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Public Works and Government Services Canada

3.90. Contracting with former public servants

  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
    Contracting officers must indicate in the approval document that a contract will be issued to a former public servant. 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:
      maximum payable per diem rate;
      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;
      cost of usual fringe benefits, 30 percent;
      total annual pension in pay.
      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.