year 1982/83 are as follows:
    Example 1 Assumptions: Recovery Base
    Cost CentreRecovery Base
    Repair and Overhaul - Direct Labour Costs$600,000
    Material Handling - Total Material Costs$1,500,000
    G & A- Costs of Production$3,500,000
  8. The amounts of each recovery base allocated to this contract are:
    Example 1 Assumptions: Amounts of each recovery base allocated
    Cost CentreRecovery Base
    Repair and Overhaul$272,700
    Material Handling$750,000
    G & A$1,602,900
Example 1
Example 1
Details F/Y 1982/83 Cost Centres
Repair Overhaul
$
Material Handling
$
G & A
$
Engineering
$
Occupancy
$
Total
$
1. Amounts for depreciation by Cost Centre. 28,500 500 1,000 3,000 7,000 40,000
2. Net Book Value of Fixed Assets as at March 31, 1982. 203,063 3,562 7,125 21,375 49,875 285,000
3. Re-allocation of cost centres.            
Occupancy
32,419 7,481 4,988 4,987 (49,875) --
Engineering
26,362 -- -- (26,362) -- --
4. Adjusted Net Book Value of Fixed Assets by cost centres. 261,844 11,043 12,113 -- -- 285,000
5. Bases for recovery of overhead. Direct Labour Costs Total Material Costs Costs of Production      
6. Total amount of each overhead recovery base for Fiscal Year 1982/83. 600,000 1,500,000 3,500,000      
7. Amount of each overhead recovery base for Fiscal Year 1982/83 allocated to this contract. 272,700 750,000 1,602,000      
8. Percentage of Line 7 to Line 6. 45.5% 50.0% 45.8%      
9. Net Book Value of Fixed Assets Applicable to the contract Line 8 x Line 4. 119,139 5,522 5,548     130,209
  FIXED CAPITAL EMPLOYED APPLICABLE TO CONTRACT $130,209
Example 2 - Assumptions:
  1. The period of contract performance is from July 1, 1982 to December 31, 1983.
  2. The contractor's fiscal year ends on December 31.
  3. The contractor accumulates costs in 6 cost centres and the amounts for depreciation included in the agreed budget for each fiscal year are:
    Example 2 Assumptions: Amounts for depreciation included in the agreed budget for each fiscal year
    Cost CentreF/Y 1982$F/Y 1983$
    Manufacturing30,00035,000
    Engineering6,0005,900
    Material Handling5,0004,500
    G & A3,5004,000
    Inspection1,000900
    Occupancy10,0009,500
    Total55,50059,800
  4. The costs accumulated in the Occupancy cost centre are subsequently re-allocated to all other cost centres on the basis of area occupied which is as follows:
    Example 2 Assumptions: Re-allocated to all other cost centres on the basis of area occupied
    Cost CentreRe-Allocated Percentage
    Manufacturing50%
    Engineering15%
    Material Handling15%
    G & A10%
    Inspection10%
    Total100%
  5. The costs accumulated in the Inspection cost centre are subsequently re-allocated to the Manufacturing cost centre.
  6. The Net Book Value of Fixed Assets (excluding land and any intangible assets) appearing on the contractor's balance sheet as at December 31, 1981 is $400,000, and estimated for the year ending December 31, 1982 is $405,000.
  7. The recovery base for overhead in each cost centre and the amount thereof for each fiscal year are as follows:
    Example 2 Assumptions: Recovery base for overhead in each cost centre and the amount thereof for each fiscal year
    Cost CentreF/Y 1982F/Y 1983
    Manufacturing - Direct Labour Costs$300,000$440,000
    Engineering - Direct Labour Hours100,000 hours100,000 hours
    Material Handling - Total Material Costs$700,000$650,000
    G & A- Costs of Production$3,500,000$3,700,000
  8. The amounts of each recovery base allocated to this contract in each fiscal year are:
    Example 2 Assumptions: Amounts of each recovery base allocated to this contract
    Cost CentreF/Y 1982F/Y 1983
    Manufacturing$65,000$110,000
    Engineering6,000 hours600 hours
    Material Handling$75,000$125,000
    G & A$350,000$484,000
Fiscal Year Ending December 31, 1982 (1st Year) Example 2 (cont'd)
Fiscal Year Ending December 31, 1982 - Example 2: 1st year
Details F/Y 1982/83 Cost Centres
Manufac-
turing
$
Engineer-
ing
$
Material Handling
$
G & A
$
Inspec-
tion
$
Occup-
ancy
$
Total
$
1. Amounts for depreciation by Cost Centre 30,000 6,000 5,000 3,500 1,000 10,000 55,500
2. Net Book Value of Fixed Assets as at March 31, 1981 216,218 43,244 36,036 25,225 7,207 72,070 400,000
3. Re-allocation of cost centres              
Occupancy
36,035 10,810 10,811 7,207 7,207 (72,070) --
Inspection
14,414 -- -- -- (14,414) -- --
4. Adjusted Net Book Value of Fixed Assets by cost centres 266,667 54,054 46,847 32,432 -- -- 400,000
5. Bases for recovery of overhead Direct Labour Costs Direct Labour Hours Total Material Costs Cost of Production      
6. Total Amount of each overhead recovery basis for Fiscal Year 1982 300,000 100,000 hours 700,000 3,500,000      
7. Amount of each overhead recovery base for Fiscal Year 1982 allocated to this contract 65,000 6,000 hours 75,000 350,000      
8. Percentage of Line 7 to Line 6 21.7% 6.0% 10.7% 10.0%      
9. Net Book Value of Fixed Assets Applicable to this contract in Fiscal Year 1982. Line 8 x Line 4. 57,867 3,243 5,013 3,243     69,366
FIXED CAPITAL EMPLOYED APPLICABLE TO THIS CONTRACT  $69,366
Fiscal Year Ending December 31, 1983 (2nd Year) Example 2 (cont'd…)
Fiscal Year Ending December 31, 1983 Example 2: 2nd year
Details F/Y 1983 Cost Centres
Manufac-
turing
$
Engineer-
ing
$
Material Handling
$
G & A
$
Inspec-
tion
$
Occup-
ancy
$
Total
$
1. Amounts for depreciation by Cost Centre 35,000 5,900 4,500 4,000 900 9,500 59,800
2. Net Book Value of Fixed Assets as at March 31, 1982 237,041 39,958 30,476 27,091 6,095 64,339 405,000
3. Re-allocation of cost centres              
Occupancy
32,169 9,651 9,651 6,434 6,434 (64,339)  
Inspection
12,529 -- -- -- (12,529) -- --
4. Adjusted Net Book Value of Fixed Assets by cost centres 281,739 49,609 40,127 33,525 -- -- 405,000
5. Bases for recovery of overhead Direct Labour Costs Direct Labour Hours Total Material Costs Cost of production      
6. Total Amount of each overhead recovery base for Fiscal Year 1983 440,000 100,000 hours 650,000 3,700,000      
7. Amount of each overhead recovery base for Fiscal Year 1983 allocated to this contract 110,000 600 hours 125,000 484,000      
8. Percentage of Line 7 to Line 6 25.0% 0.6% 19.2% 13.1%      
9. Net Book Value of Fixed Assets Applicable to this contract in Fiscal Year 1983. Line 8 x Line 4 70,435 298 7,704 4,392     82,829
FIXED CAPITAL EMPLOYED APPLICABLE TO THIS CONTRACT 82,829
Summary
Example 2: Summary
Fixed Capital Amount
Fixed Capital Employed Applicable to this Contract - F/Y 1982 $69,366
Fixed Capital Employed Applicable to this Contract - F/Y 1983 $82,829
Total $152,195
Example 3 - Assumptions:
  1. Contract is for Repair and Overhaul in Plant and by Mobile Repair Party (MRP)
  2. Bases of Payment are:
    Example 3 Assumptions: Bases of Payment
    Cost CentreBasis of Payment
    Repair and Overhaul in Plan- Fixed Time Rate
    Mobile Repair Party- Fixed Time Rate
    Company Furnished Materials- Actual Costs plus Mark Up
    Accountable Advances (AA) Spares Embodied- Mark Up only
  3. Contract Period is 12 months.
  4. Total Negotiated Contract Costs are:
    Example 3 Assumptions: Total Negotiated Contract Costs
    Cost CentreLabour CostNegotiated Contract Cost
    Company Furnished Materials $300,000
    AA Spares Embodied (450,000)
    In-Plant Repair and Overhaul:
    Direct Labour
    30,000 hours @ $9 per h270,000
    Overhead
    30,000 hours @ $18 per h540,000
    Mobile Repair Party
    Direct Labour
    300 hours @ $9 per h2,700
    Overhead
    300 hours @ $9 per h2,700
    Material Handling
    On Company Furnished Materials
    $300,000 @ 5%15,000
    On AA Spares Embodied
    $450,000 @ 5%22,500
    G & A
    On Company Furnished Materials
    $300,000 @ 10%30,000
    On AA Spares Embodied
    $450,000 @ 10%45,000
    On In-Plant Repair and Overhaul
    $810,000 @ 10%81,000
    On MRP
    $5,400 @ 10%540
    On Material Handling Costs
    $37,500 @ 10%3,750
    Total Contract Costs $1,313,190
  5. Examples of Profit Calculations
    Example 3 Assumptions: Examples of Profit Calculations
    Summary of Contract Costs unit cost per hour $ $
    (a) Company Furnished Materials
    Laid Down Costs
      300,000  
    Plus 5% Material Handling
      15,000  
        315,000  
    Plus 10% G & A
      31,500 346,500
    (b) Accountable Advance Spares Embodied:
    Laid Down Costs
      (450,000)  
    Plus 5% Material Handling
      22,500  
        472,500  
    Plus 10% G & A
      47,250 69,750
    (c) Repair and Overhaul:
    Labour 30,000 hours
    @ $27.00 per hour 810,000  
    Plus 10% G & A
    2.70 81,000 891,000
    Costing Rate
    29.70    
    (d) Mobile Repaid Party:
    Labour 300 hours
    @ $18.00 per hour 5,400  
    Plus 10% G & A
    1.80 540 5,940
    Costing Rate
    19.80 Total 1,313,190
    Company Furnished Materials   300,000
    Direct Labour   272,700
    Plant Overhead   542,700
    Material Handling Overhead   37,500
        1,152,900
    G & A   160,290
    Total   1,313,190
  6. Fixed Capital Employed applicable to the contract is $130,209 (see Example 1 in this Annex) broken down as follows:
    Example 3 Assumptions: Fixed Capital Employed applicable to the contract
    Cost CentreAmountPercentageFixed Capital Employed
    Company Furnished Materials$346,50027.8%$36,198
    Repair and Overhaul891,00071.7%93,360
    Mobile Repair Party5,9400.5%651
    Total$1,243,440100.0%$130,209
  7. Latest Bond Rate published by the Director, Acquisition Program Integrity Secretariat (APIS), is 10%.
  8. Working Capital Employed applicable to the contract is $290,376 (see Example 1 in Annex 10.2: Examples to Determine the Working Capital Employed), broken down as follows:
    Example 3 Assumptions: Working Capital Employed applicable to the contract
    Cost CentreAmountPercentageWorking Capital Employed
    Company Furnished Materials$346,50027.8%$80,724
    Repair and Overhaul891,00071.7%208,200
    Mobile Repair Party5,9400.5%1,452
    Total$1,243,440100.0%$290,376
  9. Latest Chartered Bank Prime Rate published by the Director, APIS, is 11%.
  10. The contractor has been performing this or similar Repair and Overhaul work for a number of years, and the contract price was negotiated and agreed to prior to work commencing. As a result, the rate for contractual risk on the fixed time rate work is assessed at 3%.
Profit on Company Furnished Materials
Example 3: Profit on Company Furnished Materials
Profit Factor Measurement Base
Profit Factor Details Amount $ Profit Rate % Profit Amount $
Return on Capital Employed Fixed Capital Employed 36,198 1.7 x 10% 6,154
Working Capital Employed Applicable to Contract 80,724 11 8,880
Total 116,922   15,034
General Business Risk Direct Materials 300,000 1.5 4,500
Material Handling Overhead 15,000 4 600
G & A 31,500 4 1,260
Total Costs 346,500   6,360
Contractual Risk Cost Reimbursable - No Ceiling 300,000 0 --
Material Handling Overhead and G & A- Fixed Rates 46,500 3 1,395
Total Costs 346,500   1,395
Total Profit= 6.6% of Total Costs $22,834
Mark Up for Company Furnished Materials
Laid Down Cost $100.00
Material Handling @ 5% 5.00
  105.00
G & A@ 10% 10.50
  115.50
Profit @ 6.6% 7.62
Mark Up 23.12% $123.12
Profit on Accountable Advance Spares Embodied
Example 3: Profit on Accountable Advance Spares Embodied
Profit Factor Measurement Base
Profit Factor  Details Amount $ Profit Rate % Profit $
Return on Capital Employed N/A -- -- --
General Business Risk General AA Spares 450,000 2 9,000
Material Handling Overhead 22,500 4 900
G & A 47,250 4 1,890
Total Costs 519,750   11,790
Contractual Risk Cost Reimbursable - No Ceiling Risk Price Basis of Payment 519,750 0 --
Total Profit= 2.3% Total Costs $11,790
Mark Up for AA Spares Embodied
Laid Down Costs $100.00
Material Handling @ 5% 5.00
  105.00
G & A@ 10% 10.50
  115.50
Profit @ 2.3% 2.66
Mark Up 18.25% $118.16
Profit on Repair and Overhaul
Example 3: Profit on Repair and Overhaul
Profit Factor Measurement Base
Profit Factor Details Amount $ Profit Rate % Profit Amount $
Return on Capital Employed Fixed Capital Employed Applicable to Contract 93,360 1.7 x 10% 15,871
Working Capital Employed Applicable to Contract 208,200 11 22,902
Total Capital Employed 301,560   38,773
General Business Risk Direct Labour 270,000 4 10,800
Plan Overhead 540,000 4 21,600
G & A 81,500 4 3,240
Total Costs 891,000   35,640
Contractual Risk Fixed Time Rate Basis of Payment 891,000 3 26,730
Total Profit= 11.4% of Total Costs $101,143
Fixed Time Rate for Repair and Overhaul
Direct Labour $9.00 per hour
Plant Overhead 18.00 per hour
  27.00 per hour
G & A@ 10% 2.70 per hour
  29.70 per hour
Profit @ 11.4% 3.39 per hour
Selling Price $33.09 per hour
Profit on Mobile Repair Party
Example 3: Profit on Mobile Repair Party
Profit Factor Measurement Base
Profit Factor Details Amount $ Profit Rate % Profit Amount $
Return on Capital Employed Fixed Capital Employed Applicable to Contract 651 1.7 x 10% 111
Working Capital Employed Applicable to Contract 1,452 11 160
Total Capital Employed 2,103   271
General Business Risk Direct Labour 2,700 4 108
Plan Overhead 2,700 4 108
G & A 540 4 22
Total Costs 5,940   238
Contractual Risks Fixed Time Rate Basis of Payment 5,940 3 178
Total Profit= 11.6% of Total Costs $687
Fixed Time Rate for Mobile Repair Party
Direct Labour $9.00 per hour
Plant Overhead 9.00 per hour
  18.00 per hour
G & A@ 10% 1.80 per hour
Costing Rate 19.80 per hour
Profit @ 11.6% 2.30 per hour
Selling Price $22.10 per hour
Profit Summary
Example 3: Profit Summary
Costs Company Furnished Material $ AA Spares Embodied $ Repair and Overhaul $ Mobile Repair Party $ Total $
Total Costs 346,500 69,750 891,000 5,940 1,313,190
Return on Capital Employed % of Total Costs 15,034
4.3%
-- 38,773
4.4%
271
4.6%
54,078
4.1%
General Business Risk % of Total Costs 6,360
1.8%
11,790
16.6%
35,640
4.0%
238
4.0%
54,028
4.1%
Contractual Risk % of Total Costs 1,395
0.4%
-- 26,730
3.0%
178
3.0%
28,303
2.2%
Total/All Factors % of Total Costs 22,789
6.6%
11,790
16.6%
101,143
11.4%
6,871
1.6%
136,409
10.4%
Example 4 - Assumptions:
  1. The contract is for the design, manufacture and supply of 24 widgets.
  2. The basis of payment is a firm unit price per widget.
  3. The contract performance period is 18 months.
  4. Total negotiated Contract Costs are:
    Example 4 Assumptions: Total negotiated Contract Costs
    Cost CentreNegotiated Contract Cost
    Direct Materials$200,000
    Subcontracts40,000
    Direct Labour254,000
    Overhead340,000
    G & A Overhead116,000
    Royalties10,000
    Total$960,000
  5. Fixed Capital Employed applicable to the contract is $152,195 (see Example 2 in this Annex).
  6. The latest Bond Rate published by the Director, Acquisition Program Integrity Secretariat (APIS), is 10%.
  7. Working Capital Employed applicable to the contract is $298,667 (see Example 2 in Annex 10.2: Examples to Determine the Working Capital Employed).
  8. The latest Chartered Bank Prime Rate published by the Director, APIS, is 11%.
  9. The widgets are of a completely new design, as requested by the government, and the contractor is assuming maximum risk in agreeing to a firm price. However, the price was only reached 3 months after the commencement of work. Therefore, the rate of profit for contractual risk was assessed at 6.5%.
  10. The G & A overhead contains an amount of $20,000 for allowable Research and General Development.
    Example 4"
    Profit FactorMeasurement Base
    Profit FactorDetailsAmount $Profit Rate %Profit Amount $
    Return on Capital EmployedFixed Capital Employed Applicable to Contract152,1951.7 x 10%25,873
    Working Capital Employed Applicable to Contract298,6671132,852
    Total Capital Employed450,862 58,726
    General Business RiskDirect Materials200,0001.53,000
    Subcontracts40,0002800
    Direct Labour254,000410,160
    Overhead456,000418,240
    Other Allowable Costs (Royalties)10,000----
    Total Allowable Costs960,000 32,200
    Contractual RiskTotal Allowable Costs less Royalties950,0006.561,750
    Total Profit= 15.9% of Total Costs$152,676
    Total Cost$960,000
    Profit152,676
    Total$1,112,676
     = $46,361.50 per widget

Annex 10.2: Examples to Determine the Working Capital Employed

()

Contracts of $250,000 and more

Examples of Calculation
Example 1 - Assumptions:
  1. The contract period is 12 months.
  2. Total contract costs are $1,313,190 of which $26,500 is for depreciation.
  3. Costs incurred are on an even basis month by month.
  4. Progress payments at 85% are paid monthly.
  5. The time between forwarding the invoice and receipt of payment is 1 month.
Contracts of $250,000 and more Calculation Example 1
Month Allowable Contract Cost excluding Depreciation
$
Contract Revenue Less Profit
$
Monthly Working Capital Employed
$
Cumulative Monthly Working Capital Employed
$
1 107,224 -- 107,224 107,224
2 107,224 -- 107,224 214,448
3 107,224 93,017 14,207 228,655
4 107,224 93,018 14,206 242,861
5 107,224 93,017 14,207 257,068
6 107,224 93,018 14,206 271,274
7 107,224 93,017 14,207 285,481
8 107,224 93,018 14,206 299,687
9 107,224 93,017 14,207 313,894
10 107,224 93,018 14,206 328,100
11 107,224 93,017 14,207 342,307
12 107,206 93,018 14,208 356,515
13 -- 93,017 (93,017) 263,498
14 -- 289,998 (289,998) (26,500)
  1,286,690 1,313,190 (26,500) 3,484,512

Working Capital Employed Applicable to the Contract for profit purposes -
$3,484,512 ÷ 12 = $290,376

Example 2 - Assumptions:
  1. Contract period is 18 months.
  2. Contract is for the design, manufacture and supply of 24 widgets at a cost per widget of $40,000 for total costs of $960,000.
  3. The total costs include an amount of $84,000 for depreciation.
  4. Costs are incurred on a month by month basis as shown in the attached schedule.
  5. Invoices are made on delivery and the delivery schedule is as follows:
    1 widget in each of the 8 th, 9 th and 10 th months.
    2 widgets in each of the 11 th and 12 th months.
    3 widgets in each of the 13 th through 17 th months inclusive.
    2 widgets in the 18 th month.
  6. The time between forwarding the invoice and receipt of payment is 1 month.
    Contracts of $250,000 and more Calculation Example 2
    MonthAllowable Contract Cost excluding Depreciation
    $
    Contract Revenue Less Profit
    $
    Monthly Working Capital Employed
    $
    Cumulative Monthly Working Capital Employed
    $
    124,000--24,00024,000
    224,000--24,00048,000
    330,000--30,00078,000
    430,000--30,000108,000
    540,000--40,000148,000
    640,000--40,000188,000
    760,000--60,000248,000
    860,000--60,000308,000
    960,00040,00020,000328,000
    1060,00040,00020,000348,000
    1170,00040,00030,000378,000
    1270,00080,000(10,000)368,000
    1360,00080,000(20,000)348,000
    1460,000120,000(60,000)288,000
    1560,000120,000(60,000)228,000
    1650,000120,000(70,000)158,000
    1740,000120,000(80,000)78,000
    1838,000120,000(82,000)(4,000)
    19--80,000(80,000)(84,000)
     876,000960,000(84,000)3,584,000

    Working Capital Employed Applicable to the Contract for profit purposes -
    $3,584,000 ÷ 12 = $298,667

Annex 10.3: Examples of Profit Calculations

()

Negotiated Contracts with total costs between $50,000 and $249,999
Example 1 - Assumptions:
  1. The contract is for the investigation of certain phenomena and the preparation and delivery of a report.
  2. The basis of payment is cost reimbursable with a fixed fee.
  3. The contractor performance period is 10 months.
  4. The Estimated Contract Costs are:
    Negotiated Contracts with total costs between $50,000 and $249,999 Profit Calculations Example 1: Estimated Contract Costs
    Cost CentreContract Cost
    Direct Materials$500
    Subcontracts$20,000
    Direct Labour$40,000
    Overhead$40,000
    Total$100,500
  5. No machinery or equipment owned by the contractor is used in performance of the contract.
  6. No advance, progress or milestone payments are to be made to the contractor.
  7. The contractor has little familiarity with the work to be performed from past experience and the fixed fee was agreed before the work on the contract commenced, therefore the maximum of 1% for Contractual Risk has been given.
  8. No research and general development nor product development costs are applicable and allowable to the contract.
    Negotiated Contracts with total costs between $50,000 and $249,999 Profit Calculations Example 1: Profit Factor, Measurement Base"
    Profit FactorMeasurement Base
    FactorDetailsAmount $Profit Rate %Profit $
    Return on Capital EmployedFixed Capital EmployedN/A --
    Working Capital Employed (No advance, progress or milestone payments)100,50033,015
    General Business RiskDirect Materials5001.58
    Subcontracts20,0002400
    Direct Labour40,00041,600
    Overhead40,00041,600
    Total Allowable Costs100,500 3,608
    Contractual RiskTotal Allowable Costs100,50011,005
    Total Profit= 7.6% of Total Costs $7,628
    Amount of Fixed Fee $7,628
Example 2 - Assumptions:
  1. Contract is for Repair and Overhaul in Plant.
  2. Basis of Payment are:
    Negotiated Contracts with total costs between $50,000 and $249,999 Profit Calculations Example 2: Basis of Payment
    Cost CentreBasis of Payment
    Repair and Overhaul in Plant- Fixed Time Rate
    Company Furnished Materials- Actual Costs plus Mark Up
    Accountable Advance Spares Embodied- Mark Up Only
  3. Contract Period is 12 months.
  4. Total Negotiated Contract Costs are:
    Negotiated Contracts witd total costs between $50,000 and $249,999 Profit Calculations Example 2: Total Negotiated Contract Costs
    Cost CentreLabour CostNegotiated Contract Cost
    Company Furnished Materials $50,000
    AA Spares Embodied$100,000 
    In Plant Repair and Overhaul:
    Direct Labour
    5,000 hours @ $8 per hour40,000
    Overhead
    5,000 hours @ $16 per hour80,000
    Material Handling
    On Company Furnished Materials
    $50,000 @ 6%3,000
    On AA Spares Embodied
    $100,000 @ 6%6,000
    G & A
    On Company Furnished Materials
    $50,000 @ 9%4,500
    On AA Spares Embodied
    $100,000 @ 9%9,000
    On In Plant Repair and Overhaul
    $120,000 @ 9%10,800
    On Material Handling Costs
    $9,000 @ 9%810
    Total Contract Costs $204,110
  5. Negotiated Contracts with total costs between $50,000 and $249,999 Profit Calculations Example 2: Summary of Contract Costs
    Summary of Contract Costs $ $ $
    a) Company Furnished Materials:
    Laid Down Costs
      50,000  
    Plus 6% Material Handling
      3,000  
        53,000  
    Plus 9% G & A
      4,770 57,770
    b) Accountable Advance Spares Embodied:
    Laid Down Costs (LDC)
    100,000    
    Plus 6% Material Handling (MH) on LDC
      6,000  
    Plus 9% G & A on LDC plus MH
      9,540 15,540
    c) Repair and Overhaul:
    Labour 5,000 hours @ $24 per hour
      120,000  
    Plus 9% G & A
      10,800 130,800
    Total 204,110
    Company Furnished Materials 50,000
    Direct Labour 40,000
    Plant Overhead 80,000
    Material Handling Overhead 9,000
      179,000
    G & A 25,110
    Total 204,110
  6. Machinery and equipment owned by the contractor is used in performance of the contract.
  7. Progress payments are to be made on the contract.
  8. The duration of the contract is twelve months and no difficulty has been experienced in predicting labour and overhead rates. Furthermore, the fixed time rate was only negotiated and agreed two months after work commenced. Therefore the rate of profit for Contractual Risk is assessed at 22%.
  9. No research and development costs are applicable and allowable on the contract.
    Negotiated Contracts with total costs between $50,000 and $249,999 Profit Calculations Example 2: Profit Factor, Measurement Base
    Profit FactorMeasurement Base
    Factor DetailsAmount $Profit Rate %Profit $
    Return on Capital EmployedFixed Capital Employed57,7701578
    Working Capital Employed (Progress Payments to be made)57,7701.5867
     Total 1,445
    General Business RiskDirect Materials50,0001.5750
    Material Handling Overhead3,0004120
    G & A4,7704191
    Total Allowable Costs57,770 1,061
    Contractual RiskMaterial Cost Reimbursable No Ceiling50,0000--
    Material Handling Overhead and G & A Fixed Rates7,7702.5194
    Total Costs57,770 194
    Total Profit= 4.7% of Total Costs$2,700
    Mark Up to CF Materials
    Laid Down Cost$100.00
    Material Handling @ 6%6.00
     106.00
    G & A@ 9%9.54
     115.54
    Profit @ 4.7%5.43
    Mark Up 21%$120.97
Profit on AA Spares Embodied
Negotiated Contracts with total costs between $50,000 and $249,999 Profit Calculations Example 2: Profit on AA Spares Embodied
Profit Factor Measurement Base
  Factor Details Amount $ Profit Rate % Profit Amount $
Return on Capital Employed Fixed Capital Employed N\A -- --
Working Capital Employed N\A -- --
General Business Risk AA Spares 100,000 2 2,000
Material Handling Overhead 6,000 4 240
G & A 9,540 4 382
Total Allowable Costs 115,540 -- 2,622
Contractual Risk Cost Reimbursable - No Ceiling Basis of Payment -- -- --
Total Profit= 2.3% of Total Costs $2,622
Mark Up for AA Spares Embodied
Laid Down Cost $100.00
Material Handling @ 6% 6.00
  106.00
G & A@ 9% 9.54
  115.54
Profit @ 2.3% 2.66
Mark Up 18.2% $118.20
Profit on Repair and Overhaul
Negotiated Contracts with total costs between $50,000 and $249,999 Profit Calculations Example 2: Profit on Repair and Overhaul
Profit Factor Measurement Base
  Factor Details Amount $ Profit Rate % Profit Amount $
Return on Capital Employed Fixed Capital Employed 130,800 1 1,308
Working Capital Employed (Progress Payments to be made) 130,800 1.5 1,962
  Total   3,270
General Business Risk Direct Labour 40,000 4 1,600
Plant Overhead 80,000 4 3,200
G & A 10,800 4 432
Total Costs 130,800   5,232
Contractual Risk Fixed Time Rate Basis of Payment 130,800 2.5 3,270
Total Profit= 9.0% of Total Costs $11,772
Fixed Time Rate for Repair and Overhaul
Direct Labour $8.00 per hour
Plant Overhead 16.00per hour
  24.00 per hour
G & A@ 9% 2.16per hour
Costing Rate 26.16 per hour
Profit @ 9.0% 2.35per hour
Selling Rate $28.51 per hour
Profit Summary
Negotiated Contracts with total costs between $50,000 and $249,999 Profit Calculations Example 2: Profit Summary
  Company Furnished Material
$
AA Spares Embodied
$
Repair and Overhaul
$
Total
$
Total Costs 57,770 15,540 130,800 204,110
Return on Capital Employed 1,445 -- 3,270 4,715
% of Total Costs 2.5% -- 2.5% 2.3%
General Business Risk 1,061 2,622 5,232 8,915
% of Total Costs 1.8% 16.9% 4.0% 4.4%
Contractual Risk 194 -- 3,270 3,464
% of Total Costs 3.4% -- 2.5% 1.7%
Total all Factors 2,700 2,622 11,772 17,094
% of Total Costs 4.7% 16.9% 9.0% 8.4%
Example 3 - Assumptions:
  1. The contract is for the manufacture and supply of 180 widgets.
  2. The basis of payment is a firm unit price per widget.
  3. The contract performance period is 9 months.
  4. The Negotiated Contracts Costs are:
    Negotiated Contracts with total costs between $50,000 and $249,999 Profit Calculations Example 3: Negotiated Contracts Costs
    Cost CentreNegotiated Contract Cost
    Direct Materials$15,000
    Direct Labour20,000
    Overhead45,000
    G & A10,000
    Subtotal90,000
    Royalties3,000
    Total$93,000
  5. Machinery and equipment owned by the contractor is used in performance of the contract.
  6. No advance, progress or milestone payments are to be made to the contractor.
  7. The contractor has manufactured these particular widgets, which are to his own specifications, for a number of years. As a result a reasonable rate contractual risk is considered to be 5.5%.
    Negotiated Contracts with total costs between $50,000 and $249,999 Profit Calculations Example 3: Profit Summary
    Profit FactorMeasurement Base
      FactorDetailsAmount $Profit Rate %Profit $
    Return on Capital EmployedFixed Capital Employed90,0001900
    Working Capital Employed (No advance, progress or milestone payments)90,00032,700
    Total   3,600
    General Business RiskDirect Materials15,0001.5225
    Direct Labour20,0004800
    Overhead45,00041,800
    G & A10,0004400
    Royalties3,000c--
    Total Costs93,000 3,225
    Contractual RiskTotal Allowable Costs less Royalties90,0005.54,950
    Total Profit= 12.7% of Total Costs$11,775
    Total Cost$93,000
    Profit11,775
     $104,775
    = $582.08 per widget

Annex 10.4: Reasons for the non-applicability of certain costs when utilizing Contract Cost Principles 1031-2

()

The following costs are considered non-applicable to government contracts when utilizing contract cost principles 1031-2 for the reasons given.

  1. Allowances for interest on invested capital, bonds, debentures, bank or other loans together with related bond discounts and finance charges

    Interest on borrowing, however represented, is not an acceptable cost. There are several reasons for this. In the first place, it is impossible to know how much of a contractor's capital should be properly provided by equity capital and how much by borrowed capital. If it were fair to allow interest on the borrowed capital (the financial reward to the lender), it would also seem fair to allow dividends (the financial reward to the investor). As dividends are recognized as a distribution of profits and therefore not an item of cost, so too with interest. Another consideration is the determination of what a contractor's capital properly should be, regardless of what it may actually happen to be. If interest were to be an acceptable cost, then a contractor financed by bonds, debentures or long term loans would be in an advantageous position compared to a contractor financed by the sale of equity. The government recognizes the cost-of-money (interest) associated with capital employed, however financed, as a factor in the calculation of profit.

  2. Legal, accounting and consulting fees in connection with financial re-organization, security issues, capital stock issues, obtaining of patents and licences and prosecution of claims against Canada

    A distinction should be drawn between the occasional expenses in relation to the raising of capital referred to here, which are not an acceptable cost, and the normal recurring expenses associated with the day-to-day management and recording of capital transactions, which are an acceptable cost. The latter expenses include those arising from the registry and transfer of share capital when they form part of the activity of the company secretary, costs of share holders' meetings, normal proxy solicitations, reports to shareholders, submission of required reports to government agencies, reasonable directors' fees and incidental expenses of directors and for committee meetings.

  3. Losses on investments, bad debts and expenses for the collection thereof

    Since interest on capital invested in a contractor's business is not considered a business operating cost, neither is interest received by a contractor from funds invested outside the business considered a necessary credit against business operating costs. However, it also follows that any losses sustained by a contractor from these outside investments are not considered to be a business operating cost and thus are not acceptable on government contracts.

    Since the government as a debtor always pays its just debts, while it is only the commercial customers who have bad debts on a contractor's books, the losses due to bad debts and the expenses of collection thereof are not an acceptable cost to government contracts.

  4. Losses on other contracts

    An excess of costs over income on a contract is not acceptable as a cost to any other contract. This principle also applies to application by a contractor of preferred overhead rates to certain contracts. Where this occurs, the excess of actual overhead over the preferred overhead amount will not be absorbed by government contracts.

  5. Federal and provincial income taxes, excess profit taxes or surtaxes and/or special expenses in connection therewith

    In general, taxes which a contractor is required to pay and which are computed in accordance with sound accounting principles are acceptable costs, except for those included under this heading and/or other taxes in connection with financing, refinancing or re-organizing.

    On the other hand, all tax refunds, federal or provincial, are not required to be applied to reduce any related expenses.

  6. Provisions for contingencies

    A contingency liability is a liability which could arise on the happening of some event which may or may not occur. The initial provision or increase of funding for a contingent liability is considered to be a setting aside of earned profits to meet possible liabilities against future profits and not a business operating cost and therefore not an acceptable cost to government contracts.

    There is one exception to the above and that is in respect of the acceptability of costs for the provision of warranties. In any firm price contract, a contractor may include as a cost a reasonable amount to be set aside as a provision for the absorption of expenses associated with warranties given under the terms of the contract. In determining a reasonable amount, the following factors should be taken into account:

    1. the amounts provided for warranty expenses should be separate for each distinctive product or family of products;
    2. the amounts provided should reflect, where available, the previous performance of the product(s) in regard to warranty, using an average of three to five years;
    3. the cost of any provision for warranty charged to a specific contract should reflect any difference in the warranty period from that normally granted by a contractor on the product(s); and
    4. the costs should be net of any warranty contract sales to other customers.
  7. Premiums for life insurance on the lives of officers and/or directors where proceeds accrue to the contractor

    Similarly, proceeds from such life insurance need not be applied to reduce any cost to the contractor.

    Premiums on this type of insurance are not acceptable in government contracts since Canada does not derive any benefit therefrom.

  8. Amortization of unrealized appreciation of assets

    See Annex 10.5.2: Cost Interpretation Bulletin - Number 02 Depreciation, "Depreciation".

  9. Depreciation of assets paid for by Canada

    See Annex 10.5.2: Cost Interpretation Bulletin - Number 02 Depreciation, "Depreciation".

  10. Fines and penalties

    The amounts of fines and penalties imposed by federal, provincial or local authorities are not an acceptable cost to government contracts, for to accept such amounts would be tantamount to the government's supporting financially the offense which gives rise to the imposition of a fine or penalty.

  11. Expenses and depreciation of excess/idle facilities

    For this purpose, excess/idle facilities means the sum of all fixed assets appearing in a contractor's books of account which are not in use or for which no use is anticipated within a reasonable period. The expenses associated with the maintenance and/or the amounts of depreciation attributable to such fixed assets are not acceptable costs to government contracts.

    The expenses and/or depreciation of excess/idle facilities, as defined above, which the government has ordered retained for defence purpose, should be charged to a separate contract set up for that purpose.

  12. Unreasonable compensation for officers and employees

    The extra costs associated with the above are not an acceptable charge to government contracts.

  13. Product development or improvement expenses not associated with the product being acquired under the contract

    See Annex 10.5.7: Cost Interpretation Bulletin - Number 07 Research and Development Expenses.

  14. Advertising, except reasonable advertising of an industrial or institutional character placed in trade, technical or professional journals for the dissemination of information for the industry or institution
    1. Assuming that a contractor's employees enhance their knowledge by reading trade, technical or professional journals, and, in turn, government contracts benefit from this increased knowledge by way of increased efficiency and productivity, and that the advertising supports these publications, the expenses of advertising in this manner are an acceptable cost to government contracts, provided:
      1. it is in the nature of institutional or support advertising only, and not in the form of display advertising;
      2. it does not advertise a particular product or service of a contractor;
      3. it is placed in trade, technical or institutional journals (financial publications are primarily for investors, not for an industry or trade; and so do not qualify); and
      4. the cost is reasonable.
    2. Expenses associated with the help wanted advertisements are an acceptable cost, provided they are reasonable and only for the purpose of recruiting personnel.
    3. The expenses associated with advertising through any media for other than (1) and (2) above, are not an acceptable cost to government contracts. For this purpose, advertising media are: magazines, newspapers, television and radio programs or "commercials", brochures, direct mail, outdoor advertising, conventions, exhibits, free goods and samples.
  15. Entertainment expenses

    Although expenses for amusement, diversion, social activities and incidentals relating thereto are not acceptable, the expenses associated with meetings and conferences, when called for the dissemination of technical information or discussion of production problems and the like, are acceptable. These latter expenses may include those for meals, transportation, rental of meeting places and other incidentals provided they are reasonable.

  16. Donations, except those to charities registered under the Income Tax Act

    Donations, except those to political parties, are an acceptable cost provided they comply with the Income Tax regulations and are taken into overhead in the period they are paid rather than pledged.

  17. Dues and other memberships other than regular trade and professional associations

    The expenses associated with membership, either of the company as a whole or individual officers or employees in associations whose prime purpose is to provide entertainment or recreation, are not an acceptable cost to government contracts.

  18. Fees, extraordinary or abnormal, for professional advice in regard to technical, administrative or accounting matters, unless approval from the Contracting Authority is obtained

    The fees associated with obtaining this assistance are not an acceptable cost, unless a contractor demonstrates, to the satisfaction of the contracting officer, the circumstances giving rise to the need for this assistance.

  19. Compensation in the form of dividend payments or calculated based on dividend payments

    Dividends are not organization costs; they are a distribution of earnings to shareholders. Therefore since dividends are not organization operating costs they are disallowed contract costs.

  20. Compensation calculated, or valued, based on changes in the price of corporate securities, such as stock options, stock appreciation rights, phantom stock plans or junior stock conversions; or, any compensation in the form of a payment made to an employee in lieu of an employee receiving or exercising a right, option, or benefit

    Disallowing this type of expense as a contract cost is already addressed as per paragraph f. provisions for contingencies of section 07 Non-applicable Costs of SACC General Conditions Contract Cost Principles 1031-2. This contingent liability is the setting aside of a provision to retain the employee and motivate future performance, based on events which may or may not occur. The provision for a contingency is considered to be a setting aside of earned profits to meet possible future liabilities and is not a business operating cost. Therefore it is not an acceptable cost to government contracts.

    Further, compensation based on changes in securities price is not based on work actually performed and thus, is unallowable. Regardless of the name given to the plan, stock-based compensation scenarios continue to emerge, and rather than trying to cover each scenario individually, in Contract Cost Principles 1031-2, a general disallowance addresses compensation based on changes in prices of corporate securities.

Annex 10.5: Cost Interpretation Bulletins 01 to 19

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Annex 10.5.1: Cost Interpretation Bulletin - Number 01 Excess Facilities

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Section 07 (k) of Contract Cost Principles 1031-2 provides that the expenses and depreciation of excess facilities shall be considered non-applicable costs to the contract.

This Bulletin explains the costs that should be considered for the purpose of the application of the above section.

Definition

For the purpose of this Bulletin:

"Facilities" in this context means plant or any portion thereof (including land integral to the operation), equipment individually or collectively, or any other tangible capital asset, wherever located, and whether owned or leased by the contractor.

Interpretation

The costs that are associated with facilities that are excess to the contractor's current needs should be examined to determine if these costs are non-applicable.

In examining these costs, the following factors should also be considered:

  1. Vacant, or largely vacant space;
  2. Inactive or unused equipment;
  3. Idle capacity required for stand-by purposes;
  4. Indirect supporting staff no longer required either in full or part;
  5. Other costs such as maintenance, repair, rent, property taxes, insurance, depreciation, etc.;
  6. Management costs that should be reduced because of the reduction in active facilities.

Annex 10.5.2:  Cost Interpretation Bulletin - Number 02 Depreciation

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Depreciation

Paragraph 04.2.e. of SACC General Conditions 1031-2 Contract Cost Principles provides that Indirect Costs (Overhead) may include a reasonable provision for depreciation.

In addition, subsection 07 of General Conditions 1031-2 Contract Cost Principles disallows the following:

  • a. finance charges
  • h. amortization of unrealized appreciation of assets
  • k. expenses and depreciation of excess facilities

This Bulletin explains what is meant by a reasonable provision for depreciation for the purpose of the application of the above paragraph 04.2.e.

Definitions

For the purpose of this Bulletin:

"Asset Laid Down Cost" is the cost incurred by a contractor to acquire an asset. This includes the contractor’s invoice price (less trade discount) plus any applicable charges for transportation, exchange, customs duties, brokerage duties and applicable taxes. (Coût livré d’un élément d’actif)

"Asset Recognition" the cost of an item shall be recognized as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the contractor; and the cost of the item can be measured reliably. (Comptabilisation d’une immobilisation)

"Available and In Use" is the date that the asset is first used to earn income. (Prêt et mis en service)

"Borrowing Cost" includes exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs, interest expense calculated using the effective interest method, and finance charges in respect of finance leases. (Coût d’emprunt)

"Capital Cost Allowance" is a deduction, akin to depreciation, allowed in computing income for tax purposes. (Déduction pour amortissement)

"Cost" is the asset laid down cost plus amount of consideration given up to, construct, develop, or better an item of property, plant and equipment including installing it at the location and in the condition necessary for its intended use less any applicable portion of any income, rebate, allowance, or any other credit relating to any applicable direct or indirect cost, received by or accruing to the contractor and related capitalized borrowing costs included in the cost of the asset. The cost as defined for Contract Cost Principles 1031-2 does not include an estimate of the costs of dismantling and removing the item and restoring the site on which it is located. (Coût)

"Cost Model" is an item of Property, Plant and Equipment that shall be carried at its cost less any accumulated depreciation. (Modèle de coûts)

"Depreciation" is the gradual exhaustion of the service capacity of fixed assets which is not restored by maintenance practices. It is the consequence of such factors as use, obsolescence, inadequacy, and decay. (Amortissement)

"Depreciation Accounting" is an accounting procedure in which the cost of a fixed asset less the estimated residual value, if any, is distributed over its estimated useful life in a systematic and rational manner. (Imputation axée sur l’amortissement)

"Depreciation Base" is the asset cost less estimated residual value. (Assiette d’amortissement)

"Diminishing, Declining or Reducing Balance Depreciation" is the depreciation amount computed by a constant fraction of the depreciated cost so that the depreciation base is written off by the estimated date of retirement. (Amortissement selon le solde décroissant)

"Production Depreciation" is the depreciation amount computed by that portion of the depreciation base that the production, or use during the period, bears to the total estimated production or use to be obtained from the asset. (Amortissement fonctionnel)

"Renewal (Replacement) Accounting" is an accounting procedure in which no charge for expense is made for a fixed asset until replacement occurs; the cost of the replacement rather than the cost of the original asset is then charged to expense. (Imputation axée sur le remplacement)

"Retirement Accounting" is an accounting procedure in which no charge to expense is made for a fixed asset until it is removed from service; the original cost is charged to overhead in the year the asset is retired. (Imputation axée sur la cession)

"Straight Line Depreciation" is the depreciation amount computed by dividing the depreciation base by the estimated number of periods of service life. (Amortissement linéaire)

"Sum-of-the years'-digits Depreciation" is the depreciation amount whereby the depreciation base is allocated to the individual years on a reducing basis, by multiplying it by a fraction in which the numerator is the number of years + 1 of estimated life remaining, and the denominator is the sum of the series of numbers representing the years in the total estimated life. (Amortissement proportionnel à l’ordre numérique des années inversées)

Interpretation

To be considered reasonable any provision for depreciation should be determined in accordance with the following:

  1. For the purpose of Depreciation, an item of Property, Plant and Equipment shall be measured based on its original cost per the cost model less related borrowing costs included in the cost of the asset. Amortization of unrealized appreciation of assets will not be considered as it reappraises historical cost to fair value which is not representative of the original cost.
  2. The amount should be calculated using one of the following methods on a consistent basis:
    1. Capital Cost Allowance;
    2. Straight Line Depreciation;
    3. Diminishing, Declining or Reducing Balance Depreciation;
    4. Production Depreciation;
    5. Sum-of-the-years' digits Depreciation.

    The following two methods are not acceptable:

    1. Renewal (Replacement) Accounting; and
    2. Retirement Accounting.
  3. The amount calculated using Capital Cost Allowance (CCA) rates should be no higher than the basic CCA rates published by Canada Revenue Agency (CRA) for income tax purposes. Occasionally, CRA permits the use of accelerated CCA rates for income tax purposes, but they are not permitted for General Condition 1031-2 purposes.
  4. The total amount of depreciation for any one asset should not exceed 100 percent of that asset's original cost.
  5. In general, depreciation should be calculated and included in the cost of production only for accounting periods subsequent to the asset being available and in use. During the first year of use, the depreciation amount may be based on the exact fraction of the fiscal year, or by using the half-year convention, if that is the contractors practice. This latter method assumes that all capital acquisitions take place at mid-year.
  6. Assets purchased specifically for use on contracts should be capitalized and depreciated using the contractor's normal method, unless title is taken by Canada, or Canada pays for the asset under an Assistance Program.
  7. Canada's funding in any form, including direct or indirect benefits such as the contribution for capital assistance, should be accounted for using the cost reduction approach. The amount of all such funds received by, or credited to the contractor's account should be deducted from the related purchase price of the assets, with any depreciation or amortization calculated on the net amount. Investment Tax Credit on the other hand shall not be deducted from the fixed asset acquisition cost.
  8. Leasehold improvement costs are similar to capital additions and for depreciation purposes should be amortized over the lesser of the expected useful life of the leasehold improvement or the non-renewable term of the lease.

Annex 10.5.3:  Cost Interpretation Bulletin - Number 03 Lease Costs

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Under the terms of Contract Cost Principles 1031-2 lease costs are applicable costs for inclusion in a contractor's overhead or as direct charge to the contract, if they are reasonable.

This Bulletin explains what is meant by reasonable lease costs.

Definitions

For the purpose of this Bulletin:

"Lease" is the conveyance by a lessor to a lessee of the right to use a tangible asset usually for a specific period of time in return for rent.

"Operating Lease "is a lease in which the lessor does not transfer substantially all the benefits and risks incident to the ownership of the property.

"Capital Lease" is a lease that transfers substantially all the benefits and risks incident to ownership from the lessor to the lessee.

"Executory Costs" are costs related to the operation of the leased property (e.g. insurance premiums, maintenance costs, and property taxes).

"Interest Rate Implicit in the Lease" is the discount rate that, at the inception of the lease, causes the aggregate present value of:

  • the minimum lease payments excluding that portion of the payments representing executory costs to be paid by the lessor and any profit on such costs; and
  • the unguaranteed residual value accruing to the benefit of the lessor, to be equal to the fair value of the leased property to the lessor at the inception of the lease.

"Rate for incremental borrowing" is the interest rate that, at the inception of the lease, the lessee would have incurred to borrow, over a similar term and with similar security for the borrowing, the funds necessary to purchase the leased asset.

"Unguaranteed Residual Value" is that portion of the residual value of leased property which is not guaranteed or is solely guaranteed by a related party to the lessor.

Interpretation

To be considered reasonable any lease cost should be determined in accordance with the following.

  1. The type of lease must be correctly identified as either an operating lease or a capital lease. In the case of an operating lease, the actual rental cost paid is considered to be a reasonable cost. In the case of a capital lease, the depreciation amount calculated on the capitalized value of the asset in the lease over the lease term or economic life of the asset, is considered to be a reasonable cost.
  2. A lease should be classified as a capital lease if one of the following criteria are met:
    1. the lease specifies the transfer of the property to the lessee by the end of the lease term; or
    2. the lease contains a bargain purchase option; or
    3. the lease term is such that the lessee will receive substantially all of the economic benefits from the use of the leased property over its life span, which will normally occur if the lease term covers 75% or more of the economic life of the leased property; or
    4. the present value of the minimum lease payments, excluding any executory costs, is equal to substantially all (usually 90% or more) of the fair value of the leased property at the inception of the lease; the discount rate to be used in determining the present value of the minimum lease payments for this purpose should be the lower of the lessee's rate for incremental borrowing and the interest rate used in the lease, if known.
  3. For a capital lease, the value at which it will be capitalized should be the lower of the present value of the minimum lease payments as described in 2 d) or the fair value of the asset (usually this is the purchase value of the asset).

Annex 10.5.4:  Cost Interpretation Bulletin - Number 04 Travel Costs

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Under the terms of Contract Cost Principles 1031-2 reasonable travel costs are applicable costs for inclusion in a contractor's overhead or as a direct charge to contract.

This Bulletin explains the conditions to be met before any specific travel costs are charged directly to the contract.

Definition

For the purpose of this Bulletin:

"Travel Costs" are the costs for transportation, lodging, meals and incidental expenses incurred by a contractor's personnel on official company business. Costs for transportation may be based on mileage rates, actual costs incurred, or on a combination thereof, provided the method used results in a reasonable charge. Costs for lodging, meals and incidental expenses may be based on per diem, actual expenses, or a combination thereof, provided the method used results in a reasonable charge.

Interpretation
  1. In order for travel costs to be acceptable as direct costs to a contract, the following conditions must be met:
    1. such costs are directly attributable to the performance of the work under the contract;
    2. the practice of charging travel costs to a contract is consistently followed in the costing of both government and non-government work; and
    3. all directly charged travel costs are eliminated from indirect costs allocated to government contracts.
  2. A reasonable amount/percentage may be added to travel costs allocated directly to a contract to cover applicable G & A costs, provided it is the contractor's usual and consistent practice to do so.

Annex 10.5.5:  Cost Interpretation Bulletin - Number 05 Head Office Expense

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Under the terms of Contract Cost Principles 1031-2 expenses allocated to a contractor which is a segment of an organization by the Head Office of that organization are applicable costs for inclusion in the contractor's overhead provided that the amount allocated is reasonable.

This Bulletin explains the method to be used in the allocation of Head Office expenses in order for the amount allocated to be considered reasonable.

Definitions

For the purpose of this Bulletin:

"Head Office" is an office responsible for the policy direction and management of two or more, but not necessary all, segments of an organization.

"Segment" is one of two or more branches, divisions, product departments, plants, or other subdivisions of an organization reporting directly to a parent/head office, usually identified with responsibility for profit and/or producing a product or service.

Interpretation
  1. For the allocation of any expenses to be acceptable, a Head Office/Segment relationship must exist, generally with company policies describing the basis of allocation for these expenses.
  2. For the allocation of the expenses to be considered reasonable all, or any combination of the following three methods should be used.
    1. Directly Chargeable- Those expenses included within the Head Office expense pool to be allocated which can be identified as having been incurred specifically and totally for one particular segment. Such expenses should be allocated directly to the particular segment, to the extent practicable.
    2. Separately Allocated- Those individual, or groups of expenses which are allocated only to a limited group of corporate segments. Such expenses are not usually incurred for specific segments but possess objective, measurable relationships to the segments and should be grouped in homogeneous pools for subsequent allocation on a basis which represents these objective, measurable relationships.
    3. Residual- These represent the remaining expenses which are allocated to all, or most corporate segments on an overall basis. These expenses should be allocated to segments using a base or bases which represent the total activity of the segments (see 3. below).

      A three part exercise for allocation, as described above, would only be necessary where the dollars concerned were material. In less significant situations, a combination of the Directly Chargeable and the Residual methods might suffice. In low-dollar value situations, the Residual method alone might be appropriate.

  3. There are many and varied bases which might be used to allocate residual expenses. However, to be accepted and considered reasonable, the base(s) selected must be representative and consistently applied to all segments of the organization. The following are examples of bases for allocation which are often used:
    1. Number of personnel in each segment of the organization.
    2. Dollar value of production in each segment of the organization.
    3. Cost of goods sold in each segment of the organization.
    4. Total sales in each segment of the organization.
  4. Allocations derived from an arbitrary forecasted distribution base are not considered acceptable. Historical and present cost data used to derive the allocation base, along with future economic conditions should be considered and documented.

Annex 10.5.6:  Cost Interpretation Bulletin - Number 06 Pension Costs

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Section 04(2)(c) of Contract Cost Principles 1031-2 states in part, that "indirect costs may include such items as fringe benefits (the contractor's contribution only)" in overhead pools.

Pension costs are normally included as a fringe benefit in a contractor's overhead pools. This interpretation explains the determination and measurement of pension costs.

Definitions

For the purposes of this Bulletin:

" Actuarial Assumptions" are presumptions about future events that will affect pension costs and obligations. These include theories concerning mortality, withdrawal, disability, retirement, changes in compensation, interest on accrued pension benefits, investment earnings, and asset appreciation or depreciation.

" Actuarial Cost Methods" are methods used to determine the cost of providing pension plan benefits and to allocate that cost to specific time periods.

"Current Service Cost" is the cost of anticipated future retirement benefits accrued during any year usually determined on an actuarial basis; it represents the aggregate estimated cost for one year's service by each employee who is a member of the plan.

"Defined Benefit Pension Plan" specifies either the benefits to be received by employees after retirement or the method for determining those benefits.

"Defined Contribution Pension Plan" is one in which the employer's contributions are fixed, usually as a percentage of compensation, and allocated to specific individuals. The pension benefit for each employee is the amount that can be provided at retirement based on the accumulated contributions made on that individual's behalf and investment earnings on those contributions.

"Experience Gain or Loss" is the measure of the difference between the expected and actual experience of the plan.

"Past Service Cost" is the estimated cost of future retirement benefits accrued in the years prior to the adoption of a pension plan; these costs are normally charged to operations over a reasonable period of years.

"Pension Plan" is any arrangement (contractual or otherwise) by which a program is established to provide retirement income to employees.

Interpretation

The reasonableness of these proposed pension cost amounts should be determined in accordance with the following:

  1. The terms and conditions of the plan are determinant factors in measuring the obligations.
  2. The amount of pension cost for a cost accounting period is periodically determined by use of an actuarial cost method which measures separately each of the components of pension costs.
  3. Each Actuarial Assumption used to measure pension cost must be separately identified and represent the contractor's best estimates of anticipated experience under the plan, taking into account past experience and reasonable expectations.
  4. Either Defined Contribution Pension Plans or Defined Benefit Pension Plans are acceptable in the calculation of pension costs in accordance with Government Contract Cost Principles 1031-2.

    Under Defined Contribution Pension Plans the employer's responsibility is simply to make a contribution each year based on the formula established in the plan. The pension cost for a cost accounting period will normally be the current and past service cost.

    Accounting for Defined Benefit Pension Plans is quite complex, because the benefits are defined in terms of uncertain future variables, an appropriate funding pattern must be established to assure that enough funds will be available at retirement to meet the benefits promised. The pension cost for a cost accounting period will normally be the aggregate of current service, plus past service, plus interest, minus expected return on plan assets, plus or minus experience gains/losses.

Annex 10.5.7:  Cost Interpretation Bulletin - Number 07 Research and Development Expenses

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Paragraph 04 (02) (h) of Contract Cost Principles 1031-2 states that: "general research and development expenses as considered applicable by Canada" may be included in Indirect Costs (Overhead). Paragraph 7 (m) of Contract Cost Principles 1031-2 states that: "product development or improvement expenses not associated with the product being acquired under the contract" are considered non-applicable costs to the contract.

This Bulletin explains the difference between General Research and Development Expenses and Product Development or Improvement expenses in the light of these two sections of Contract Cost Principles 1031-2. It also explains the treatment required for each of the different type of expenses in a contractor's cost accounting practices for acceptability in contracts.

Definitions

For the purpose of this Bulletin:

"General Research and Development" is a planned investigation undertaken with the hope of gaining new scientific or technical knowledge and understanding. Such investigation may, or may not be directed towards a specific practical aim or application.

"Product Development and/or Improvement" is a systematic program of work, going beyond basic and applied research which is directed towards the creation of a new or improved product, system, component or material, substantially in a marketable form, but excluding any manufacture beyond completion of the new and improved product's prototype.

Interpretation
  1. Company funded research and development should be divided into two distinct expenditure categories:
    1. General Research and Development; and
    2. Specific Product Development and/or Product Improvement.
  2. General Research and Development
    1. The expenditures relating to general research and development should be included in overhead and allocated to the contractor's total business activity which would exclude those items such as resale activity, warranty, etc., within the current fiscal year.
  3. Specific Product - Product Development/Product Improvement
    1. The Costs within these categories of research should not be included in overhead at the time it is incurred. Proper treatment of these expenditures would be to extract them from overhead pools and segregate these costs for later recovery against product sales.
    2. Negotiators should consider, as an aspect of their negotiations, overhead applications to these product development costs. In the case of G & A overhead, either the costs are applied at the time that the Product Development Costs are incurred, or at the time the Product Development Costs are recovered against product sales. For guidance on the timing of application of G & A overhead costs, negotiators may look at other G & A recovery applications made to Product Development by the company.
    3. The recovery of the contractor's product development costs should, in the majority cases, be accomplished through the amortization of these product development costs against the sales of the family of products to which the product development pertained.
    4. The contractor may recover these expenses on the relevant product sales, including government sales, even if the related expenditures have been written off to the profit and loss account in the year originally incurred. However, in this case the contractor must maintain sufficient records to demonstrate the costs to be recovered and also to substantiate that these costs had not already been recovered in overhead.
  4. The following are examples of activities that typically would be excluded from any general research and development and product development project:
    1. engineering follow-through in an early production phase;
    2. quality control during commercial production, including routine product testing;
    3. trouble-shooting in connection with breakdowns during production;
    4. routine, or periodic alterations to existing products, production lines, manufacturing processes, and other ongoing operations, even though such alterations may represent improvement;
    5. adoption of an existing capability to a particular requirement, or customer's need, as part of a continuing commercial activity;
    6. routine tools, jigs, mould, and dies design;
    7. activity, including design and construction engineering, related to the construction, relocation, rearrangement, or facilities start-up, or equipment, whose sole use is for a particular R&D project, unless specifically approved by the technical authority;
    8. all market research activities, including those directed at market development, verification, identification, demonstration, preference, and customer acceptance development;
    9. pre-production and proposal costs;
    10. cost overruns on previous firm price development contracts.
  5. General Research and Development (R&D) - Other Factors
    1. Costs acceptable as general research and development must relate to projects classified as basic research, or applied research. Costs applicable to Product Development projects partially funded by Canada are not acceptable as general research and development costs. Product Development is not considered an overhead item and is recovered by a separate product development expenditure recuperation rate.
    2. In those instances where the general research and development expenditures are the majority of the total G & A cost pool, this fact must be highlighted in the cost rate negotiation report, or a separate general research and development overhead rate developed.
    3. Significant differences between the negotiated and actual costs incurred must be taken into consideration when reviewing audited costs, or negotiating future years general research and development costs.
  6. Product Development (PD) - Other Factors
    1. Company funded product development will inevitably produce non-marketable products which would not allow these costs to be recovered on related product sales. However, there may be marketable by-products or product advances made.
  7. Product Development Amortization
    1. Contractors proposing to amortize PD costs of the product developed against future sales to Canada, must submit an annual cost schedule to the responsible Directorate.

Annex 10.5.8:  Cost Interpretation Bulletin - Number 08 Bid and Proposal Expenses

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Under paragraph 04 (02) (g) of Contract Cost Principles 1031-2, selling and marketing expenses which could be considered to include amongst other things, Bid and Proposal Expenses, are listed as one of the items generally considered to be indirect costs. However, in some instances contractors follow a consistent practice of charging Bid and Proposal Expenses of a successful Bid or Proposal direct to the resulting contract.

This Bulletin explains the criteria under which the direct charging of Bid and Proposal Expenses to resulting contracts is acceptable to PWGSC.

Definition

For the purpose of this Bulletin:

"Bid and Proposal Expenses" are the costs incurred in preparing, submitting, and supporting bids and proposals, (whether or not solicited), on potential contracts, including:

  1. direct administrative effort, for the physical preparation of the technical proposal documents, and also the technical and non-technical effort for the preparation and publication of cost data, and other administrative data necessary to support the contractor's bids and proposals;
  2. technical effort, incurred to specifically support a contractor's bid, or proposal, including the system and concept formulation studies, and the development of engineering and production data; and,
  3. purchased services and supplies incurred to specifically support a bid or proposal.
Interpretation

Bid and Proposal Expenses are acceptable to PWGSC as a direct charge to resulting contracts in cases of proposals resulting in subsequent contract negotiations, provided that the bid and proposal expenses are clearly denoted in the proposal and contract documents as forming part of the agreed contract price.

Annex 10.5.9:  Cost Interpretation Bulletin - Number 09 Selling and Marketing Expenses

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Paragraph 04 (02) (g) of Contract Cost Principles 1031-2 permits selling and marketing expenses associated with the product or service being acquired under a PWGSC contract, providing they are reasonably and properly incurred, to be an acceptable cost to the contract.

This Bulletin explains what constitutes reasonable selling and marketing expenses and how an appropriate share of these expenses for allocation to an PWGSC contract is to be determined.

Interpretation
  1. In determining the reasonableness of selling and marketing expenses, consideration shall be given to:
    1. the nature and amount of these expenses in the light of the expenses which a prudent individual would incur in the conduct of a competitive business;
    2. the proportionate amounts expended as between government and commercial business;
    3. the trend and comparability of the contractor's current period cost in relation with prior periods;
    4. the general level of such costs within a contractor's industrial sector;
    5. the nature and extent of the sales effort in relation to the cost thereof and to the contract value.
  2. Selling and Marketing Expenses may include reasonable product demonstration expenses incurred for attendance at trade shows and fairs. However, the following expenses are considered non-applicable:
    1. Entertainment Expenses, i.e. expenses for amusement, diversion, social activities and incidentals relating thereto. However, expenses associated with meetings and conferences, when called for the dissemination of technical information or discussion of production problems and the like, including the reasonable cost of meals, transportation, rental of meeting places and other incidentals, are acceptable.
    2. Advertising Expenses, except for expenses referred to in 1031-2 as being acceptable, i.e. those expenses associated with reasonable advertising of an industrial or institutional character placed in trade, technical or professional journals for the dissemination of information for the industry or institution.
    3. Costs of retained lobbyists, as described in the Appendix M, Lobbyists and Contracting, of the Treasury Board Contracting Policy, who are paid on a contingency fees basis.
    4. Unreasonable Commissions to Selling Agents.
    5. Unspecified Payments to a Third Party.
    6. Depreciation or Write-off Costs of Demonstration Equipment.
  3. Allocation to Contracts

    To enable a reasonable and justifiable share of selling and marketing expenses to be charged against PWGSC contracts, the following practice should generally be adopted:

    1. selling and marketing expenses should be clearly identified by a contractor as distinct from other indirect costs to the extent, where warranted, of creating a separate cost pool for these expenses;
    2. where a contractor manufactures more than one particular product or provides more than one particular service, the selling and marketing expenses specifically identifiable with each particular product or service should be allocated directly thereto with any general expenses being prorated equitably across all products or services; and then
    3. a pro-rata share of the selling and marketing expenses allocated in accordance with b) above to the particular products or services or family of products or services being acquired under the PWGSC contract included in the applicable overhead costs of the contract.

Annex 10.5.10:  Cost Interpretation Bulletin - Number 10 Severance Payments

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Contract Cost Principles 1031-2 state that: "The total cost of the Contract must be the sum of the applicable direct and indirect costs which are, or must be reasonably and properly incurred and/or allocated, in the performance of the Contract, less any applicable credits." Such costs may include severance payments to employees.

This Bulletin explains which severance payments and the amount there of that may be an acceptable cost to the contract.

Definition

For the purpose of this Bulletin:

"Severance Pay" means a cash settlement or paid leave granted to employees upon termination of employment for various reasons, or upon retirement. Remuneration for earned vacation credits or compensation for unused sick leave credits is not considered as severance pay. Other payments excluded from severance pay are return of contributions made to pension plans or retirement savings programs.

Interpretation
  1. Severance payments should be calculated using one of the following criteria in order to be considered as an allowable cost:
    1. in accordance with an employment contract, collective agreement or enacted legislation; or
    2. according to an established company policy; or
    3. based on the merits of a particular case.
  2. In order for the allowable severance payment to be deemed reasonable any amount associated with the following should not be included:
    1. profit sharing;
    2. commissions;
    3. patent or other rights.

Annex 10.5.11:  Cost Interpretation Bulletin - Number 11 Pension Plan Refunds

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On occasion, there exist credits due to refunds to contractors from companies handling their pension plans. This situation could be as a result of large lay offs of employees, plan terminations and related interest on funds invested.

The accounting issue that arises from these terminations is whether a gain should be recognized when these assets revert back to the company.

Definitions

For the purpose of this Bulletin:

"Pension Plan Settlement" occurs when an employer legally discharges the obligation for accrued pension benefits either by transferring assets directly to plan participants in exchange for their rights to pension benefits or by purchasing annuity contracts in which a third party unconditionally undertakes to pay all accrued pension benefits.

"Pension Plan Curtailment" occurs when the expected years of future service to be rendered by the existing employee group is reduced significantly or when benefits will not be earned by employees for some or all future periods.

Interpretation
  1. The pension refund amounts to be deducted from overhead expenditures used to determine costing rates should be the contractor's share of the expected pension credits.
  2. Upon a pension plan settlement or curtailment, the employer may have eliminated obligations with respect to the plan, any gains or losses on the transaction, including any unauthorized amounts related to previous plan amendments.

    Changes in assumption and experience gains and losses, should be recognized immediately.

  3. On the other hand, if an employer settles only a part of the accrued pension benefits, a portion of any gains or losses including any unamortized amounts should be recognized immediately.

Annex 10.5.12:  Cost Interpretation Bulletin - Number 12 Company Funded Costs

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Contract Cost Principles 1031-2 refer to "costs which are, or must be reasonably and properly incurred and/or allocated, in the performance of the contract, less any applicable credits."

This bulletin explains the establishment of costs when government assistance has been provided related to costs of fixed assets, research, and product development.

Definitions

For the purpose of this Bulletin:

"Company Funded Costs" are expenditures made from funds over which the enterprise has spending power and which were not provided to the company through the terms of a related agreement or understanding.

"Grant" is an unconditional payment made to a recipient, usually for a specific purpose, for which the donor will not receive any royalties, goods, or services.

"Contribution" is a conditional transfer payment under an auditable agreement for which the donor will not receive any royalties, goods, or services.

"Contribution Arrangement" is an undertaking between a donor department or agency and a prospective recipient of a contribution, describing the obligations of each, and the terms and conditions of payments and which contain conditions for royalties from resulting sales. The arrangement may be as informal as an exchange of letters.

Interpretation

The Company Funded Costs that shall be considered applicable for contracts negotiated in accordance with 1031-2 are:

Fixed Assets

Government Assistance towards the acquisition of fixed assets shall be deducted from the fixed asset acquisition cost and the relevant depreciation thereof calculated on the net asset amount. Depreciation on the net amount may be included in the applicable overhead for cost recovery on contracts.

Research and Development

Government Assistance in the form of Investment Tax Credits shall not be deducted from the related research and development expenditures when determining the applicable costs.

Product Development

Government Assistance, as well as third party funded assistance, towards a specific product development shall be netted against the relevant product development costs to arrive at the portion to be recovered over the sale of that product or family of products.

Annex 10.5.13:  Cost Interpretation Bulletin - Number 13 Executive Compensation

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Paragraph 04 (2) (f) of Contract Cost Principles 1031-2 states that indirect costs may include: "general and administration expenses: including remuneration of executive and corporate officers…". However, section 07 (1) identifies "unreasonable compensation for officers and employees" as a non-applicable cost. There are many different considerations that may affect the amount a particular individual may be receiving.

This cost interpretation provides guidelines on the determination and allowability of executive compensation expenses that are included in a contractor's overhead expenditures.

Interpretation
  1. Items included in a total compensation plan for any executive, not necessarily all allowable costs, usually consist of four basis elements, these are:
    1. Salary: reflects the extent of experience and sustained level of performance for a job, or position.
    2. Benefits: deals with the provision of time off with pay, employee services, health care services, allowable insurance protection and retirement incentives.
    3. Performance Incentives: rewards the extent of accomplishment agreement targets.
    4. Perquisites: benefits which are designed only to apply to executives, such as housing loans; these are in addition to benefits offered to other employees.
  2. Guidelines for considering what is reasonable executive compensation are:
    1. compensation paid to executives in similar positions, compared to related executive pay scales surveys;
    2. the executive's previous experience, experience in other positions within the company and similar appointments in other companies;
    3. comparison of the compensation paid for the nature and scope of the work, or service, as defined in the contract of service and/or the position description;
    4. the size and complexity and the corporate management structure;
    5. the company's general salary policy should be reviewed to ascertain the compensation is uniformly paid, according to set criteria;
    6. in the case of smaller contractors with a limited number of officers, the amount of compensation paid to executives in the previous year should be reviewed, as a substantial increase over the prior year tends to indicate compensation may be excessive, further investigation should be made to determine whether the executives' salaries are for services rendered, rather than a re-distribution of the business's profits;
    7. compensation paid to executives through related party transactions.

Annex 10.5.14:  Cost Interpretation Bulletin - Number 14 Mobile Repair Party Requirements

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Section 5 of Contract Cost Principles 1031-2 recognizes that indirect costs should be accumulated and allocated based on a principle of similarity of costs in the pool and a causal relationship to the contracts to which the costs are allocated.

Repair work is normally carried out in a contractor's plant but, on occasion, it is necessary in meeting the requirements of a customer department, to have repair work performed at other locations.

This cost interpretation provides guidelines on the determination of overhead expenses applicable to Mobile Repair Party requirements.

Definition

For the purpose of this Bulletin:

"Mobile Repair Party" is the individual, or group of individuals, performing work away from the contractor's plant.

Interpretation

The overhead rate on Mobile Repair Party work normally will be at the full plant rate, however, it should be noted that under the three conditions below, the overhead rate could be different:

  1. where the estimated hours to be expended for Mobile Repair Party work exceed 5% of the estimated total direct labour hours for both commercial and defence repair and overhaul work during the contract period; or
  2. where the estimated hours to be expended for Mobile Repair Party work are less than 5%, but the contracting officer considers that a significant number of direct labour employees are hired for Mobile Repair Party work only; or
  3. where the contractor maintains adequate cost records to permit the calculation and negotiation of a separate Mobile Repair Party rate.

In the circumstances contemplated under alternatives a) and b) above, an overhead rate should be negotiated to reflect the reduced costs applicable to Mobile Repair Party work.

Notwithstanding the Cost Interpretation on Travel Costs, all travel costs for direct personnel for Mobile Repair Party requirements, should be charged to the contract directly and not included in any overhead pool.

Annex 10.5.15:  Cost Interpretation Bulletin - Number 15 Environmental Costs

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According to Section 04 of Contract Cost Principles 1031-2 "Indirect Costs" are: "those costs which, though necessarily having been incurred during the performance of the Contract for the conduct of the Contractor's business in general, cannot be identified and measured as directly applicable to the performance of the Contract."

An element that is becoming a more significant portion of indirect costs is environmental costs. This cost interpretation provides guidelines on applicable environmental costs included in a Contractor's indirect costs.

Definition

For the purposes of this Bulletin:

"Environmental costs" are the costs incurred by an entity to prevent, abate , or remediate damage to the environment or to deal with the conservation of renewable and non-renewable resources.

Interpretation
  1. Any direct or indirect benefits, for example, tax credits, insurance benefits, or government assistance, should be accounted for using the cost reduction approach. The amount of all such benefits received by or credited to the contractor's account should be deducted from the related environmental cost and any amortization of the cost should be calculated on the net amount.
  2. Notwithstanding the other sections of this bulletin, no fines, or penalties, or any other non applicable cost as determined under Section 07 of Contract Cost Principles 1031-2 are allowable.
  3. Environmental costs can be grouped according to the periods when the cost is incurred and the periods that the cost relates to.
    1. Current period operations.

      An example of this type of cost is the disposal of waste from current period operations.

      These costs should be allowed and allocated on the appropriate base in the current period.

    2. Current period past operations.

      An example is clean up costs for activities that occurred previously.

      Any current period cost that is a material amount should be deferred and amortized over a reasonable number of future periods.

    3. Current period future operations.

      An example is depreciable equipment purchased to control hazardous emissions.

      These costs should be amortized over the periods for which benefits are expected from the costs incurred.

Annex 10.5.16:  Cost Interpretation Bulletin - Number 16 Take-out Rates

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Section 05 of Contract Cost Principles 1031-2 states:

"Indirect costs must be accumulated in appropriate indirect cost pools, reflecting a contractor's organizational or operational lines and these pools subsequently allocated to contracts in accordance with the following two principles:

  1. the costs included in a particular indirect cost pool should have a similarity of relationship with each contract to which that indirect cost pool is subsequently distributed; further, the costs included in an indirect cost pool should be similar enough in their relationship to each other that the allocation of the total costs in the pool provides a result which would be similar to that achieved if each cost within that pool were separately distributed;
  2. the allocation basis for each indirect cost pool should reflect, as far as possible, the causal relationship of the pooled costs to the contracts to which these costs are distributed".

    This bulletin provides interpretation on how take out rates reflect the allocation of specific cost from indirect cost pools to suit the related costs and circumstances of the contracts. However, a fair level of overhead, or G & A costs must be charged to the particular products or services in question."

Definition

For the purpose of this Bulletin:

"Take-Out Rate" is the negotiated rate applied for the recovery of overhead costs on goods and services which do not form the major portion of the company's business but are in themselves significant relative to a government contract. The resulting rate, in most cases, should be somewhat less than that which applies to other work processed through the company's facilities.

Interpretation
  1. Take-out rates may be established to apportion overhead expenses on a reasonable and justifiable basis on goods and services which requires less overhead effort than the company's regular activity.
  2. The task of identifying where and when a take-out rate is applicable is left to the discretion of the negotiators, who are in the best position to establish the need, based on the information available at the time.
  3. Some of the areas for applications of take-out rates are:
    1. Subcontracts;
    2. Drop shipments, other resale and high value purchases;
    3. Mobile repair party and field services;
    4. Other specialized applications such as for travel and living that are charged directly to a contract.
  4. The purpose of a take out rate is to allocate costs to a contract. Other overhead recovery rates must not include any of the costs of any contracts that are subject to take out rates. This means that take out rates that are established without taking into account the full costs of specific situations may result in unrecovered overhead as this overhead cannot be recovered on other contracts. As an example; this situation can arise if a contract is established using a take out rate that is set to limit the total price of the contract and the rate is not sufficient to allow full cost recovery.

Annex 10.5.17:  Cost Interpretation Bulletin - Number 17 Government Supplied Materiel

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Paragraph 05 (a) of Contract Cost Principles 1031-2 deals with the allocation of indirect costs according to the principles of "similarity of relationship" and the "causal relationship of pooled costs". Applying these principles requires consideration of both the nature of activities giving rise to the costs and when different activities occur.

The purpose of this cost interpretation is to provide guidance in determining when material handling and general and administrative costs relating to government supplied material are allowable items for cost reimbursement.

Definitions

For the purpose of this Bulletin:

"Accountable Advance Spares" are non-catalogued materiel owned by the government and manufactured or purchased by contractors in accordance with agreements between contractors and the government. Accountable Advance Spares are used in the repair and overhaul of government equipment.

"Laid-Down Cost" is the cost incurred by a contractor to acquire a specific product. This includes the invoice price (less trade discounts) charged to the contractor plus any applicable charges for transportation, exchange, custom duties, and brokerage charges.

"Government-Supplied Materiel" (GSM): Material supplied to a contractor by a government department or agency for incorporation into the end product.

Interpretation
  1. Material handling costs related to the storing and transferring out of storage are allocated to the GSM when they are embodied.
  2. General and Administrative (G & A) overhead expenses and material handling costs that are applicable should be allocated as a cost associated with the embodiment of government supplied material in the year when the materials are embodied. When transfers of GSM, for example from accountable advance spares inventory, are made to Canada for asset disposal, the general and administrative overhead expenses and material handling costs that are applicable are allocated at the time of transfer.
  3. When the contractor stores GSM for Canada, the cost of the items being stored would normally include the laid-down cost of the purchased GSM; or the applicable direct material, direct labour, factory overhead and G & A applicable to the manufacturing operation of the manufactured GSM.

Annex 10.5.18:  Cost Interpretation Bulletin - Number 18 Incentive Remuneration Profit Sharing Plans

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Section 04 of Contract Cost Principles 1031-2 explains indirect costs. This section's paragraph 2. (c) indicates that fringe benefits (the contractor's contribution only) are to be included as indirect costs (overhead). A fringe benefit type that may not be an overhead cost for 1031-2 purposes is amounts paid under Incentive Remuneration Profit Sharing Plans. The reason these amounts are not considered costs is that normally these plans are considered as a distribution of a portion of earnings to employees. Earnings that are profits or a distribution of retained earnings are not costs. However, since the purpose of these plans is to remunerate employees, it is often argued that payments under these plans should be considered costs.

This cost interpretation is to determine the features of Incentive Remuneration-Profit Sharing Plans that may be considered as allowable cost items in accordance with 1031-2.

Definition

Incentive Remuneration Profit Sharing are plans designed to link the performance of employees to the achievement or organizational objectives, through the provision of additional compensation from the distribution of a defined share of the organization's net profit.

Interpretation

Incentive Remuneration Profit Sharing Plans may be considered as an allowable cost element providing:

  1. The plan includes a documented sharing arrangement, with all employees, and the incentive amounts payable by the employer must be computed with reference to earned profits.
  2. The company pays employees directly or provides the funds for the employee profit sharing plan to a trustee in trust for the benefit of the employees who are members of the plan.
  3. The amount of cost will not exceed the amount of payment made to the employees or the plan trustee.
  4. The cost is recognized only in the year the employee provides services to earn benefits under the plan.
  5. The entire amount recognized as cost must be disbursed to employees (or paid to the trustee) in the fiscal year when the benefits were earned or shortly after the end of the fiscal year (within a few months, but well before the end of the fiscal year following the one for which plan benefits were based).
  6. Any funds payable by the trustee to the employer for over contributions or funds that the plan may earn; shall be used to reduce the current year cost unless these earned funds or over contributions are paid directly by the employer to the employees within that current fiscal year. (see Annex 10.5.11: Cost Interpretation Bulletin - Number 11 Pension Plan Refunds).
  7. Compensation to owners of closely held corporations, partners, sole proprietors, or members of their immediate families should be in accordance with the personal service rendered rather than a distribution of profits. (see Annex 10.5.13: Cost Interpretation Bulletin - Number 13 Executive Compensation).

Annex 10.5.19:  Cost Interpretation Bulletin - Number 19 Purchased Labour -- Personnel Procured From Outside Sources

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In accordance with sections 03, 04 and 05 of Contract Cost Principles 1031-2, Purchased Labour Costs are considered either as Direct Costs or may be viewed as Direct Labour Costs.

Definitions

For the purpose of this Bulletin:

"Purchased Labour Costs" are the costs incurred by a contractor/entity for temporary personnel procured from the outside for skills such as engineers, technical writers, technicians, craftsmen. Purchased Labour normally attract different indirect costs. Care must be taken to ensure that they are not accounted for as the contractor's employees.

Interpretation
  1. Contractors' cost accounting method for purchased labour and overhead allocation thereon varies depending on the circumstances under which purchased labour costs are incurred.

    For example,

    1. some contractors classify purchased labour as direct labour costs when the work is performed in the contractor's facilities under their supervision and otherwise meets section 03(b) of 1031-2 definition of direct labour costs. These contractors cost direct labour using either the purchased labour rate or average labour rate incurred by their own employees for comparable work. However differences between the average labour rate incurred by the contractor's own employees and purchased labour prices are treated as overhead costs and are allocated accordingly.
    2. other contractors classify purchased labour as subcontract costs.
  2. Purchased labour must share in an allocation of certain indirect expenses where there is a causal or beneficial relationship, and the allocation method must be consistent with the contractor's disclosed cost accounting practices.
  3. The accounting treatment for purchased labour must be evaluated on a case-by-case basis with consideration given to the materiality of costs involved and the overall effect of the accounting treatment on final cost objectives. Acceptance or rejection of the contractor's treatment of purchased labour must be based upon
    1. the causal and beneficial relationship of indirect expenses and purchased labour, and
    2. the nature of the employer/consultant relationship.
  4. The preferred cost accounting method for purchased labour is to have a separate direct cost for this activity with an appropriate allocation of applicable overhead. Other methods devised are acceptable providing the accounting method is considered reasonable and justifiable and meets the relevant Contract Cost Principles 1031-2.

Annex 10.6: Cost Notifications 01 to 02

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Annex 10.6.1:  Cost Notification 01 - Technology Partnership Canada Royalty Amount for Cost Rate Negotiations

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Background

Technology Partnership Canada (TPC) has contributed sums per TPC Project Agreements which carry provisions for the possible repayment of these contributions per Royalty repayment terms in these accords.

In most cases, these royalty repayment terms are tied to the sale of the potential product/project that TPC contributed the funds for. The term and repayment percentage varies per the understanding.

Issue

In the agreements that were reviewed, the royalty payments to TPC to be made by the firm, in most instances, exceed the original contribution amount providing that the project has viable sales of the development project.

The annual rate negotiation with a firm will be faced with a potential royalty repayment cost in the overhead rate calculation in the year that the repayment is required and made to TPC.

Cost Recovery Position For Annual Rate Negotiation Negotiations

For annual rate negotiation purposes, the recovery amount allowed on contracts shall be limited to the original TPC contribution per the agreement. The amount in excess of the original contribution shall be considered a separate element outside the rate negotiations and will not be an allowable contract cost.

The amount of the recovery shall be determined by the original TPC agreement. For contributions that are product specific, a product development recovery rate will be established. For non-product specific agreements, the recovery will be made through a General and Administrative Overhead and shall be recovered over a reasonable amount of time.

References

Treasury Board Accounting Standard 3.2- Transfer Payments (Grants and Contributions)

1031-2, Contract Cost Principles, of the Standard Acquisition Clauses and Conditions Manual

Annex 10.4: Reasons for the non-applicability of certain costs when utilizing Contract Cost Principles 1031-2: Reasons for the Non-applicability of Certain Cost when Utilizing Contract Cost Principles 1031-2.

Annex 10.5.7: Cost Interpretation Bulletin - Number 07 Research and Development Expenses.

Annex 10.5.12: Cost Interpretation Bulletin - Number 12 Company Funded Costs.

CICA 3290 Contingencies

Annex 10.6.2:  Cost Notification 02 - Goodwill

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Definitions

For the purpose of this Notification:

Goodwill is the excess of the cost of an acquired enterprise over the net of the amounts assigned to assets acquired and liabilities assumed. This is an unidentifiable intangible asset, which originates under the purchase method of accounting for a business combination when the price paid by the acquiring company exceeds the sum of the identifiable individual assets acquired less liabilities assumed, based upon their fair values.

Notification:

Goodwill represents the value paid by a contractor on a business enterprise purchase in excess of the fair value of the acquired firm's assets less the assumed liabilities. This amount is based on the anticipated growth and earnings of the newly acquired company and thus is an intangible asset.

Any cost for amortization, expensing, write-off, or write-down of this intangible asset called goodwill (however represented) is unallowable.

References

1031-2, Contract Cost Principles, of the Standard Acquisition Clauses and Conditions Manual

Annex 10.2: Examples to Determine the Working Capital Employed: Reasons for the non-applicability of certain cost when utilizing Contract Cost Principles 1031-2

CICA 3062 Goodwill

FAR 31.205-49 Goodwill

1 Supply Manual Glossary

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Glossary

A | B | C | D | E |F | G | H | I | J | K | L | M | N | O |P | Q | R | S | T | U | V | W | X | Y | Z |
A
acceptance
  1. A deliberate and intentional agreement or consent to accept goods and services rated as acceptable.
  2. Receipt by the consignee for a shipment, thus terminating the common carrier liability subject to claim for shortages or damages if such exist. (2010-01-11) (acceptation)
account
  1. A formal record of a particular type of transaction such as an asset, liability, proprietorship, revenue or expense, expressed in money or other unit of measurement and kept in a ledger.
  2. The bookkeeping records of any organization, including journals, ledgers, vouchers and other supporting papers.
  3. Defence Production Act. Means the Defence Production Loan Account. (See 9.25.1)
  4. Canadian Institute of Chartered Accountants (CICA). Collective term for the whole set of financial statements of an organization.
  5. Records of the cost to the contractor of the work performed under a Public Works and Government Services Canada contract and of all expenditures and commitments made by the contractor in connection with the contract and invoices, receipts and vouchers relating to it. (2010-01-11) (compte)
accountable advance
  1. Funds provided to a contractor to purchase spare parts, which are not an item of supply in the supply system, and that will be used in the repair and overhaul of government equipment.
  2. Advance funds provided for a specific purpose, and chargeable to the appropriation for the service in respect of why the advance was made.
  3. Accountable Advance Regulations. A sum of money advanced from and temporarily charged to an appropriation; for example, a revolving fund, working capital advance, special account. (2010-01-11) (avance à justifier)
adjustment
  1. The amount of variation permitted by an adjustment clause in the contract, which generally permits a change upward or downward in the price or obligations, in case certain events transpire.
  2. Refer to economic price adjustment. (2010-01-11) (rajustement)

Advance Contract Award Notice (ACAN)

A notice posted on the Government Electronic Tendering Service (GETS) advising suppliers in advance that a contract will be awarded to a particular supplier and to invite them to submit a statement of capabilities if they think that they meet the requirements set out in the ACAN. (2013-06-01) (Préavis d'adjudication de contrat [PAC])

advance payment

A payment made in advance, by or on behalf of Canada, under the contract, and before the good is delivered or the service rendered. (2010-01-11) (paiement anticipé)

after-imposed duties

All duties that the contractor has to pay that were not applicable on the contract date. (2010-01-11) (droits imposés ultérieurement)

after-imposed taxes

All applicable Goods and Services Tax/Harmonized Sales Tax exempted or excluded on the reference date but for which exemption was later removed or reduced such that the contractor is required to pay or bear additional taxes as a result of legislative, judicial or administrative action, taking effect after the reference date. This also includes increases announced after the reference date affecting the rate of tax, whether specific or percentage. (2010-01-11) (taxes imposées ultérieurement)

after-relieved duties

All duties that were applicable on the contract date but were no longer applicable at the time of delivery. (2010-01-11) (droits dégrevés ultérieurement)

after-relieved taxes

All applicable Goods and Services Tax/Harmonized Sales Tax that would have been payable on the transaction or property covered by contract, but which the contractor is not required to pay or bear, or for which the contractor obtains a refund or drawback, as a result of legislative, judicial or administrative action taking effect after the reference date. (2010-01-11) (taxes dégrevées ultérieurement)

agency

A relationship between two persons, by agreement or otherwise, where one (the agent) may act on behalf of the other (the principal) and bind the principal by words and actions. (2010-01-11) (agence)

agent

Person who acts on behalf of another person (the principal) in dealings with third parties. (2010-01-11) (agent)

agreement

A consensus of two or more persons in respect of anything done or to be done. Although used as synonymous with “contract”, agreement may have a broader meaning. (2010-01-11) (accord)

Agreement on Internal Trade (AIT)

An intergovernmental trade agreement signed by Canadian First Ministers that came into force in 1995. Its purpose is to reduce and eliminate, to the extent possible, barriers to the free movement of labour, goods, services, and investment within Canada and to establish an open, efficient, and stable domestic market. (2010-01-11) (Accord sur le commerce intérieur [ACI])

amendment

An agreed addition to, deletion from, correction or modification of a contract. (2010-01-11) (modification)

appropriate minister
  1. With respect to a department named in Schedule I of the Financial Administration Act(FAA) the minister presiding over the department.
  2. With respect to a division or branch of the public service of Canada set out in column I of Schedule I.1 of the FAA, the minister set out in column II of that Schedule.
  3. With respect to a commission under the Inquiries Act, the minister designated by order of the Governor in Council.
  4. With respect to the Senate, the Speaker; with respect to the House of Commons, the Board of Internal Economy, and with respect to the Library of Parliament, the Speakers of the Senate and the House of Commons.
  5. With respect to a departmental corporation, the minister designated by order of the Governor in Council.
  6. With respect to a Crown corporation, the appropriate minister as defined in subsection 83(1) of the FAA. (2010-01-11) (ministre compétent)
architectural and engineering service contractor

A contract for the provision of services in respect of the planning, design, preparation, or supervision of the construction, repair, renovation or restoration of a work. (2010-01-11) (marché de services d'architecture et de génie)

assets

Any owned physical object (tangible) or right (intangible) having economic value to its owner. See production assets. (2010-01-11) (actif)

assignment
  1. A transfer of a right from either party to the other, as mutually agreed upon.
  2. Lease. In this context, the entire unexpired residue of the lease is transferred.
  3. For the benefit of creditors. Regulated by the Bankruptcy and Insolvency Act, it is an assignment made in favor of the trustee in bankruptcy who takes it in trust for the general body of creditors of the insolvent assignor for realization and distribution in accordance with the statute.
  4. Book debts. Right to collect and receive all accounts receivable, present and future, of the borrower. This right is exercised by the lender, which signifies to the debtors of the borrower that the lender requires them to pay the outstanding balance on their account. (2010-01-11) (cession)
assignment of contract

The transfer by the contractor of responsibility for performance of all or part of the contract to a third party. (2010-01-11) (cession d'un contrat)

associated government

Government of United Kingdom, any other government of the Commonwealth of Nations, the government of a country that is a member of the North Atlantic Treaty Organization (NATO) or the government of any other country designated by the Governor in Council, as being a country in defence of Canada. (2010-01-11) (gouvernement associé)

audit
  1. General. An examination, full scrutiny and verification of accounting records, usually by a third person.
  2. An examination of all elements of actual costs incurred by the contractor and the determination of actual profit realized. See discretionary audit. (2010-01-11) (vérification)
authority
  1. The right to perform certain acts, or prescribe rules governing the conduct of others.
  2. Generally, under balanced schemes of management, administrative authority represents the activation of corporate policy and is coupled with responsibility and accountability.
  3. A person commonly regarded as possessing an extensive knowledge in any given field. (2010-01-11) (pouvoir)
Automated Vendor Rotation System (AVRS)

A system that maintains a record of bid opportunities for the suppliers from each source list. AVRS records are only maintained on regional type satellites. (2010-01-11) (Système automatisé de rotation des fournisseurs [SARF])

award

The notification to a bidder or tenderer of acceptance of a bid or tender, which brings a contract into existence. (2010-01-11) (attribution)

B
bankruptcy
  1. A condition where an insolvent company or person either voluntarily institutes bankruptcy proceedings by applying to have a licensed trustee in bankruptcy appointed or where the company's or person's creditors are successful in petitioning the court to issue a receiving order, the effect of which is to authorize transfer of all assets of the bankrupt debtor to a licensed trustee in bankruptcy for realization or distribution to the creditors.
  2. The state or condition of one who is bankrupt, whereby the property of a person or company, being legally declared unable to meet debts, is vested in an official trustee for distribution among creditors. (2010-01-11) (faillite)
basic procurement

A basic procurement has the characteristics of clarity and completeness. The requirement is known and identifiable, and evaluation methods are simple. The methods for soliciting bids and contracting are pre-determined and set out. There is little need for analysis or speculation. There is an absence of change with the procurement process and control is within the department's domain of authority. There may be tools and instruments available that support the character of Basic. There is usually a low level of risk. (2011-10-04) (approvisionnement de base)

best value

The combination of price, technical merit, and quality, as determined by the contracting authority before the solicitation and set out in the evaluation criteria, and which forms the basis of evaluation and negotiation between buyers and sellers to arrive at an acceptable basis for a purchase and sale. (2010-01-11) (meilleur rapport qualité-prix)

bid

An offer to provide services or supply goods as a result of a solicitation. (2010-01-11) (soumission)

bid bond
  1. A bond given to guarantee entry into a contract. This bond is given to indemnify Canada against increased costs if the bidder does not carry out the specified undertaking to enter into a contract. A bond given by a person to guarantee entry into a contract if the contract is awarded to that person.
  2. See security deposit, government guaranteed bond and surety bond. (2010-01-11) (cautionnement de soumission)
bid security

A bid bond or a security deposit given by a person to Canada to guarantee entry into a contract if the contract is awarded to that person. (2010-01-11) (garantie de soumission)

bid solicitation

An invitation, verbal or written, to suppliers to submit a bid, quotation or offer. (2010-01-11) (demande de soumissions)

bidder

Person or entity (or, in the case of a joint venture, the persons or entities) submitting a bid to perform a contract for goods, services or both. It does not include the parent, subsidiaries or other affiliates of the bidder, or its subcontractors. (2009-12-15 ) (soumissionnaire)

bidders' conference

A meeting chaired by Public Works and Government Services Canada to discuss with potential bidders, technical, operational and performance specifications, and/or the full extent of financial, security and other contractual obligations related to a solicitation. (2010-01-11) (conférence des soumissionnaires)

bill of exchange

This includes certified cheques, bank drafts and money orders, and are defined in the Bills of Exchange Act as "an unconditional order in writing, addressed by one person to another, signed by the person presenting it, requiring the person to whom it is addressed to pay, on demand or at a fixed or determinable future time, a sum of money to or to the order of a specified person or to the bearer”. (2010-01-11) (lettre de change)

bill of sale

An instrument in writing under which the title to personal chattel is transferred. A mere receipt for payment is not a bill of sale. The instrument must actually signify a transfer of title of the goods to the buyer. (2010-01-11) (contrat de vente)

blanket order case

Supply arrangement that is negotiated with the United States Government under the auspices of Foreign Military Sales (FMS). It allows clients to submit detailed requirements directly to the identified U.S. military organization. This arrangement, which is similar in nature to the standing offer method of procurement, is normally utilized when there is no definite listing of items or of quantities required. This category of FMS cases (contracts) does not necessitate the purchase of equity. See 9.20. (2010-01-11) (dossier de commandes - cadres)

C
Call-up Against a Standing Offer

An order issued under the authority of a duly authorized user against a particular standing offer. Communication of a call-up against a standing offer to the offeror constitutes acceptance of the standing offer to the extent of the goods, services, or both, being ordered and causes a contract to come into effect. The parties to the contract that comes into effect when a call-up against a standing offer is made are Canada, as represented by the Minister of Public Works and Government Services and the offeror. (2010-01-11) (commande subséquente à une offre à commandes)

Canadian General Standards Board (CGSB)

A part of Public Works and Government Services Canada accredited by the Standards Council of Canada as a standard development organization and an ISO 9000 registrar. CGSB is mandated to provide a range of standardization and conformity assessment services in support of government procurement and other government requirements, such as:

  1. development of standards, specifications, manuals and guides;
  2. listings of prequalified products and services; and
  3. Quality Systems Division. (2010-01-11) (Office des normes générales du Canada [ONGC])
Canadian goods
  1. For the purposes of the Canadian Content Policy. Generally, with the exception of goods covered by the International Trade Agreements, Canadian goods are those wholly manufactured or that originate in Canada or they are products containing imported components that have undergone sufficient change in Canada to be considered Canadian.
  2. For the purposes of Taxes and Duties. goods that are the growth, produce or manufacture of Canada or that are of foreign origin but are duty and tax paid and have thus been entered for consumption into Canada.
  3. Addition to Canadian Goods Abroad. Goods that are exported from Canada for the purpose of being incorporated with foreign articles abroad.
  4. Processing of Canadian Goods Abroad. This refers to goods that are exported for a phase of production, which cannot be completed in Canada. (2010-01-11) (marchandises canadiennes)
Canadian industry

All commercial enterprises resident and operating in Canada and incorporated, registered, or recognized as such, under federal or provincial legislation and that carry on activities in Canada. This includes industrial research institutes jointly operated by groups of such commercial enterprises. (2010-01-11) (industrie canadienne)

Canadian International Trade Tribunal (CITT)

An administrative tribunal operating within Canada's trade remedies system. It is an independent quasi-judicial body that carries out its statutory responsibilities in an autonomous and impartial manner and reports to Parliament through the Minister of Finance. (2010-01-11) (Tribunal canadien du commerce extérieur)

Canadian services

Services provided by Canadian-based personnel. (2010-01-11) (services canadiens)

capital cost allowance

Depreciation of fixed assets over a number of accounting periods. (2010-01-11) (déduction pour amortissement)

capital lease

A lease that, from the point of view of the lessee, transfers substantially all the benefit and risk incidents to ownership of the property to the lessee. (2010-01-11) (bail de location-acquisition)

carrier

Any person who, in a contract of carriage, undertakes to perform or to procure the performance of transport by rail, road, air, sea, inland waterway or by a combination of such modes. (2010-01-11) (transporteur)

cash flow

A tracing, in successive steps, of individual items or aggregates of income or expenditure from their first recognition in the accounts to their final disposition or loss of identity. (2010-01-11) (mouvement de trésorerie)

ceiling price

The maximum price to be paid to the contractor as established in the contract and beyond for which the contractor will not receive additional compensation for the defined work. As provided in the contract, the ceiling price may be subject to downward revision based on a pre-established payment formula. (2010-01-11) (prix plafond)

Certificate of Commitment

A written statement from suppliers committing them to the implementation of employment equity. These certificates are available from the offices of Human Resources and Skills Development Canada. (2010-01-11) (attestation d'engagement)

Certified Products List (CPL)

The CPL is identical to the Qualified Products List (QPL) except that there are more frequent audits and tests. This higher level of product assurance permits the qualifying authority, as a certification agency, to enter into a licensing agreement with supplier(s), allowing them to use a registered certification mark on their products and promotional literature. (2010-01-11) (liste des produits certifiés [LPC])

classified information

Information related to the national interest that may qualify for an exemption or exclusion under the Access to Information Actor Privacy Actand the compromise of which would reasonably be expected to cause injury to the national interest. (2010-01-11) (information classifiée)

client

A department, agency, branch, division, Crown corporation or other entity for whom PWGSC procures goods and services. (2010-01-11) (client)

collusion

A secret understanding between two or more persons to take advantage of another with the object of depriving him or her of a right or property. It implies the existence of fraud of some kind, the employment of fraudulent means, or of lawful means for the accomplishment of an unlawful purpose. (2010-01-11) (collusion)

Co-operative Logistics (COLOG)

A supply arrangement, which is negotiated with the United States Government under the auspices of Foreign Military Sales (FMS). It enables the Canadian Department of National Defence to obtain directly from the supply systems operated by the United States Department of Defence, spare parts and accessories needed for Crown-owned military equipment of U.S. origin. This category of FMS cases (contracts) necessitates the purchase of equity in the supply system of the appropriate military organization. See 9.15(FMS) and 9.20(COLOG). (2010-01-11) (COLOG)

commercial practice

Custom or usage of the particular trade in which usage or custom is ordinary and reasonable. Evidence of a trade usage may be given in aid of interpreting a contract. (2010-01-11) (pratique commerciale)

commercial products

Products of a class or kind that are used regularly for other than government purposes and are sold by the contractor in the course of carrying out normal business operations, which are regularly sold by the contractor to clients other than the government in sufficient quantities to constitute a real commercial market, and for which there is sufficient number of buyers, other than the government, of establishing a going-price for the products. (2010-01-11) (produits commerciaux)

commercial services

Services of a class or kind that are used regularly for other than government purposes and are sold by the contractor in the course of carrying out normal business operations, which are customarily provided by the contractor with personnel regularly employed and equipment, if necessary, and regularly maintained for the purpose of supplying such services, and for which there is a sufficient number of buyers, other than the government, to establish a going-price for the services. (2010-01-11) (services commerciaux)

commodity

Raw material, perishable goods, fabricated article or item of production or supply utilized in everyday endeavors and which is identified by contents, physical nature or characteristics. (2010-01-11) (produit)

common carrier

Any person who undertakes and is authorized to transport persons or goods as a regular business. (2010-01-11) (transporteur public)

common ownership control

The assets of an enterprise or other organization are held indivisibly rather than in the names of the individual members. Consequently, rather than being “owners” of the enterprise, its members are held to be trustees of it and its assets for future generations. Common ownership is a way of “neutralizing” capital, and vesting control of an enterprise by virtue of participation in it, rather than by the injection of capital. (2010-01-11) (contrôle collectif)

Common Service Agency
  1. An agency whose activities are directed mainly toward serving other departments and agencies.
  2. Public Works and Government Services Canada is a common service agency. (2010-01-11) (organisme de services communs)
company

See corporation. (2010-01-11) (compagnie)

competitive bid solicitation

Solicitation of bids from two or more sources. (2010-01-11) (demande de soumissions concurrentielle)

competitive bidding

A process that requires that all bidders be placed on an equal footing, and that they bid under the same terms and conditions. (2010-01-11) (soumission concurrentielle)

competitive contract

A contract where the process used for the solicitation of bids enhances access, competition and fairness and assures that a reasonable and representative number of suppliers are given an opportunity to bid. (2010-01-11) (contrat concurrentiel)

complex procurement

A complex procurement has the characteristic of dealing with the unknown. It requires creativity and ongoing development. It is based on achieving a goal/target and driven by managing change/phases. Pre-established methods of supply may have to be modified and procurement strategies and evaluation methodologies may have to be researched or developed. The procurement may involve partnerships with clients, multiple stakeholders, and control may be shared. Contract administration is detailed and extensive and may be unpredictable. There may be a high level of risk (public sensitivity, product, impacts). (2011-10-04) (approvisionnement complexe)

compliance review

This refers to a compliance review of a representative selection of contractors that will be conducted periodically by Human Resources and Skills Development Canada to assess compliance with the employment equity program criteria and the results obtained. (2010-01-11) (vérification de conformité)

Comprehensive Land Claims Agreements
  1. Comprehensive Land Claims Agreements (CLCAs) are negotiated in areas of Canada where Aboriginal rights and title have not been addressed by treaty or through other legal means. These agreements are modern-day treaties between Aboriginal claimant groups, Canada and the relevant province or territory. While each one is unique, these agreements usually include such things as land ownership, money, wildlife harvesting rights, participation in land, resource, water, wildlife and environmental management as well as measures to promote economic development and protect Aboriginal culture. Many agreements also include provisions relating to Aboriginal self-government.
  2. CLCAs are law. The CLCA obligations are legally binding because they are contained in agreements signed by Canada and backed by legislation. (2013-11-06) (ententes sur les revendications territoriales globales)
COMSEC

Cryptographic, transmission and emission security measures applied to information stored, processed or transmitted electronically; a subset of information technology security. (2010-01-11) (COMSEC)

condition
  1. Contract law.
    1. A term or an obligation in the contract that goes directly to the substance of the contract or is essential to its very nature that its non-performance may be fairly considered by the other party as a substantial failure to perform the contract at all.
    2. A provision making an obligation subordinate or contingent upon a future and uncertain event.
  2. Implied condition. One created by law without any words used by the parties, whether the parties had it in their minds at the time or not. (2010-08-16) (condition)
confidential

Level of classification that applies to information and assets whose compromise could reasonably be expected to cause injury to the national interest. (2010-01-11) (confidentiel)

consignee

The person to whom goods are shipped. (2010-01-11) (destinataire)

consignment

Goods shipped for future sale or other purposes. The ownership of the goods (title) remains with the shipper (consignor). The receiver (consignee) is accountable for the goods after accepting them. Consigned goods are a part of the consignor's inventory until sold. The consignee may be the eventual purchaser, may act as the agent through whom the sale is effected, or may otherwise dispose of the goods in accordance with its agreement with the consignor. (2010-01-11) (expédition)

construction contract
  1. Includes an agreement for the supply and erection of a prefabricated structure. The mere purchase of a prefabricated structure would be a "goods contract." However, a subsequent erection contract would be a "construction contract”.
  2. A contract entered into for the construction, repair, renovation or restoration of any work except a vessel and includes: a contract for the supply and erection of a prefabricated structure; a contract for dredging; a contract for demolition; or a contract for the hire of equipment to be used in or incidentally to the execution of any contract referred to in this definition. (2010-01-11) (contrat de construction)
consultant

An individual or entity that provides advice or other professional services to Canada. A consultant serves in an outside independent advisory capacity to an officer or department, as distinguished from one who serves as an employee in performance of a department's duties and responsibilities. A consultant expresses views or gives opinions on problems or questions as requested, but does not perform, supervise, nor take responsibility for the performance of operating functions. Ordinarily, consultants are experts in a particular field in which advice is given. A consultant need not be a specialist; the expertise may consist of broad administrative, professional or technical experience, indicating ability and knowledge, which will make the advice a distinctive value to the client. The work performed under the contract is the provision of advice. (2010-01-11) (expert-conseil)

contingent liability

A legal or financial obligation that may arise as a result of a future and uncertain event. A liability which is not now fixed and absolute, but which will become so in case of the occurrence of some future and uncertain event. A potential liability, e.g. pending lawsuit, disputed claim. (2010-01-11) (dette éventuelle)

contract
  1. An agreement between two or more persons, which creates an obligation to do or not to do a particular thing. Its essentials are competent parties, subject matter, a legal consideration, mutuality of agreement and mutuality of obligation.
  2. Under the Government Contracts Regulations,a contract means a construction contract, a goods contractor and a service contract entered into on behalf of Canada by a contracting authority. (2010-08-16) (contrat)
contract approval authority

The authority delegated by the Minister of PWGSC to the person designated to occupy a position, that is, the incumbent of a position, to approve on his/her behalf submissions to enter into contracts, to amend contracts or to issue standing offers up to specified dollar limits. See contract signing authority. (2010-01-11) (pouvoir d'approbation des contrats)

Contract Claims Resolution Board (CCRB)

CCRB resolves claims resulting from contract disputes in a more economical, quicker and less formal process. This Board takes a common sense alternative dispute resolution approach to problems and seeks to reach settlements that are acceptable to all parties. A summary of the dispute resolution processes of the Contract Settlement Board and the Contract Dispute Advisory Board is set forth in 8.145and 8.150respectively. (2010-01-11) (Conseil de règlement des différends contractuels)

contract date

The effective date of the contract. (2010-01-11) (date du contrat)

contract dispute
Matter of dispute in respect of a contract that cannot be resolved between the contractor or its authorized representative and the contracting officer designated in the said contract. (2010-01-11) (différend contractuel)

contract for service
  1. A contract in which one party (the contractor) agrees to provide services to another with no day-to-day supervision or control. It normally implies the accomplishment of a specified job or task to achieve a prescribed objective.
  2. An employer-employee relationship does not exist in contracts for services. (2010-01-11) (contrat de services)
contract price
  1. General. The price or price formula stipulated in a contract of purchase or sale. It is also referred to as firm price, target price, cost price, etc.
  2. PWGSC contract. The amount expressed in the contract to be payable to the contractor for the work. (2010-01-11) (prix contractuel)
contract security

A payment bond or a performance bond given on behalf of a person to Canada, to make good on any default by that person under the contract by compensating Canada, or completing the performance of the contract to the extent required by the terms and conditions of the payment bond or performance bond, or a security deposit given by the person to Canada to secure the performance of the contract to the extent required by the terms and conditions of the contract. (2010-01-11) (garantie contractuelle)

contract signing authority

The authority delegated by the minister of PWGSC to the person designated to occupy a position, that is, the incumbent of a position, to sign on his/her behalf contract, contract amendment or standing offer documents after ascertaining that the approval authority has been duly granted and ensuring that the terms and conditions written in the documents reflect those approved by the contract approval authority. See contract approval authority. (2010-01-11) (pouvoir de signature des contrats)

contracting authority
  1. The appropriate minister, as defined in paragraph (a) or (b) of the definition "appropriate Minister" in section 2 of the Financial Administration Act.
  2. A corporation named in Schedule II of the Financial Administration Act.
  3. Defence Construction (1951) Limited, the National Capital Commission or the National Battlefields Commission. See also contract approval authorityand appropriate minister.
  4. The person authorized to enter into a contract on behalf of Canada. (2010-01-11) (autorité contractante)
contractor
  1. General. This refers to any one of the parties to a contract.
  2. One who contracts to perform work or furnish materiels in accordance with a contract. (2010-01-11) (entrepreneur)
control

The process by which the activities of a project or organization conform to a desired plan of action. Examples of control elements are: authority and capacity for its exercise, common understanding of purpose, objectives, plan of organization and action, assumption of responsibility by organizational units, policies governing courses of action, standards of performance appraisals and monitoring of performance, and ability to convert or modify performance. (2010-01-11) (contrôle)

controlled goods

Controlled goods are defined under the schedule to the Defence Production Act. The goods listed in the schedule to the Export Control List made under section 3 of the Export and Import Permits Act are controlled goods. (2010-01-11) (marchandises contrôlées)

copyright
  1. An exclusive statutory right of those such as authors, publishers, composers, etc., to control the publication/dispositions of their works of art, literature, music, films, pictures, etc., which is protected by the Copyright Act of Canada. Under the Geneva Convention of 1952 to which Canada became a party in 1962, international copyright is obtained without any formalities by placing on the work the symbol 8, identifying the name of the copyright holder in the year of the first publication.
  2. The exclusive right of printing or otherwise multiplying copies of information and data.
  3. For a more comprehensive definition, see section 3of the Copyright Act. (2010-01-11) (droit d'auteur)
CORCAN

CORCAN includes the Correctional Services Canada (CSC) Industries, and the Automated Document Processing and Agribusiness programs. Purchases by PWGSC , on behalf of clients, from CSC will be conducted through CORCAN. See 9.30. (2010-01-11) (CORCAN)

corporation

An artificial person or legal entity created by or under the authority of the federal or provincial laws. The law treats the corporation itself as a person, which can sue and be sued. The corporation is distinct from the individuals who comprise it (shareholders). (2010-01-11) (société)

cost
  1. General. The price paid for anything, outlay and expense. When a contract refers to actual cost, the term means the amount, not including any profit, which was in fact paid out for materials and for labour.
  2. PWGSC contract. Costs determined in accordance with Contract Cost Principles 1031-2.
  3. Considered as total price in contract proposals for approval authority. (2010-01-11) (coût)
cost accounting

The classification, recording, analysis, reporting and interpretation of expenditures associated with the production and distribution of goods and services. (2010-01-11) (comptabilité du prix de revient)

cost analysis
  1. An examination or review of cost data to determine if costs are charged in accordance with prescribed criteria or regulations, for example the Contract Cost Principles 1031-2.
  2. A study of cost data for the purpose of identifying the causes of inefficiency or the improvement desirable in cost recording, supervision or management.
  3. The estimation of production costs by the bidder.
  4. The examination, before price negotiation, of the cost estimates presented by a potential supplier. Such analysis is for the purpose of checking that only permitted types of cost are included, that no significant cost category has been omitted, and that time, labour rates and other details are reasonable. (2010-01-11) (analyse des coûts)
cost centre

An administrative unit selected within an organization for the purpose of accumulating and controlling costs. It usually consists of a natural grouping of machines, methods, processes or operations; is identified with single management responsibility; and is made up of elements, which have common cost characteristics. (2010-01-11) (centre de coûts)

cost control

Employment of management devices in the performance of any necessary operation so that pre-established objectives of quality, quantity and time may be attained at the lowest possible outlay or cost for goods and services. Such devices include a bill of material, instructions, performance standards, competent supervision, cost limits on items and operations, and studies, interim reports and decisions based on these reports. (2010-01-11) (contrôle des coûts)

costs incurred

Costs allowed under the Contract Cost Principles 1031-2applicable to a particular contract. See also cost. (2010-01-11) (frais engagés)

cost of goods

Stocked Item Supply. The price FOB supplier plus inbound transportation. (2010-01-11) (coût des biens)

cost of service

Stocked Item Supply. This refers to all expenses (other than cost of goods) incurred by PWGSC in providing the Stocked Item Supply service. (2010-01-11) (coût du service)

cost plus fixed fee

A basis of price in which the contractor is paid costs reasonably and properly incurred, as determined by audit together with an agreed upon fixed fee (or a percentage of cost) by way of profit. (2010-01-11) (coût plus honoraires fixes)

cost reimbursable contract

Contract where the contractor is reimbursed the applicable, allocable, reasonable direct and indirect costs incurred by the contractor. There are five general types of cost reimbursable contract basis of payment as follows: cost reimbursable with fixed time rate; cost reimbursable with incentive fee; cost reimbursable with fixed fee; cost reimbursable with fee based on actual costs; and cost reimbursable with no fee. (2012-07-16) (contrats à frais remboursables)

counter offer

An offer to enter into a transaction on terms differing from those first proposed. A statement by the offeree which has the legal effect of rejecting the offer and of proposing a new offer to the offeror. (2010-01-11) (contre-offre)

country of origin

A country in which the product is mined, produced or manufactured. A product of domestic origin is a product mined, produced, or manufactured in Canada. (2010-01-11) (pays d'origine)

customs

Duties charged on commodities on their import into or export from a country by a governmental authority. (2010-01-11) (douane)

customs duty - defence

Tariff Code 9982.00.00 of the Schedule to the Customs Tariff provides for the remission of customs duty on all defence supplies imported under contracts of $250,000 or more, by the Department of National Defence and Public Works and Government Services Canada (PWGSC), as well as the private sector provided that the person claiming remission provides certification by the minister of PWGSC that the goods supplied under the contract are defence supplies. (2010-01-11) (droit de douane - défense)

customs tariff

A schedule of charges assessed by the government on imported goods. (2010-01-11) (tarif des douanes)

D
damages
  1. Compensation, usually in money, for injury to persons, or damage to goods or property.
  2. General damages are such as the law will presume to be direct, natural and probable consequences of the act in question.
  3. Special damages are such as the law will presume to be exceptional in character.
  4. See also liquidated damages. (2010-01-11) (dommages-intérêts)
defect
  1. General. A lack, want, deficiency or absence of something necessary for completeness, perfection or adequacy in form or function.
  2. An imperfection, fault or error in manufactured materiel and service.
  3. Critical defect. A defect that judgment and experience indicate is likely to result in hazardous or unsafe conditions for individuals depending on, using or maintaining the product.
  4. Major defect. Other than critical defect that is likely to result in failure, or to reduce materially the usability of the unit product for its intended purpose.
  5. Minor defect. A defect that is not likely to reduce materially the usability of a unit product for its intended purpose, or is a departure from established standards having little bearing on the effective use or operation of the unit.
  6. Latent defect. This refers to a hidden or concealed defect, one, which could not be discovered by reasonable and customary inspection; one not apparent on the face of goods, product or a document. (2010-01-11) (défaut)
defence contract

A contract or subcontract with Canada or an agent of Canada, or with an associated government, that in any way relates to defence supplies or to defence projects or to the designing, manufacturing, producing, constructing, finishing, assembling, transporting, repairing, maintaining or servicing, or storing of, or dealing in, defence supplies or defence projects. (2010-01-11) (contrat de défense)

Defence Production Act

An act that gives to the minister of PWGSC "exclusive authority to buy or otherwise acquire defence supplies". The provisions of the Defence Production Act govern all PWGSC contracts for defence supplies or projects. (2010-01-11) (Loi sur la production de défense)

Defence Production Loan Account

An account, which may be used to make loans or advances to aid in defence procurement, such as working capital loans or advance payments on contracts and to make payment for such. See 9.25. (2010-01-11) (compte de prêts de la production de défense)

Defence Production Revolving Fund

An account in the Consolidated Revenue Fund, which may be used by PWGSC to designate and operate the DPRF for other than loan transactions. The DPRF provides PWGSC with a budgetary account to purchase defence supplies, to make payment for such, and to get reimbursed out of an appropriation of a client (for example, DND), or by an agent of Canada, or by an associated government. See 9.25.1. (2010-01-11) (Fonds renouvelable de la production de défense)

defence projects

Buildings, aerodromes, airports, dockyards, roads, defence fortifications or other military works, or works required for the production, maintenance or storage of defence supplies. (2010-01-11) (entreprises de défense)

defence supplies

This has the same meaning as in the Defence Production Act and covers:

  1. Arms, ammunition, implements of war, vehicles, mechanical and other equipment, watercraft, amphibious craft, aircraft, animals, articles, materials, substances and things required or used for the purposes of the defence of Canada or for cooperative efforts for defence being carried on by Canada and an associated government.
  2. Ships of all kinds.
  3. Articles, materials, substances and things of all kinds used for the production or supply of anything mentioned in 1. or 2. above or for the construction of defence projects.
  4. Requirements necessary or appropriate to promote national defence, which means programs for military and atomic energy production or construction, military assistance and directly related activities. (2010-01-11) (matériel de défense)
delayed bid

A bid delivered to the specified bid receiving area after the closing date and time but before the contract award date may be considered, provided the delay can be proven to have been due solely to a delay in delivery that can be attributed to the Canada Post Corporation (CPC) (or national equivalent of a foreign country) or to incorrect handling by PWGSC . The only pieces of evidence relating to a delay in the CPC system that are acceptable are: a CPC cancellation date stamp; a CPC Priority Courier Bill of Lading, and a CPC Xpresspost Label, which clearly indicates that the bid was mailed before the bid closing date. (2010-01-11) (soumission retardée)

delivery
  1. Actual. The transfer of possessions.
  2. Sale of goods. Delivery takes place when the goods are placed under the control of the person who has to receive them. Alternatively, the presence of the goods at the seller's place of business, ready to be delivered, and the purchaser notified, may be termed a delivery.
  3. Shipping occurs when lading is surrendered and title to goods passes to the receiver or consignee. (2010-01-11) (livraison)
department
  1. The same meaning as in the Financial Administration Act(FAA) and includes any of the departments named in Schedule I and any corporation in Schedule II of the FAA, the staffs of the Senate, the House of Commons, and the Library of Parliament. It includes further any division or branch of the public service of Canada, including a commission appointed under the Inquiries Act, designated by the Governor in Council as a department for the purposes of the FAA.
  2. Department of Public Works and Government Services. (2010-01-11) (ministère)
Departmental Individual Standing Offer (DISO)

Used by PWGSC as a method of supply to: analyze customer demand, determine quantities and quality, standardize products used by government, manage complex requirements and satisfy requirements for data collection for reports to Treasury Board and the Auditor General's Office. Only PWGSC may issue call-ups against a DISO upon receipt of a funded requisition from a customer department. (2010-01-11) (offre à commandes individuelle et ministérielle [OCIM])

depreciation
  1. Decrease in value, particularly the deterioration or the loss in value arising from age and use of a property.
  2. The gradual exhaustion of the service capacity of fixed assets, which is not restored by maintenance practices. It is the consequence of such factors as use, obsolescence, inadequacy and decay.
  3. A proportionate charge as an expense for a period based on the cost or other recorded value of fixed assets. (2010-01-11) (amortissement)
design authority

The component of the client or its delegated agency responsible for determination of design parameters. (2010-01-11) (responsable de la conception)

design change

A permanent change or modification to the governing technical data. (2010-01-11) (modification de conception)

design deviation

A temporary departure from governing technical data. (2010-01-11) (altération de conception)

direct cost

Any item of cost, or the total of such items, which can be directly related to a particular product, service, program, function or project; usually, but not necessarily limited to items of material and labour and direct overhead. (2010-01-11) (coût direct)

direct labour

The labour applied to the material that will form an integral part of the final product in a manufacturing process. (2010-01-11) (main-d'œuvre directe)

direct labour costs

The approved direct labour costs applicable to the estimated costs of a negotiated contract. Negotiated labour costs for a lengthy contract may include predicted increases in labour rates. (2010-01-11) (frais de main-d'œuvre directe)

direct material

The material that will form an integral part of the final product in a manufacturing process. (2010-01-11) (matières directes)

discount
  1. A reduction from a list price or a stated amount offered by the seller to the buyer.
  2. A cash discount is an allowance extended to encourage payment of invoice on or before a stated date, which is earlier than the net date. The percent of discount allowed is agreed upon between buyer and seller and is often established by industry or trade custom.
  3. To compute the present value of a future sum. (2010-01-11) (escompte)
discretionary audit
  1. Verification done on a discretionary basis by the government of profit on a contract or a series of contracts.
  2. Verification that Canada is not being charged in excess of the lowest price charged anyone else. This verification is employed in conjunction with a price certification on negotiated firm price contracts. (2010-01-11) (vérification discrétionnaire des comptes)
discretionary verification

An independent verification by Audit Services Bureau or other qualified personnel as approved by Acquisition Program Integrity Secretariat, to supplement the checks and verifications carried out by the contracting officers and/or cost analysts, to ensure the timeliness of payments by contractors to workmen, subcontractors and suppliers. (2010-01-11) (vérification discrétionnaire)

disposal

The removal of materiel from a supply system by sale, trade-in or destruction. Within the federal government, disposal is normally arranged through the PWGSC Crown Assets Distribution Directorate/Centre. (2010-01-11) (aliénation)

distributor

A supplier who acquires goods for resale to a wholesaler, retailer or ultimate consumer. A distributor may sell goods from their own inventory, from a consignment inventory, or directly from the manufacturer's stock. (2010-01-11) (distributeur)

duty
  1. General. A tax levied by a government on the importation, exportation, or use and consumption of goods.
  2. Any duties or taxes levied on imported goods under the Customs Tariff, the Excise Tax Act, the Excise Act, the Special Import Measures Act, or any other law relating to customs.
  3. All applicable duties. All duties in effect on the contract date imposed and collected by the taxing authority on the transaction or property covered by the contract. (2010-01-11) (droit)
E
economic price adjustment

Price adjustments, both upward and downward, which are necessary either to protect Canada and the contractor against significant economic fluctuations in labour and material costs, including services and supplies, or in the event of changes in the contractor's established prices attributable to industry-wide economic factors. (2010-01-11) (indexation des prix)

effectiveness
  1. Auditor General. The extent to which a program achieves its goals or other intended effects. For example: to increase income in a particular area, a program might be devised to create jobs. The jobs created would be program output. This contributes to the desired program effect of increased income, which can be measured to assess program effectiveness. Of course, not all programs are equally evaluated. Also, management procedures for measuring and reporting effectiveness will differ between programs.
  2. General. The measure of how well a group, person, function or program reaches its objectives or achieves results. (2010-01-11) (efficacité)
efficiency
  1. Auditor General. The relationship between goods or services produced, and resources used to produce them. An efficient operation produces the maximum output for any given set of resource inputs, or it has minimum inputs for any given quantity and quality of service provided.
  2. General. A measure of how well a person, group, function or program uses its time and resources to achieve certain results, that is, total resources consumed. (2010-01-11) (efficience)
electrical equipment

Any apparatus, appliance, device, instrument, fitting, fixture, machinery, material or thing used in or for, or capable of being used in or for, the generation, transformation, transmission, distribution, supply or utilization of electrical power or energy, and without restricting the generality of the foregoing, including any assemblage or combination of materials or things, which are used or are capable of being used or adapted, to serve or perform any particular purpose or function when connected to an electrical installation, notwithstanding that any of such materials or things may be mechanical, metallic or non-electric in origin. (2010-01-11) (matériel électrique)

electronic bidding

A method of procurement that promotes suppliers' access to, and transparency in, the procurement process and facilitates Canada's receipt of best value, by using:

  1. public notice by means of an approved electronic information service of procurement opportunities (e.g., Government Electronic Tendering Service [GETS]);
  2. public notice by means of an electronic information service of proposed directed procurements by means of an Advance Contract Award Notice;
  3. such other procurement methods as may be approved by the Treasury Board. (2013-06-01) (invitation électronique à soumissionner)
employment equity

A concept that encourages the removal of employment barriers; identifies and removes discriminatory policies and practices; seeks the goal of fair representation for all Canadians, in particular women, Aboriginal people, disabled persons and visible minorities; and promotes economic development through the full utilization of the talents of all Canadians. (2010-01-11) (équité en matière d'emploi)

Engineering Change Proposal

Design change procedure used in aircraft procurement. The ECP form provides the data concerning a proposed change and, when signed by design and procurement authorities, becomes a change order. (2010-01-11) (proposition de modification technique)

equipment

Major items of materiel that are not expendable except through depreciation or wear and tear and which, although they may be fixed or positioned in prescribed places, do not lose their identity or become integral parts of other equipment and installations. Items in this category are normally susceptible to running maintenance. Equipment items are usually procured, issued and replaced on the basis of planned departmental capital acquisition programs, for example, aircraft vehicles, vessels, boats, workshop machinery, electronics systems. (2010-01-11) (équipement)

escalation

See economic price adjustmentor adjustment. (2010-01-11) (indexation)

estimated cost

The estimated cost to be used as the basis for the sourcing decision is that cost determined, through consultation between PWGSC and the client, as being representative of all known work and expected unscheduled work, arising out of the requirement, that is, the total estimated contract value. (2010-01-11) (coût estimatif)

exchange rate adjustment

The exchange rate adjustment is the adjustment amount, plus, minus or zero that will be shown as a line item on each invoice for contracts with an exchange rate fluctuation provision and reflected in the total price payable for the invoice. It is calculated in accordance with the contract provisions using form PWGSC-TPSGC 450 Claim for Exchange Rate Adjustments. (2013-11-06) (rajustement de fluctuation du taux de change)

executory costs

Costs related to the operation of the leased property (for example, insurance, maintenance cost and property taxes). (2010-01-11) (coûts exécutoires)

ex gratia payment

A payment made pursuant to the Treasury Board Policy on Claims and Ex gratia Payments: “a benevolent payment made by Canada under the authority of the Governor in Council. The payment is made to anyone in the public interest for loss or expenditure incurred for which there is no legal liability on the part of the Crown. An ex gratia payment is an exceptional vehicle used only when there is no statutory, regulatory or policy vehicle to make the payment.” (2010-01-11) (paiement à titre gracieux)

export permit

A permit issued on application, by Industry Canada, to a resident of Canada for the export of certain goods covered by the Export Permit Regulations. (2010-01-11) (permis d'exportation)

extra payment claim

Claims made by a contractor against Canada in respect of firm or ceiling price contracts where a legal liability does not exist or where there is uncertainty that a legal liability exists under the contract. (2010-01-11) (demande d'indemnisation)

extract file

A file created when a requisition is formally subdivided and involves procurement action by a contracting officer other than the main file holder. (2010-01-11) (dossier d'extraits)

F
facility
  1. A physical plant or installation; for example, base, arsenal or building, used to make the performance of a function easier.
  2. The materiel resources needed to facilitate any action or operation. (2010-01-11) (installation)
facility evaluation

A survey/examination of any or all of the capabilities of a supplier that pertain to competence as a source of supply or recipient of aid. Pre-award surveys are made in cases of doubt regarding productive capability, quality control or financial strength. (2010-01-11) (évaluation des installations)

facility security clearance

A determination by the Canadian Industrial Security Directorate that, from a security viewpoint, an organization is eligible for access to Canadian and foreign government information or assets, which are “classified” or “protected” at the same level as the clearance being granted or to a lower level. (2010-01-11) (attestation de sécurité d'installation)

fair market value
  1. The price that would be agreed to in an open and unrestricted market between knowledgeable and willing parties, dealing at arm's length, who are fully informed and not under any compulsion to transact.
  2. The word “fair” implies a concept of a market, which is not disturbed by unpredictable economic factors; for example, boom or depression. (2010-01-11) (juste valeur marchande)
FAS Free Alongside Ship (...named port of shipment)

The book containing the International Chamber of Commerce (ICC) official rules for the interpretation of trade terms is entitled " Incoterms 2000" , and the location of a summary for the description of FAS. The responsible obligations of the buyer and seller cannot be found on the ICC Web site; that information may only be found in the Incoterms 2000 book. (2010-01-11) (FAS franco le long du navire [...port d'embarquement convenu])

FCA Free Carrier (...named place)

The book containing the International Chamber of Commerce (ICC) official rules for the interpretation of trade terms is entitled " Incoterms 2000" , and the location of a summary for the description of FCA. The responsible obligations of the buyer and seller cannot be found on the ICC Web site that information may only be found in the Incoterms 2000 book. (2010-01-11) (FCA franco transporteur [... lieu convenu])

Federal Supply Classification

PWGSC uses the U.S. Federal Supply Classification (FSC) system as the basis for assigning commodity procurement responsibilities, and the Goods and Services Identification Number (GSIN) system permits the definitive assignment of responsibilities for item groupings within FSC. (2010-01-11) (classification fédérale des approvisionnements)

final payment

Payment made in satisfaction of a final invoice. This refers to a payment, which completes the monetary settlement in accordance with the conditions of the contract. (2010-01-11) (paiement final)

financial analysis

The process of selecting relevant financial information about the supplier, developing significant relationships (ratios), studying these relationships and interpreting the results. (2010-01-11) (analyse financière)

firm base price or firm base price elements

The otherwise firm price or firm price elements identified within the contract basis of payment from which economic price adjustments will be made on the occurrence of certain specified contingencies. (2010-01-11) (prix de base ferme ou éléments de prix de base ferme)

firm price

A method of pricing in which the total amount payable is a fixed lump sum, or is an amount determinable in accordance with fixed unit prices. (2010-01-11) (prix ferme)

firm price contract

A contract that sets the total amount payable, or pursuant to which the total amount payable is the product obtained, by multiplying the number of identical units of work performed or identical items delivered by a predetermined fixed price for each unit or item. (2010-01-11) (contrat à prix ferme)

fixed time rate

A method of pricing in which the amount payable is determined in accordance with the combined cost of labour, overhead and profit, as expressed by a fixed amount by time period. (2010-01-11) (taux fixe basé sur le temps)

fixed unit price

A method of pricing in which the total amount payable is the product of the number of identical units of work performed or identical items delivered, multiplied by a predetermined fixed price for each unit or item. (2010-01-11) (prix unitaire fixe)

FOB (Free on Board)

A mercantile term used extensively in both domestic and international trade.

  1. As a domestic trade term, used in both Canada and the United States, FOB ordinarily determines the place where the seller effects delivery of the goods, where title and risk of loss will pass, and whether the seller or the buyer is required to pay freight charges (for example, FOB New York), unless otherwise specified in the contract. Specific application of the term FOB either with reference to transfer of title, risk, or burden of freight charges, may vary according to applicable law, custom and usage or agreement of the parties concerned.
  2. As an Incoterm, FOB is defined by the International Chamber of Commerce and can only be used for shipments by seagoing vessels. ( Note: There are 13 Incoterms 2000 , 6 of which can only be used for shipments by seagoing vessel.)The contractual rights and obligations of this and similar mercantile terms are used in international commerce. (2010-01-11) (FAB franco à bord)
foreground information

All intellectual property first conceived, developed, produced or reduced to practice as part of the work under the contract. (2010-01-11) (renseignements originaux)

Foreign Currency Component (FCC)

The portion of the price or rate that will be directly affected by exchange rate fluctuations. The FCC will typically include all related taxes, duties and other costs paid by the bidder and which are to be included in the adjustment amount. It may also include entry fees, transportation costs or delivery charges, and any other charges associated with being the importer of record which are paid in a foreign currency. (2013-11-06) (montant en monnaie étrangère)

Foreign Military Sales (FMS)

A Security Assistance Program, which is administered by the United States Department of Defence, and allows eligible foreign governments and international agencies to purchase defence-related articles and services from the United States Government. See 9.15. (2010-01-11) (ventes de matériel militaire à l'étranger [FMS])

Foreign Ownership, Control or Influence (FOCI)

Assessments are designed to ensure that no third party, individual, firm, or government is assumed to possess dominance of, or authority over, a Canadian facility to such a degree that it could gain unauthorized access to INFOSEC information. (2010-01-11) (participation, contrôle et influence étrangers [PCEI])

formal agreement

An agreement executed under seal by the parties and signed by the Corporate Secretary, the person responsible for affixing the seal for Canada. (2010-01-11) (accord officiel)

former public servant

Any former member of a department as defined in the Financial Administration Act, former member of the Canadian Armed Forces or former member of the Royal Canadian Mounted Police. (2011-05-16) (ancien fonctionnaire)

G
general and administrative rate

Estimated general and administrative expenses are a percentage of material, labour and overhead costs. (2010-01-11) (coefficient de dépenses générales et administratives)

Goods and Services Identification Number (GSIN)

A system of material and services categorization used within PWGSC . The system is used in conjunction with the Federal Supply Classification (FSC) code. (2010-01-11) (numéro d'identification des biens et services [NIBS])

goods contract

An agreement for the purchase of articles, commodities, equipment, goods, materials or supplies and includes: printing or the reproduction of printed matter and the construction or repair of a vessel. (2010-01-11) (contrat de biens)

Government Electronic Tendering Service (GETS)

The service used by the federal government to post notices (for example, Notices of Proposed Procurement, Advance Contract Award Notices and Contract Award Notices) and to make available solicitation documents. This service provided through Buyandsell.gc.ca/tenders becomes the official site for Canada to meet its trade agreement obligations and is the authoritative and first source for Government of Canada tenders. For more information about GETS, visit the Buyandsell.gc.ca Tenders minisite or contact the support line at 1-855-886-3030.(2013-06-01) (Service électronique d'appels d'offres du gouvernement [SEAOG])

government furnished equipment

Equipment supplied by Canada to be used in the production process; for example, tooling, jigs, dies, production equipment. See special production tooling, special test equipment and production assets. (2010-01-11) (équipement fourni par le gouvernement)

government guaranteed bond

A bond of the Government of Canada or a bond unconditionally guaranteed as to the principal and interest by the Government of Canada that is:

  1. Payable to the bearer.
  2. Accompanied by a duly executed instrument of transfer of the bond to the Receiver General in the form prescribed by the Domestic Bonds of Canada Regulations.
  3. Registered in the name of the Receiver General. (2010-01-11) (obligation garantie par le gouvernement)
government issue
  1. Defence Production Act means machinery, machine tools, equipment or defence supplies furnished, acquired or purchased by or on behalf of the government or associated government with funds provided by the government or associated government.
  2. PWGSC contracts. All materials, parts, components, equipment, specifications, articles and things, which may be supplied to a contractor by the government for performance of the (contract) work. (2010-01-11) (fournitures d'État)
Government Property

Anything supplied to the contractor by or on behalf of Canada for the purposes of performing the contract, and anything acquired by the contractor in any manner in connection with the work, the cost of which is paid by Canada under the contract. (2010-01-11) (biens de l'État)

Government Quality Assurance (GQA) at Source

The activity of the inspection authority or the GQA authority in monitoring or observing at the contractor's plant, before delivery, to verify whether a product, service and/or quality system complies with the technical requirements stipulated in the contract. (2010-01-11) (assurance officielle de la qualité [AOQ] à la source)

government-supplied materiel (GSM)

Any item of materiel acquired by the government of Canada and provided on a "free issue" basis to contractors for embodiment in materiel under production or for incorporation into Crown-owned equipment undergoing modification, repair or overhaul. (2010-01-11) (matériel fourni par le gouvernement)

grant

An unconditional transfer payment made to a recipient, for which Canada will not receive any goods or services. (2010-01-11) (subvention)

green procurement

The integration of environmental considerations, along with quality, performance, price and availability into the procurement process, from planning to final disposal. Green procurement means that environmental impacts of the goods we procure, which have been appropriately considered in value for money decisions. (2010-01-11) (achat écologique)

H
holdback

This refers to an amount withheld under a contract, to ensure the performance of the contract, and also to avoid overpayments in relation to progress of work. (2010-01-11) (retenue)

hypothecated bond

To pledge as collateral, such as personal property, as security for a debt without transfer of possession. This is used in relation to bid/security deposits and performance bonds. (2010-01-11) (obligation cautionnée)

I
importer

A contractor, subcontractor or a supplier who actually imported the goods or materiel. (2010-01-11) (importateur)

importer of record

The consignee or importer shown on the import entry form and on the Canada Customs Invoice or commercial invoices who is responsible for customs clearance and payment of the Goods and Services Tax or Harmonized Sales Tax. (2010-01-11) (importateur officiel)

inbound logistics

The definition of “inbound logistic” is a matter of perspective. Shipments to Canadian Forces from repair and overhaul facilities and shipments off new acquisitions are considered inbound. Inbound logistics does not have an agreed-upon definition in the industry. A shipment is inbound to the receiver; conversely, shipments that are sent out B, as a raw materiel supplier, manufacturer or vendor might do B, are outbound from the sender. For inbound logistics planning, the focus of transportation management is on planning the receipt of the shipment. The definition of inbound logistics is related not only to the controller of the shipment process, but also who takes ownership of the goods shipped. (2010-01-11) (logistique interne)

income

The return in money from one's business, labour or capital invested; gains, profits or private revenue. The excess of revenues over expenses for a period is usually referred to as net income. (2010-01-11) (revenu)

Incoterms

Incoterms 2000are standard trade definitions most commonly used in international sales contracts. They are protected by the International Chamber of Commerce copyright. They are part of the sales contract and not of the contract of carriage. (2010-08-16) (Incoterms)

indemnify
  1. To compensate against loss or damage incurred by another; to reimburse another for such loss or damage.
  2. The word “indemnify” may mean either to prevent loss so that it does not occur, or to make reimbursement or compensation after the loss has occurred. (2010-01-11) (indemniser)
indirect cost

An item of cost that cannot be reasonably identified with a specific unit of product or with a specific operation or other cost centre. An indirect cost is usually allocated to several cost objectives. (2010-01-11) (coût indirect)

industrial security

Covers all that relates to security requirements under the terms of a contract, subcontract, standing offer, agreements, which will demand that identified private sector suppliers and their personnel be security screened and, if required, that the physical premises of the proposed contractor be inspected and approved to safeguard, produce or process “Protected” or “Classified” information, assets or data, prior to gaining access to such information or assets. (2010-01-11) (sécurité industrielle)

INFOSEC

All Communications-Electronic Security (COMSEC) information and material entrusted to or developed/evaluated by or for the Communications Security Establishment. (2010-01-11) (INFOSEC)

insolvency

A condition where a supplier, although not bankrupt, is either unable to meet its obligations, as they generally become due, or has ceased paying current obligations in the ordinary course of business, or whose assets have a realizable value insufficient to pay all its obligations. (2010-01-11) (insolvabilité)

inspection
  1. General. A close scrutiny or an examination. The process of determining conformance of a product to the applicable requirements.
  2. 100 percent. The inspection of each unit of product or the whole material, as opposed to any form of sampling inspection.
  3. Final. The last of several inspections at successive stages of manufacture, repair, modification, etc.
  4. Normal. The inspection that is used when there is no statistically significant evidence that the quality of the product being submitted is higher or lower than the specified quality level.
  5. Original. The first inspection of a particular quantity of product, as distinguished from inspection of a product that is resubmitted after prior rejection.
  6. Receiving. Inspection by a client of materials and manufactured products, as delivered.
  7. Reduced. Provision in a sampling procedure for switching to a less severe sampling plan when there is evidence that the submitted quality level is higher than the specified quality level.
  8. Source. The inspection of supplies or services at the point of manufacture or point of shipment.
  9. Activities such as measuring, examining, testing, gauging one or more characteristics of a product or service and comparing these with specified requirements to determine conformity.
  10. The activity of monitoring or observing, before delivery, to verify whether a product, service and/or quality system complies with the technical requirements stipulated in the contract. (2010-01-11) (inspection)
inspection at source

Refer to Government Quality Assurance (GQA) at Source. (2010-01-11) (inspection à la source)

inspection authority

The person designated as such in the contract. This includes any person acting, on behalf of Canada or the Minister, as the inspection authority in relation to the contract. For purposes of contracts for the Department of National Defence, inspection authority includes quality assurance authority. (2010-01-11) (responsable de l'inspection)

insurance

A contract of indemnity whereby one party (the insurer) undertakes to indemnify the other (the insured) against damage or loss, on a specified subject by specified perils in consideration of a payment received (a premium). The instrument by which the contract is entered into is called the policy. (2010-01-11) (assurance)

intellectual property

Any information or knowledge of an industrial, scientific, technical, commercial, literary, dramatic, artistic or otherwise creative nature relating to the work, whether oral or recorded in any form or medium and whether or not subject to copyright; this includes but is not limited to any inventions, designs, methods, processes, techniques, know-how, show-how, models, prototypes, patterns, samples, schematics, experimental or test data, reports, drawings, plans, specifications, photographs, manuals and any other documents, software, and firmware. (2010-01-11) (propriété intellectuelle)

interest

The compensation allowed by law, or fixed by the parties, for the use or retention by one party of a sum of money or other property belonging to another. It may take the form of a lump sum payment or periodical payments at a rate percent. (2010-01-11) (intérêt)

interest rate implicit in the lease

The discount rate that, at the inception of the lease, causes the aggregate present value of: the minimum lease payments, excluding that portion of the payments representing executory costs to be paid by the lessor, and any profit on such costs, and the unguaranteed residual value accruing to the benefit of the lessor, to be equal to the fair value of the leased property to the lessor at the inception of the lease. (2010-01-11) (taux d'intérêt implicite du bail)

interim standard

A standard published to satisfy a clear and urgent need without passing through all the procedural and review processes required for Canadian General Standards Board standards or National Standards of Canada. (2010-01-11) (norme provisoire)

international contract

Canadian Commercial Corporation (CCC ). The contract between CCC and the foreign government, their agencies or international organizations. (2010-01-11) (contrat international)

invention

Patent law. The creation of something that did not exist before, by the exercise of a creative mind, possessing elements of novelty and utility and measure different from anything that preceded the same. (2010-01-11) (invention)

inventory

This refers to an itemized list of goods, showing the number and usually the value of the goods. (2010-01-11) (stock)

invitation for bids

See bid solicitation. (2010-01-11) (demande de soumissions)

invitation to tender (ITT)

A bid solicitation document used by PWGSC when the estimated value of the requirement exceeds $25,000; two or more sources are considered capable of supplying the requirement; the requirement is adequately defined in all respects to permit the evaluation of tenders against clearly stated criteria; tenders can be submitted on a common pricing basis; and it is intended to accept the lowest-priced responsive tender without negotiations. (2010-01-11) (appel d'offres)

invoice

A billing document prepared by the seller setting out the details of goods sold or services rendered to the purchaser including quantity, price, terms of payment, etc. (2010-01-11) (facture)

item description

The data necessary to establish the identity of an item of supply for materiel management purposes. (2010-01-11) (description d'un article)

J
jobber

This refers to a middleman or dealer who purchases goods from manufacturers or importers for resale to retailers. They are also called dealer or wholesale merchant. (2010-01-11) (revendeur)

joint venture

Association of two or more parties who combine their money, property, knowledge, expertise or other resources in a single joint business enterprise, sometimes referred as a consortium, to bid together on a requirement. (2010-01-11) (coentreprise)

L
laid-down cost

The cost incurred by a supplier to acquire a specific product or service for resale to the government. This includes the supplier's invoice price (less trade discounts), plus any applicable charges for incoming transportation, foreign exchange, customs duty and brokerage, but excludes the Goods and Services Tax and the Harmonized Sales Tax. (2010-01-11) (prix de revient)

late bid

A bid delivered to the specified bid receiving unit after the closing date and time stipulated in the bid solicitation. (2010-01-11) (soumission en retard)

lease
  1. Government Contracts Regulations. An agreement whereby Canada acquires a leasehold interest in real property situated in or outside Canada and includes a tenancy agreement and a license in respect of real property.
  2. The Canadian Institute of Chartered Accountants (CICA). This refers to the conveyance, by a lessor to a lessee, of the right to use a tangible asset, usually for a specified period of time in return for rent.
  3. Capital lease. A lease that, from the point of view of the lessee, transfers substantially all the benefits and risks incident to ownership of the property to the lessee.
  4. Operating lease. This refers to a lease in which the lessor does not transfer substantially all the benefits and risks incident to ownership of property. (2010-01-11) (bail)
letter of intent

A commitment to award a contract to a designated contractor. It may be used to authorize commencement of the work before the award of a contract, in those cases where the contract provisions require time-consuming negotiations, and the timely delivery of goods or services would be jeopardized by waiting for the award of the contract. A letter of intent is issued subsequent to approval of those terms and conditions, which have been already agreed to between Canada and the contractor, but before obtaining approval of all the terms and conditions of the proposed contract. (2010-01-11) (lettre d'intention)

Letter of Interest

A letter of interest or Request for Information is used when the buyer is interested in receiving feedback from suppliers and may re-open or re-issue an opportunity as an open tender at a later day. (2010-01-11) (lettre d'intérêt)

liability
  1. A broad legal term. In general, a debt owed. The condition of being actually or potentially subject to an obligation; a condition of being responsible for a possible or actual loss, penalty, evil, expense or burden; a condition that creates a duty to perform an act immediately or in the future.
  2. Primary liability. This refers to a liability for which a person is directly responsible.
  3. Secondary liability. This refers to a liability of a contingent nature such as the liability of a guarantor. A guarantor's liability does not arise until the principal debtor has failed to pay the creditor. (2010-01-11) (responsabilité)
license

A grant of permission – a power or authority given to another to do some lawful act. (2010-01-11) (licence)

license agreement

A contract by which permission is given by the owner of a right to another, for the use of that right, free from legal recourse. (2010-01-11) (contrat de licence)

lien

A claim, encumbrance, or charge on property for payment of some debt, obligation or duty. Qualified right of property which a creditor (like a bank) has in or over specific property of his debtor, as security for the debt or charge or for performance of some act. (2010-01-11) (privilège)

liquidated damages

A specific sum of money expressly stipulated by the parties in a contract as the amount of damages to be recovered by either party for a breach of the agreement by the other. It must be a genuine pre-estimate of the loss that will be caused to one party if another party breaks the contract. It constitutes the amount, no more and no less, that the plaintiff is entitled to recover in the event of breach without being required to prove actual damages. (2010-01-11) (dommages-intérêts fixés en argent)

listing program

The entire process by which a specific product/service/supplier is designated as conforming to the requirements of standards or specifications, including those for quality assurance, and identified for subsequent procurement on a qualified products list. See Qualified Products List, Certified Products List. (2010-01-11) (programme de listage)

loan

Anything lent or given to another on condition that it be returned or repaid, either with or without interest. (2010-01-11) (prêt)

loan agreement

An agreement pursuant to which some Department of National Defence equipment is loaned by PWGSC to a contractor. (2010-01-11) (convention de prêt)

low dollar value

Requirements that are generally less complex and a low risk, with an estimated total value below $25,000, including all applicable taxes. (2010-01-11) (faible valeur)

lump sum payment

The price agreed upon between the vendor and the purchaser for a group of items without breakdown of individual values; a lot price. (2010-01-11) (paiement forfaitaire)

M
machine tool

This refers to a class of production tools basic to many manufacturing industries; power-driven, precision metal-working machines, which remove metal in the form of chips by cutting or grinding, such as lathes, drill presses, boring mills, planers, milling machines, shapers and grinders. (2010-01-11) (machine-outil)

maintenance
  1. Materiel. All action to retain materiel in a serviceable condition or to restore it to serviceable conditions. It includes inspection, testing, servicing, classification, as to serviceability, repairs, rebuilding and reclamation.
  2. The cost of keeping a property in efficient working condition. (2010-01-11) (maintenance)
mandatory standing offers

If PWGSC has issued a standing offer that covers the client's specific requirement, departments must use that standing offer for its acquisition. For a complete list of existing standing offers, consult the Standing Offer Index. (2010-01-11) (offres à commandes obligatoires)

manufacturing

The production of articles for use from raw or prepared materials by giving to these materials new form, qualities and properties or combinations thereof whether by hand or machinery. (2010-01-11) (fabrication)

market price
  1. The price at which a seller is ready and willing to sell and a buyer is ready and willing to buy in the ordinary course of trade. It is the actual price at which a given commodity is currently sold or has recently been sold in the open market, that is, not a forced sale. See fair market value and market value.
  2. Accounting. The prevailing or last quoted price under conditions applicable in the circumstances. Net realizable value. (2010-01-11) (prix du marché)
market value

The price, which a product or property might be expected to bring, if offered for sale in a fair market; that is, a market that is not temporarily prone to fluctuations. It is the price that would be fixed by negotiation and mutual agreement between a willing buyer and a supplier who is willing but not compelled to sell. (2010-01-11) (valeur marchande)

mark-up
  1. Defence Production Act. The amount added to cost in determining the selling price to cover overhead and profit.
  2. The difference between the contractor's laid-down cost for a product and its resale price to Canada, Goods and Services Tax and/or the Harmonized Sales Tax excluded. Mark-up includes applicable purchasing expense, internal handling and general and administrative expenses, plus profit.
  3. The amount added to the cost of merchandise to arrive at the price at which it will be offered for sale. This refers to an addition to a previously established selling price of goods for sale. (2010-01-11) (majoration)
materiel and services to military specifications
  1. Includes all materiel and services, including repair and overhaul, as well as research and development, for which a military or other Department of National Defence (DND) specification or requirement is included in procurement documentation. Also included in this category are materiel and services that are not covered by DND or military specifications, but are of a significant concern to DND as to the allocation of responsibilities annotated under this heading.
  2. Includes the range of items covered by commercial or the Canadian General Standards Board standards and specifications. It also includes those items or services, which are not specifically identified by DND, in its procurement documentation, as requiring special military or other DND specifications or requirements. (2010-01-11) (matériel et services assujettis aux spécifications militaires)
material and services to non-military specifications

Includes the range of items covered by commercial or Canadian General Standards Board standards and specifications. It also includes those items or services, which are not specifically identified by Department of National Defence (DND), in its procurement documentation, as requiring special military or other DND specifications or requirements. (2010-01-11) (matériel et services assujettis aux spécifications non militaires)

milestone payment

A method of making a progress payment, which relates to a measurable and/or defined item or work package for which a price can be assigned with a good probability that such assigned price will turn out to be within reasonable limits of predictive accuracy for the value of the work. (2010-01-11) (paiement d'étape)

Minister

The Minister of Public Works and Government Services. (2010-01-11) (Ministre)

misrepresentation

Any manifestation by words or other conduct by one person to another that, under the circumstances, amounts to an assertion not in accordance with the facts. An untrue statement of fact, an incorrect or false representation. It can be either fraudulent or innocent. It is fraudulent when it is made knowing that the same is false or without belief in its truth. A party induced by fraudulent misrepresentation to enter into a contract may repudiate the contract. Where a misrepresentation is an innocent one, it may be a ground for refusing specific performance to the party who made the misrepresentation and may also be a ground for rescission of the contract. The misrepresentation should, however, be a material one on which the other party relied. (2010-01-11) (fausse déclaration)

mobile repair party

An individual or group of individuals who perform repair work away from a contractor's plant, generally at client locations. (2010-01-11) (service mobile de réparation)

modification

Equipment. An engineered alteration to an item of supply, which changes the design characteristics or capabilities of the end item, major or subassembly component part, or accessory. Normally a modification is made after an item of equipment is delivered, whereas a design change is made, before delivery during production. (2010-01-11) (modification)

monopoly

The ownership or control of so large a part of the market supply or output of a given commodity as to unduly prevent or lessen competition in that commodity. (2010-01-11) (monopole)

mutual consent

A meeting of the minds on a specific subject, and a manifestation of intent of the parties to do or refrain from doing some specific act or acts. (2010-01-11) (consentement mutuel)

N
National Individual Standing Offer (NISO)

A standing offer issued for the use of a specific department or agency throughout Canada. NISOs are arranged by PWGSC on receipt of a funded requisition. (2010-01-11) (offre à commandes individuelle et nationale [OCIN])

National Master Standing Offer (NMSO)

A standing offer issued for the use of many departments or agencies throughout Canada. NMSOs are arranged by PWGSC without any requisitions from customer departments or agencies. (2010-01-11) (offre à commandes principale et nationale [OCPN])

NATO Stock Number (NSN)

A 13-digit number; for example, 5305-21-111-3333 broken down as follows:

  1. Digits 1-4; for example, 5305, the NATO supply classification, consisting of Group 53, which covers all items of hardware, followed by the class within the group 05 (screws), 06 (bolts), etc., the whole being known as the supply class.
  2. Digits 5-6; for example, -21-, the NATO code for the National Codification Bureau that assigned the stock number; for example, 00 U.S.A., 21 Canada, 14 France, 99 U.K., etc.
  3. Digits 7-13; for example, 111-3333, the National Item Identification Number; non-significant, but sequentially assigned by each National Codification Bureau to a unique item of supply.
  4. Digits 5-13; for example, 21-111-3333, the NATO Item Identification Number, including both the NATO code of the National Codification Bureau and its item identification number. The last 9 digits of the number remain with the item throughout its life, even though the NATO supply classification may change as a result of reclassification and consequent conversion of stock numbers; for example, 5305-21- 111-2222converted to 2805-21-111-2222. (2010-01-11) (numéro de nomenclature de l'OTAN)
need-to-know

The need for someone to access and know information in order to perform his/her duties. (2010-01-11) (besoin de connaître)

negotiation

The process of reaching agreement between two or more parties on the terms and conditions of a contract. (2010-01-11) (négociation)

non-compliance

Failure to comply with a requirement. (2010-01-11) (non-conformité)

no substitute

Description of a product by brand name or model number or by using a restrictive specification, with the provision that a substitute product is not acceptable. (2010-01-11) (aucun produit de remplacement)

non-resident contractor

An individual not engaged in regular and continuous employment in Canada and who does not maintain a permanent residence or office in Canada. This also refers to a partnership or a corporation not maintaining a permanent office in Canada. (2010-01-11) (entrepreneur non résident)

Notice of Proposed Procurement

A notice of an opportunity to participate in procurement. The NPP is published on the Government Electronic Tendering Service (see the Buyandsell.gc.ca Tenders minisite) and includes general information, such as a description of the requirement, and how solicitation documents can be obtained. (2013-06-01) (avis de projet de marché [APM])

O offer

A proposal made by one party to another to do something, usually accompanied by an expected acceptance, counter-offer, return promise or act. The offer creates a power of acceptance permitting the offeree by accepting the offer to transform the offeror's promise into a contractual obligation. An offer is an essential ingredient for the formation of a contract. (2010-01-11) (offre)

offeror

The party that makes the offer. (2010-01-11) (offrant)

Office of Greening Government Operations (OGGO)

The Office of Greening Government Operations (OGGO) was created in April 2005, within Public Works and Government Services Canada (PWGSC). OGGO's mandate is to accelerate the greening of the government's operations by working closely with other federal departments, particularly Treasury Board Secretariat and Environment Canada. (2010-01-11) (Bureau de l'écologisation des opérations gouvernementales {BEOG})

Office of Small and Medium Enterprises (OSME)

As part of the government of Canada, supports the government agenda to provide best value for Canadians by:

  1. encouraging and assisting small and medium enterprises to participate in the federal government procurement process;
  2. improving the links between supply and demand and influencing changes in government acquisitions; and
  3. conducting economic analysis of Government of Canada procurement and the private sector. (2010-01-11) (Bureau des petites et moyennes enterprises [BPME])
operating cost

The cost of operating, maintaining and repairing a product throughout its useful life, less its estimated residual value at the time of retirement. (2010-01-11) (coût d'exploitation)

operating lease

A lease in which the lessor does not transfer substantially all the benefits and risks incident to ownership of property. (2010-01-11) (bail d'exploitation)

order

Defence Production Act. A general or specific order, requirement, direction or prescription in writing made or issued under this Act or a Regulation. (2010-01-11) (arrêté)

order-in-council

A decision, instruction, order, proclamation, etc. issued under the authority of the Governor in Council. (2010-01-11) (décret)

organization

From a security perspective, an organization is any institution, other than a Canadian government department, agency or crown corporation, holding or referring to a security clearance. The majority are commercial corporations, but other institutions are also included, such as university faculties, partnerships, consultants, and other levels of government and their agencies. (2010-01-11) (organisation)

overclaim

A claim by the supplier for costs and profits in excess of the audited final amount, as determined by Audit and Services Canada and/or sector/region verification. (2010-01-11) (réclamation en trop)

overhead costs
  1. Indirect expenses or burden; one of many terms given to expenses, which are incurred in the production of a commodity or the rendering of a service, but which cannot conveniently be measured by unit of production or service. These expenses are sometimes classified as manufacturing overhead, selling and distributive overhead, and general and administrative overhead.
  2. Service contracts. Indirect costs associated with the operation of the contractor's business and includes, unless otherwise stated, in a percentage factor that is applied to payroll cost. Salary bonuses may be included as overhead costs, unless they are paid under profit-sharing schemes, in which case they will be treated as a distribution of profit. (2010-01-11) (frais généraux)
overpayment

A payment by Canada in excess of the audited final amount as determined by Audit Services Canada and/or sector/region verification. (2010-01-11) (paiement en trop)

overtime

Time worked by a contractor's employee in excess of the employee's normal working day or working week. (2010-01-11) (heures supplémentaires)

overtime premium

The difference between the employee's regular rate of pay and the higher rate paid for overtime. (2010-01-11) (prime d'heures supplémentaires)

overtime premium costs

The amount of overtime premium and any profit thereon. (2010-01-11) (frais de rémunération des heures supplémentaires)

P
part file

A main or extract file is subdivided into part files when more than one solicitation is issued, resulting in separate contracts. Each part file may only have one active solicitation in progress. Part files must be created when more than one solicitation is required under a main or extract file. (2010-01-11) (dossier partiel)

patent

A grant of right to exclude others from making, using or selling one's invention and includes the right to license others to make, use or sell it. A grant from the government conveying and securing for an inventor the exclusive right to make, use and sell an invention for a specific number of years. (2010-01-11) (brevet)

payment bond
  1. A bond given by a contractor to guarantee the payment for labour to be provided or materials to be supplied in connection with a contract awarded to that contractor.
  2. A bond given to ensure that the subcontractor, providing labour or supplying materials to a contractor, will be paid their proper charges up to the value of the bond.
  3. A type of surety bond. (2010-01-11) (cautionnement de paiement)
payroll costs

Direct salaries paid plus costs associated with direct salaries; for example, provision for statutory holidays, vacations with pay, the contractor's contribution for unemployment insurance and workmen's compensation, health and medical insurance, group life insurance and pension. (2010-01-11) (coût de rémunération)

per diem rates
  1. A latin phrase meaning “by the day”.
  2. Service contracts. A time rate whereby the contractor is paid a fixed rate inclusive of payroll and overhead costs and profit, for each normal working day as defined in the contract. (2010-01-11) (honoraires quotidiens)
performance bond

Bond given to guarantee the performance or completion of a contract in accordance with its terms and conditions. (2010-01-11) (cautionnement d'exécution)

performance (in the context of a contract)

The fulfillment or accomplishment of that which is required by a contract or under a condition. (2010-01-11) (exécution [dans le cadre d'un contrat])

performance (in the context of advance payments)

The funds received will be used solely for the purpose of the contract;

  1. The amount of the payment is ascertained or ascertainable under the contract;
  2. The contractor is not in default of its obligations under the contract; and
  3. The payment is related to an identifiable part of the contractual undertakings. (2010-01-11) (exécution [dans le cadre de paiements anticipés])
performance (in the context of progress payments)
  1. All authorizations required under the contract have been obtained; the claim is consistent with the progress of the work and is in accordance with the contract.
  2. Indirect costs have been paid for or accrued in the accounts.
  3. Direct materials and work under subcontract have been received, accepted and either paid for or accrued in the accounts, following receipt of invoice from the contractor/subcontractor, and have been or will be used exclusively for the purpose of the contract.
  4. All direct labour costs have been paid for or accrued in the accounts and all such costs were incurred exclusively for the purpose of the contract.
  5. All other direct costs have been paid for or accrued in the accounts, following receipt of applicable invoice or expense voucher and that all such costs were incurred exclusively for the purpose of the contract.
  6. No liens, encumbrances, charges or other claims exist against the work, except those which may arise by operation of law, such as a lien in the nature of an unpaid contractor's lien and in respect of which an progress payment and/or advance payment has been or will be made by Canada. (2010-01-11) (exécution [dans le cadre de paiements progressifs])
personnel security clearance

The security screening of persons who are likely to have access, on a need-to-know basis, to classified information, assets or controlled areas in order to provide a clearance for undertaking the work. (2010-01-11) (attestation de sécurité)

personnel security screening

The administrative process used to examine a personnel security screening, that has been granted by another government organization, in order to determine its applicability and acceptance for the purpose of approval by the Canadian Industrial Security Directorate, for access to classified and/or protected information and assets provided to or produced by private organizations under contract to the Government of Canada. (2010-01-11) (enquête de sécurité sur le personnel)

physical security

The use of physical safeguards to prevent and delay unauthorized access to assets, detect attempted and actual unauthorized access and activate appropriate responses. (2010-01-11) (sécurité physique)

point rating

An evaluation procedure using values assigned to criteria to rate suppliers. (2010-01-11) (cotation numérique)

Policy on Green Procurement

A policy designed to ensure that the government cost effectively procures, operates and disposes of its assets in a manner that protects the environment and supports sustainable development objectives. (2010-01-11) (Politique d'achats écologiques)

price
  1. The consideration given in exchange or sale of anything.
  2. Defence Production Act. Includes rate or charge for any service. (2010-01-11) (prix)

price and availability (P&A) enquiry

A request to the trade for information, which is needed by PWGSC or a client for program planning or budgetary purposes. P&A enquiries must clearly indicate that the request is not a bid solicitation. (2010-01-11) (demande de prix et disponibilité)

procurement

The process of obtaining goods and services that includes the determination of requirements and acquisition from a supply system or by purchase from the trade. The procurement process has four phases:

  1. Pre-contractual phase.Includes activities related to requirement definition and procurement planning.
  2. Contracting phase. Includes all activities from bid solicitation to contract award.
  3. Contract administration phase. Includes activities such as progress monitoring, delivery follow-up, payment action, etc.
  4. Post-contractual phase includes file final action (for example, client satisfaction, contractor agreement to final claim, final contract amendment, completion of financial audits, proof of delivery, return of performance bonds) and close out (for example, completeness and accuracy of file documentation and adherence to file presentation standards). (2010-01-11) (approvisionnement)
Procurement Business Number (PBN)

A unique identifier that is assigned to each supplier when they register in the Supplier Registration Information service, on the Buying and Selling Web site. It is based on the nine-digit Business Number that Canada Revenue Agency assigns to a supplier for tax matters related to business in Canada. (2010- 08-16) (numéro d'entreprise – approvisionnement [NEA])

Procurement Ombudsman

An independent organization with a government-wide mandate, which is defined in the Federal Accountability Act. Its overall objective is to ensure the fairness, openness and transparency of government procurement. (2010-01-11) (ombudsman de l'approvisionnement)

Procurement Review Committee (PRC)

The PRC carries out a detailed review of procurements strategies for goods and services valued between $2,000,000 and $100,000,000 for potential socio-economic benefits. The reviews are conducted within parameters that are fully consistent with the Treasury Board Policy on procurement review and subject to Canada's national commitments under the Agreement on Internal Trade, plus the international commitments under the World Trade Organization Agreement on Government Procurement and the North American Free Trade Agreement, and other international trade rights and obligations. While the membership may vary slightly, there is core representation from the client department, the contracting authority, Treasury Board Secretariat, National Research Council, Industry Canada, Atlantic Canada Opportunities Agency, Western Economic Diversification Canada, Canada Economic Development (for Quebec Regions), Department of Indian and Northern Affairs, Environment Canada, Department of National Defence, International Trade Canada, and Transport Canada. (2010-01-11) (Comité d'examen des acquisitions [CEA])

Procurement Strategy for Aboriginal Business (PSAB)

Consists of measures intended to increase the number of Aboriginal firms competing for and winning federal contracts. Particularly, if it includes measures to better inform Aboriginal businesses about government procurement needs and to better inform government procurement officers about the capacity of Aboriginal businesses. The strategy is consistent with the government's general policy on procurement, which emphasizes competition and value for money. (2010-01-11) (Stratégie d'approvisionnement auprès des entreprises autochtones [SAEA])

product quality management

Process applied to ensure the required quality of goods and services. The product quality management (PQM) refers to all considerations, which are undertaken within the procurement process, to provide clients with quality goods and services that conform to the stated requirements. Inherent to PQM are such actions as proper requirements definition; judicious sourcing, as applicable; thorough supplier evaluation; and the inclusion of proper quality related bid solicitation and contract clauses. The concept of PQM embodies quality assurance, quality control and inspection. See quality assurance, quality control, inspection, and quality. (2010-01-11) (gestion de la qualité du produit)

production

See manufacturing. (2010-01-11) (production)

production assets

Covers special production tooling, special test equipment, Department of National Defence-loaned equipment, United States government property, and any other government property for which Public Works and Government Services Canada has been specifically or directly charged with assets management responsibility. (2010-01-11) (biens de production)

productivity

The ratio of some output to some input. A measure of how well resources are combined and utilized to achieve a particular desirable result. Productivity ratios may be measured in one of the following three ways:

  1. Total Output. Total Input.
  2. Total Results Achieved. Total Resources Consumed.
  3. Effectiveness. Efficiency.

The concept of productivity recognizes the interplay between various factors in the workplace. The output or results achieved may be related to different inputs or resources in the form of various productivity ratios; for example, output per labour hour, output per unit of material (as in kilometers driven per liter of gas) or output per unit of capital. Each of these productivity ratios may be influenced by a combination of factors, such as quality and availability of materials, scale of operations, rate of capacity utilization, availability and throughput capacity of capital equipment, attitude and skill level of the work force, motivation and effectiveness of the management. The manner in which these factors interrelate will have a bearing on the resulting productivity ratio. Productivity improvements or gains are generally realized in terms of increased revenue or profit, better quality or performance, or lower prices. (2010-01-11) (productivité)

Product, Resource, Operating and Contingency (PROC)

The cost factors associated with the total product life cycle:

  1. Product costs. Costs paid for the supply of goods to a specified delivery point.
  2. Resource costs. The total government resource cost of acquiring, distributing and accounting for the goods.
  3. Operating costs. The costs of operating, maintaining and repairing the goods and the depreciation incurred.
  4. Contingency costs. Those costs incurred by not having the goods available when they are required. PROC analysis is used when best value for the money spent on the acquisition over its useful life is required. (2010-01-11) (coût du PREI [produit, des ressources, d'exploitation et des imprévus])
profit
  1. Generaly the benefit or advantage in money or in money's worth.
  2. Income tax law. The surplus in the taxation period by which the receipts from a trade or business exceed the expenditures necessary for the purpose of earning those receipts.
  3. A general term for the excess of revenue, proceeds or selling price over related costs.
  4. Net income. (2010-01-11) (profit)
progress payment

A payment made by or on behalf of Canada under the contract after the performance of the part of the contract in respect of which the payment is made but before the performance of the whole contract. (2010-01-11) (paiement progressif)

proposal

An offer, submitted in response to a request from a contracting authority, which constitutes a solution to the problem, requirement or objective in the request. (2010-01-11) (proposition)

proprietary
  1. Noun: a proprietor or owner, one who has the exclusive title to a thing; one who possesses or holds the title to a thing in his own right.
  2. Adjective: belonging to ownership; owned by a particular person; belonging or pertaining to a proprietor; relating to a certain owner or proprietor. (2010-01-11) (propriétaire)
protected information

Information related to other than the national interest that may qualify for an exemption or exclusion under the Access to Information Actor Privacy Act. (2010-01-11) (renseignements de nature protégée)

prototype

Includes any item designated as such in the contract, including models, patterns and samples. (2010-01-11) (prototype)

public notice

An announcement on an approved electronic information service, in one or more newspapers, or by means of some other accepted media. (2010-01-11) (avis public)

public property

Financial Administration Act. All property, other than money, belonging to Her Majesty in right of Canada. (2010-01-11) (biens publics)

purchase description

A statement of requirements to identify and describe a particular product or service, but which may be less detailed than a specification. The description includes sufficient data to enable the supply and evaluation of the item either by means of reference to a specification or standard, or by the inclusion of critical performance data. (2010-01-11) (description d'achat)

purchase order

A purchaser's written offer to a supplier, formally stating all terms and conditions of a proposed transaction. (2010-01-11) (bon de commande)

purchasing

The buying process within the procurement cycle. (2010-01-11) (achat)

Q
qualification program

The entire process by which products are obtained from suppliers, examined and tested and then identified on a qualified products list. The qualification process includes an evaluation of the manufacturer's facilities and capabilities to meet requirements on a continuing basis. (2010-01-11) (programme d'homologation)

qualified product

A product manufactured under controlled and substantially unchanged conditions, meeting the requirements and procedures to enable that product to be listed in the applicable qualified products list. (2010-01-11) (produit homologué)

Qualified Products List (QPL)

A listing of products qualified as conforming to the requirements of standards or specifications by the appropriate panel. A QPL identifies the qualifying authority and includes the appropriate product identification and reference data together with the name of the supplier of the qualified product. (2010-01-11) (liste des produits homologués [LPH])

qualifying authority

The agency or organization responsible for the maintenance of a listing program, including the development and implementation of policies and procedures, and is responsible for the accuracy and integrity of listings. (2010-01-11) (autorité d'homologation)

quality

The totality of features and characteristics of a product or service that bear on its ability to satisfy a given need. (2010-01-11) (qualité)

quality assurance

A system of activities whose purpose is to provide assurance that the quality control is in fact being done effectively. For a specific product or service, this involves verification, audits and the evaluation of the quality factors that affect the specification, production, inspection and distribution. See government quality assurance. (2010-01-11) (assurance de la qualité)

quality audit

The monitoring of quality levels at any stage to provide information for management. (2010-01-11) (vérification de la qualité)

quality control

This refers to a range of activities, to ensure and verify that the specific quality of the product or service has been met. (2010-01-11) (contrôle de la qualité)

quality of design

The value inherent in the design; a measure of the excellence of the design in relation to the client's requirements. (2010-01-11) (qualité technique)

quotation

A bid submitted in response to a Request for Quotation from a contracting authority. (2010-01-11) (présentation de prix)

R
reasonable

What is fair, just, suitable and proper in the given circumstances of a case, that which is fit and appropriate to the end in view, and that which is according to reason, not immoderate or excessive. (2010-01-11) (raisonnable)

receiver manager

See trustee in bankruptcy. (2010-01-11) (séquestre-gérant)

receivership

Legal or equitable proceeding in which a receiver is appointed for an insolvent corporation, partnership or individual. The state or condition of a corporation, partnership or individual over whom a receiver has been appointed for protection of its assets and for ultimate sale and distribution to creditors. (2010-01-11) (mise sous séquestre)

Regional Individual Standing Offer (RISO)

A standing offer issued for the use of a specific department or agency within a specific geographic area. RISOs are arranged by PWGSC on receipt of a funded requisition. (2010-01-11) (offre à commandes individuelle et régionale [OCIR])

Regional Master Standing Offer (RMSO)

A standing offer issued for the use of many departments or agencies within a specific geographic area. RMSOs are arranged by PWGSC without any requisitions from customer departments or agencies. (2010-01-11) (offre à commandes principale et régionale [OCPR])

Registered Quality Systems List

Listing of suppliers that have had their quality system audited by an approved auditor, against the appropriate quality standard, are found to meet all of the criteria of the standard and are registered by the applicable certifying agency. (2010-01-11) (liste des systèmes d'assurance de la qualité inscrits)

reliability

The measures expressed of the ability of a product to function successfully when required, for the period required, in the specified environment. (2010-01-11) (fiabilité)

reliability status

Indicates successful completion of a reliability check; allows regular access to government assets and, with a need-to-know, to protected information. (2009-12-15) (cote de fiabilité)

remedy

A right given to a party by law or by contract which that may exercise upon a default by the other contracting party, or upon the commission of a wrong by another party. It means any remedial right to which an aggrieved party is entitled with or without resort to a tribunal. (2010-01-11) (recours)

remission
  1. Exemption from payment of customs duties and excise taxes, which are ordinarily payable on goods or materiel imported into Canada.
  2. A partial or total refund or the non-payment of taxes, which otherwise would be payable and authorized by order-in-council. (2010-01-11) (remise)
renegotiation

A re-determination of agreed contract or pricing terms, due to changed requirements or conditions, or in accordance with a previous agreement. Some contracts provide for renegotiation at a stated time or under stated conditions. (2010-01-11) (révision du contrat)

repair

To restore (something damaged or broken) to good condition or working order. (2010-01-11) (réparation)

repair and overhaul

The repair of an item of equipment to return it to serviceable condition; overhaul may or may not be coincident with repair. Repair normally involves the correction of specific defects only, whereas overhaul will entail replacement of either worn and damaged parts, or parts for which service life has expired. Overhaul is normally affected only after expiry of service life due to hours of use or elapsed time. (2010-01-11) (réparation et révision)

representation
  1. General. A statement made expressly or by implication such as by conduct.
  2. Contract. In the law of contracts, it is a statement made by one of the parties of the contract to the other, before or at the time of entering into the contract, or of some matter relating to the contract. (2010-01-11) (présentation)

Request for Information (RFI)

An RFI or Letter of Interest is not open for bidding. The buyer is interested in receiving feedback from suppliers and may re-open or re-issue an opportunity as an open tender at a later day. RFIs may include attached documents. (2010-01-11) (demande de renseignements)

Request for Proposal (RFP)

A form of bid solicitation used for complex requirements, where the selection of a supplier cannot be made solely on the basis of the lowest price. An RFP is used to procure the most cost-effective solution based upon evaluation criteria identified in the RFP. See 4.10.15. (2010-01-11) (demande de propositions)

Request for Quotation (RFQ)

Solicitation document used to solicit bids for low dollar value requirements below $25,000.00, including all applicable taxes, from one or more suppliers. It is a request to bidders, which is evaluated with the objective of accepting the lowest-priced responsive quotation. See 4.10.1. (2010-01-11) (demande de prix)

Request for Standing Offer (RFSO)

A solicitation document used to solicit standing offers. It must clearly state the requirement, the evaluation method and selection criteria, the call-up procedures, the ranking methodologies, whenever applicable, to be used for making call-ups against the authorized standing offer(s), and all terms and conditions applicable to the contract that is brought into effect, as a result of any call-up. (2010-01-11) (demande d'offres à commandes [DOC])

Request for Supply Arrangement (RFSA)

A procurement tool established by PWGSC for use by clients that allows buyers to solicit bids from a pool of pre-qualified suppliers for specific requirements. The intent is to establish a framework to permit expeditious processing of individual bid solicitations which result in legally binding contracts for the goods and services described in those bid solicitations. (2013-04-25) (demande d’arrangement en matière d’approvisionnement [DAMA])

requisition

A request to obtain materiel or services and authority to commit funds to cover the purchase. (2010-01-11) (demande)

rescission

Contract. To abrogate, annul, void or cancel a contract. The right of rescission is the right to cancel (rescind) a contract upon the occurrence of certain kinds of default by the other contracting party (like misrepresentation, duress, undue influence). To declare a contract void in its inception and to put an end to it as though it never were. It is limited to contracts where it is possible to rescind the contract and substantially to restore all parties to their respective positions before the contract was entered into. (2010-01-11) (annulation)

responsibility

The state of being answerable for an obligation and includes judgment, skill, ability and capacity. The obligation to answer for an act done, and to repair or otherwise make restitution for any injury it may have caused. (2010-01-11) (responsabilité)

responsive bid
  1. A bid, tender, proposal or quotation that meets all the mandatory requirements stipulated in the solicitation document.
  2. Synonymous with valid bid. (2010-01-11) (soumission recevable)
royalties

Usage-based payments made by one party (the licensee) to another (the licensor) for ongoing use of an asset, for example an intellectual property right. (2010-01-11) (redevances)

S
sale
  1. A transfer of a property from one person to another for a price in money. A sale of goods is different from an exchange or barter where no funds are involved. In order to determine at what point property in the goods sold rests in the purchaser, the terms of the contract have to be considered to ascertain in whom the property is vested. The property may pass at once or at a future time contingent on the fulfillment of some condition.
  2. Includes consignment or other disposition of materials and the supplying of any service. (2010-01-11) (vente)
salvage

Accounting. That portion of the residual value of an asset representing the value of parts reclaimed for future use after retirement of the asset. (2010-01-11) (récupération)

sample
  1. General. A relatively small quantity of material, or an individual object, where the quantity of the mass, group, bulk, etc. that it represents, may be inferred. A small quantity presented or sold to buyers as a specimen of goods offered for sale.
  2. When goods are sold by sample, three conditions are implied in the sale:
    1. the bulk must correspond with the sample in quality;
    2. the buyer must have a reasonable opportunity of comparing the bulk with the sample;
    3. the goods must be free from any defect rendering them unmerchantable, which would not be apparent on reasonable examination of the sample. (2010-01-11) (échantillon)
scheduled overtime

Overtime experienced by a contractor through their usual business operations. Any resulting overtime premium costs are usually included in the contractor's overhead account. (2010-01-11) (heures supplémentaires prévues)

seal

See under seal. (2010-01-11) (sceau)

secret

The level of classification that applies to information or assets when compromise could reasonably be expected to cause serious injury to the national interest. (2010-01-11) (secret)

security deposit

The deposit by the bidder/contractor of securities, including government guaranteed bonds, bills of exchange and irrevocable standby letters of credit, which the contracting authority may convert to complete the bidder's/contractor's obligations. (2010-01-11) (dépôt de garantie)

Security Requirements Checklist (SRCL)

A form used to identify security requirements associated with a contract, which contains protected or classified security requirements. (2010-01-11) (Liste de vérification des exigences relatives à la sécurité [LVERS])

SELECT

A procurement tool used to identify qualified firms and individuals for low dollar value construction, maintenance and real property consulting (architectural and engineering services). (2010-01-11) (SELECT)

selling price

This is the net selling price to the buyer after all discounts. It includes all applicable provincial sales taxes, Goods and Services Tax/Harmonized Sales Tax, excise taxes and tariffs. (2010-01-11) (prix de vente)

Set-Aside Program for Aboriginal Business

Establishes two types of set-asides: mandatory and voluntary. Mandatory set-asides apply to procurements over $5,000 for which Aboriginal populations are the primary recipients of the goods, services, or construction to be contracted. Voluntary set-asides apply to all other procurements designated by client departments as reserved for Aboriginal business. (2010-01-11) (Programme des marchés réservés aux entreprises autochtones)

site visit

A meeting held on site and conducted by either PWGSC or the client to provide suppliers with an opportunity to view and assess aspects of the work that cannot be adequately described in performance specifications or the statement of work. (2010-01-11) (visite des lieux)

sole source

The supply of a good or service that is available from only one supplier. A sole source contract implies that there is only one supplier that can fulfill the requirement and that any attempt to obtain bids would only result in one supplier being able to meet the need. (2010-01-11) (fournisseur unique)

special production tooling

Tools such as jigs, dies, fixtures, moulds, patterns, taps, gauges and other like items, which are of such a specialized nature that, without substantial modification or alteration, their use is peculiar to the production of supplies or the parts thereof, which are required by Canada. (2010-01-11) (outillage spécial de production)

special test equipment

Either single or multipurpose integrated test units engineered, designed, fabricated or modified to meet the test requirements of the specifications peculiar to the end items of equipment, which are required by Canada. Also included are associated computer software programs. The term "Special Test Equipment" does not include: special production tooling; buildings and non-severable structures (except foundations and similar improvements necessary for the installation of special test equipment); and test equipment loaned from a client's inventory. (2010-01-11) (matériel spécial d'essai)

specification

A statement of requirements to be satisfied for materiel, a product or service, including the identification of test methods, or the procedures that will determine whether the requirements have been met. (2010-01-11) (spécification)

split contract

The practice of unnecessarily dividing an aggregate requirement into a number of smaller contracts, to avoid controls or contract approval authorities. (2010-01-11) (fractionnement d'un contrat)

standard
  1. A formal specification, for recurring major interests, utilizing the consensus process, and published by a recognized standards-issuing agency. In particular, a Canadian General Standards Board (CGSB) standard is one developed in accordance with the procedures set out in the CGSB manual, Policy and Procedures Preparation of Standards.
  2. A formal statement of requirements established by authority, custom or general consent of those affected, and intended for general recurrent use. Normally, a standard is developed through a consensus process by a committee widely representative of major interests and is published by an accredited standards-writing agency, as determined by the Standards Council of Canada or recognized standards-issuing agency. (2010-01-11) (norme)
standard procurement

A standard procurement has the characteristics of judgment, review, and assessment. The procurement is based on the process of finding a solution to a requirement using existing technology and knowledge. Evaluation methods have to be defined, and may use pre-established strategies. The procurement process is established and understood though it can be complicated (many details or factors). Control is within the department’s domain of authority. Contract administration is predictable and established. There may be a medium level of risk. (2011-10-04) (approvisionnement normalisé)

standing offer

An offer from a supplier to provide goods and/or services to clients at prearranged prices or pricing basis and under set terms and conditions for a specified period on an as-and-when requested basis. A separate contract is entered into each time a call-up is made against a standing offer. When a call-up is made, the terms and conditions are already in place and acceptance by Canada if the supplier's offer is unconditional. Canada's liability is limited to the actual value of the call-ups made within the period specified in the standing offer. (2010-01-11) (offre à commandes)

Standing Offer and Call-up Authority (SOCA)

A document issued by the standing offer authority that serves two primary purposes:

  1. notification to the offeror, that authority to call-up against a standing offer has been given to specific authorized users in respect of its standing offer; and
  2. notification to clients, that, in respect to a specific standing offer, authority to call-up against the said standing offer has been granted to them as provided in the standing offer. (2010-01-11) (autorisation de passer des commandes subséquentes à une offre à commandes [APCSOC])
Standing Offer Authority

Means the person designated as such in the standing offer, or by notice to the offeror, to act as the representative of Canada in the management of the standing offer. The Standing Offer Authority will issue a document called "Standing Offer and Call-up Authority" to authorize identified users to make call-ups against the standing offer and to notify the offeror that authority to make call-ups against the standing offer has been given to identified users. (2010-01-11) (responsable de l'offre à commandes)

storage

A function of warehousing which involves the receipt of an item, putting it away for safekeeping and subsequent retrieval, when required for use, sale or disposal. (2010-01-11) (entreposage)

subcontractor

One who takes portion of a contract from principal contractor or another subcontractor. One who takes from the principal or prime contractor a specific part of the work undertaken by the principal or prime contractor. (2010-01-11) (sous-traitant)

supply

The operations normally involved in furnishing, providing, affording or distributing items of supply to a user to satisfy stated requirements. The function includes all actions from the initial determination of requirements, as to kind and quality through testing, standardization, adoption, modification, procurement, acceptance, receipt, storage, issue, maintenance, distribution, salvage, reissue, disposal, accountability, responsibility and stock control. (2010-01-11) (approvisionnement)

supply arrangement

A non-binding agreement between PWGSC and a supplier who is pre-qualified to provide goods or services to the Government of Canada. (2010-01-11) (arrangement en matière d'approvisionnement)

supply arrangement authority

Person designated as such in the supply arrangement, or by notice to the supplier, to act as the representative of Canada in the management of the supply arrangement. (2010-01-11) (responsable de l'arrangement en matière d'approvisionnement)

Supply Transfer Order

A document, which is used when goods and services are to be provided by a provincial government. (2010-01-11) (demande de transfert de biens et de services)

surety bond

A contractual arrangement between the surety, the principal (contractor) and the obligee (Canada) whereby the surety agrees to protect the obligee if the principal defaults in performing the principal's contractual obligations. The bond is the instrument that binds the surety. (2010-01-11) (cautionnement)

surplus material
  1. Materials, including raw materials, parts and equipment, purchased or manufactured by a contractor specifically for a contract, but which remain unused after completion of the contract.
  2. Materials purchased or manufactured by the contractor specifically for a Crown contract, but not used and left over after completion of the contract. (2010-01-11) (matériel excédentaire)
T
take-out rate

The negotiated rate applied to laid-down cost for the recovery of overhead costs applicable to resale business, when the resale business does not account for all functions of the particular cost centre. The resulting rate will be somewhat less than that, which applies to other work, using the cost centre facilities. A take-out rate is normally used only as an expedient, when the contractor does not have sufficient resale business to warrant a separate burden or cost centre. (2010-01-11) (taux de recouvrement)

target incentive fee

Contract. A contract where a bonus is paid on the basis of agreed sharing of savings relative to the target price. This may also provide for reduction in profits where target cost is exceeded. (2010-01-11) (tarif cible avec prime d'encouragement)

target price

Fixed fee and incentive fee formula. A method of pricing in which the contractor is paid costs reasonably and properly incurred, as determined by audit, together with an agreed upon fixed fee, as profit supplemented by an incentive fee, which will be paid to the contractor on any savings achieved between a prescribed target cost and the actual cost, as established by audit. A target price contract may also include a provision for a ceiling price. (2010-01-11) (prix visé)

tariff

A published schedule showing the rates, charges, classification, rules, regulations and other provisions applicable to transportation and incidental services. (2010-01-11) (tarif)

task authorization

A task authorization (TA) is a structured administrative tool that enables PWGSC or a client to authorize work by a contractor on an "as and when requested" basis in accordance with the conditions of the contract. TAs are not individual contracts. (2010-12-15) (autorisation de tâches)

task authorization contracts

A contract with task authorizations is a method of supply for services under which all of the work or a portion of the work will be performed on an “as and when requested basis” through predetermined conditions including an administrative process involving task authorizations. Contracts with TAs are used in service contracting situations when there is a defined need by a client to rapidly have access to one or more categories of service(s) that are expected to be needed on a repetitive basis during the period of the contract. (2010-12-15) (contrats avec autorisation de tâches)

technical authority

The individual responsible for providing information, guidance and advice on the technical aspect of a product. (2010-01-11) (responsable technique)

telephone buy

A purchase whereby the telephone is used to solicit bids for requirements valued up to $25,000, including all applicable taxes, and whereby a contract is entered into over the telephone and confirmed in writing. (2010-01-11) (achat par téléphone)

temporary help services

Services provided under contract to the government for assignments in which employees of a supplier work under the direction of public servants. (2010-01-11) (services d'aide temporaire)

tender

A proposal, bid or offer that is submitted in response to an Invitation to Tender, Request for Proposal, or Request for Quotation from a contracting authority. (2010-01-11) (offre)

term
  1. Contract. Word, phrase or condition in a contract which relates to a particular matter.
  2. A fixed and definite period, a prescribed duration. (2010-01-11) (condition)
termination for default

Termination of a contract or part of a contract as a result of a breach of an obligation. (2010-01-11) (résiliation pour manquement)

testing

An element of inspection. Generally denotes the determination by technical means of the properties or elements of supplies or components thereof, and involves the application of established scientific principles and procedures. (2010-01-11) (essai)

test methods

Detailed technical descriptions of procedures, according to which conformance to the requirements stated in specifications and standards, is determined. (2010-01-11) (méthodes d'essai)

third party liability

Insurance. That type of insurance protection that indemnifies one from liability to third persons, as opposed to insurance coverage for losses sustained by the insured. (2010-01-11) (responsabilité civile)

time payment
  1. A method of making progress payments that provides for specified payments to become due at the times specified in the contract, subject to certification by the inspection and contracting authorities that progress of the work conforms to schedule.
  2. The method of making progress payments based on physical progress of the work on a monthly basis, as determined by the inspection and contracting authorities without any set monthly goals. (2010-01-11) (paiement à terme)
title

The formal right of ownership of property, including right of possession. (2010-01-11) (titre)

top secret

The level of classification that applies to information or assets when compromise could reasonably be expected to cause exceptionally grave injury to the national interest. (2010-01-11) (très secret)

trademark

A distinctive mark of authenticity, through which the products of a particular manufacturer may be distinguished from those of others. A distinctive mark, motto, device, or emblem which a manufacturer stamps, prints, or otherwise affixes to the goods he produces, so that they may be identified in the market, and their origin be vouched for. (2010-01-11) (marque déposée)

transfer price

The price charged to a seller to Canada by another division, subsidiary or affiliate of the seller under common ownership control, or otherwise not dealing at arm's length with the seller to Canada. (2010-01-11) (prix de transfert)

trustee in bankruptcy

A person licensed under the terms of the Bankruptcy Act appointed by court to take possession of the assets of a bankrupt debtor. A trustee becomes in effect a temporary manager of a business who may carry on the business, or alternatively sell the assets. In managing the business, a trustee may be referred to as the receiver manager. (2010-01-11) (syndic de faillite)

U
under seal

Authenticated by a seal; executed by the affixing of a seal. (2010-01-11) (scellé)

unscheduled overtime

Any unexpected additional overtime experienced on Crown contracts. Payment for unscheduled overtime requires an amendment to the contract, as it is not included in the overhead rate, but is usually directly charged after the contract has been signed. (2010-01-11) (heures supplémentaires imprévues)

U.S. Defence Priorities and Allocations System (DPAS)

A system in existence in the United States to ensure the timely flow of goods, materials and services and the prompt delivery of defence and defence-related needs. (2010-01-11) (Système américain régissant les priorités et les attributions en matière de défense [DPAS])

V
value for duty
  1. Customs. The price in Canadian currency on which the appropriate rate of customs duty is applicable for goods imported into Canada.
  2. Customs Act. The value of the article, as it would be determined for the purpose of calculating an ad valorem duty upon the importation of such article into Canada, under the laws relating to the customs and the customs tariff, whether such article is in fact subject to ad valorem or other duty or not. (2010-01-11) (valeur imposable)
verification of time for acceptability

An examination of the contractor's records to: determine the actual time charged for carrying out the work in accordance with the terms of the contract; ensure that the amount of time thus determined was required in the performance of the work under the contract; and ascertain that the time charged reflects the performance of the work under the contract in an efficient and economical manner. (2010-01-11) (contrôle du temps en vue de l'acceptation)

W warehousing

The performance of those physical and administrative functions incidental to and required in the conduct of the storage activity, that is, receipt, sorting, identification, inspection, preservation, putting away, safekeeping, retrieval for issue and preparation for shipment of materiel. (2010-01-11) (entreposage)

warranty
  1. A statement or representation made by seller of goods as part of a contract of sale, having reference to character, quality, or title of goods, and by which seller promises or undertakes to insure that certain facts are as he represents them.
  2. Express warranty. The seller has made an express warranty when making some specific statement concerning the nature, quality, character, use or purpose of the goods, which induces the buyer to make its purchase of them, and the seller intends to the buyer to rely on its statement.
  3. Implied warranty. A promise arising by operation of law that something that is sold will be merchantable, and fit for the purpose for which the seller knows that it is required. A contract to do certain work, such as a building contract, contains within itself an implied warranty that the work shall be done in a workman-like manner.
  4. Breach of warranty. The consequences that flow from a breach of warranty entitle the innocent party to damages, while a breach of a condition may entitle the innocent party to rescind the contract.
  5. Full warranty. A warranty, which covers full performance, generally both labour and materials. Under a full warranty, the warrantor must remedy the product within a reasonable time, and without charge, after notice of a defect or malfunction.
  6. Limited warranty. A written warranty, which fails to meet one or more of the minimum standards for a full warranty. (2010-01-11) (garantie)
wholesaler

This is a merchant middleman who sells chiefly to retailers or industrial, institutional and commercial buyers for their resale or business use. (2010-01-11) (grossiste)

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