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4. Chapter 4 - Solicitation Process

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4.1 Solicitation process - 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. Prior to soliciting a bid using an RFQ, contracting officers are to verify the Ineligibility and Suspension List and ascertain that the bidder is not ineligible.
  3. Because of its abbreviated nature, a RFQ may not contain all of the terms and conditions that are typically used to form a contract, but must include the Integrity Provisions – Bid found in Standard Instructions 2003 or 2004.
  4. 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.
  5. 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 quotation.
  6. See section 5.16 Integrity Compliance for details on the process to be followed before contract award or before issuing a purchase order.

4.10.5 Telephone Buy

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  1. A telephone buy (T-buy) is a form of Request for Quotation (RFQ), where bids are solicited from one or more selected suppliers verbally, in-person or over the telephone, for requirements below $25,000, including all applicable taxes.
  2. Prior to soliciting a telephone bid, the contracting officer must verify the Ineligibility and Suspension List and ascertain that the bidder is not ineligible.
  3. When soliciting bids through telephone buy, the contracting officer must ensure that the bidder is informed that they will be subject to the Ineligibility and Suspension Policy, and that they must be compliant to the Policy to be awarded a contract. The contracting officer must request that the bidder familiarises themselves with the Policy.
  4. A verbal contract may be entered into by telephone (and order may be placed) if the contracting officer has the appropriate authority.
  5. Written confirmation from the bidder is not required for bids received by telephone, however the contracting officer must record the details of the telephone bid on the procurement file and the order must be confirmed in writing by issuing the applicable contract document and providing a copy to the contractor.
  6. See Chapter 7 Award of Contracts and Issuance of Standing Offers and Supply Arrangements and section 5.16 Integrity Compliance for details on the process to be followed before contract award or before issuing a purchase order.

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:
    1. through public advertisement on the Government Electronic Tendering Service (GETS);
    2. through direct invitation of selected suppliers by means of a source list, where permitted; or
    3. by invitation of one source only if conditions for a non-competitive process have been met.
  3. Prior to issuing an ITT, contracting officers are to verify the Ineligibility and Suspension List and ensure that the invited suppliers are not ineligible, if they have not been selected from a prequalified list.
  4. An ITT must include the Integrity Provisions – Bid found in Standard Instructions 2003 or 2004.
  5. An ITT can be opened publicly. Public opening should be considered for all ITTs estimated to exceed $25,000. ITTs 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.  
  6. See section 5.16 Integrity Compliance for details on the process to be followed before contract award.

4.10.15 Bid Solicitation

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  1. A bid solicitation may be used for low dollar value (Simple), medium complexity (MC) and higher complexity (HC) 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 (SACC) Manual must be used in bid solicitations for goods and/or services. Contracting officers establishing bid solicitations for low dollar value, medium and higher complexity requirements must use the standard procurement templates following the Standard Procurement Template ProceduresThe information is only accessible to federal government department and agency employees., which provides instructions on how to use the templates.
  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 and/or the Canadian Free Trade Agreement (CFTA).
  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), Canada-European Union Comprehensive Economic and Trade Agreement (CETA), World Trade Organization Agreement on Government Procurement (WTO-AGP) and Canadian Free Trade Agreement (CFTA) 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 offer method of supply.
  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. The 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. Contracting officers establishing an RFSO must use the RFSO templateThe information is only accessible to federal government department and agency employees. following the Standard Procurement Template ProceduresThe information is only accessible to federal government department and agency employees., which provides instructions on how to use the templates.
  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.1, Schedule II, Schedule III of the Financial Administration Act. See SACC Manual template RFSOThe information is only accessible to federal government department and agency employees., 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 CatalogueThe information is only accessible to federal government department and agency employees. Web site:

Standing Offer Forms
Forms Number Forms Title
PWGSC- TPSGC 942The information is only accessible to federal government department and agency employees. Call-up Against a Standing Offer
PWGSC- TPSGC 944The information is only accessible to federal government department and agency employees. Call-up Against Multiple Standing Offers
PWGSC- TPSGC 8251The information is only accessible to federal government department and agency employees. Call-up Against a Standing Offer for Temporary Help
PWGSC- TPSGC 7169-1The information is only accessible to federal government department and agency employees. Call-up Against a Standing Offer for Security Guard Services
PWGSC- TPSGC 191The information is only accessible to federal government department and agency employees. Acquisition Card Application (MasterCard)1 may also be used at the time of the call-up against standing offers, as an alternative to other payment methods identified in the standing offer2.

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 RFSOThe information is only accessible to federal government department and agency employees., Part 6B, article 2.)

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.

4.10.25 Request for Supply Arrangements

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  1. A Request for Supply Arrangements (RFSA) is used to solicit arrangements from suppliers for the establishment of supply arrangements (SA). For more information, see 3.45 Supply arrangement method of supply.
  2. Contracting officers establishing an RFSA must use the Standard Acquisition Clauses and Conditions Manual Standard Instructions 2008, General Conditions 2020 and the RFSA template following the Standard Procurement Template ProceduresThe information is only accessible to federal government department and agency employees., which provides instructions on how to use the templates.
  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 9400-3The information is only accessible to federal government department and agency employees., Bid Solicitation
    PWGSC-TPSGC 9400-4The information is only accessible to federal government department and agency employees., 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 9400-4The information is only accessible to federal government department and agency employees..
  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, Canada-European Union Comprehensive Economic and Trade Agreement (CETA) 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, CETA and/or the WTO-AGP threshold, NAFTA, CETA and/or the WTO-AGP applies to the bid solicitation.
  3. Where NAFTA, CETA 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. Refer to the provisions set out in CETA Article 19.8.7-11 on the use of multi-use lists when working with source lists. Note the same provisions are included in the WTO-AGP (Article IX: Qualification of Suppliers).

4.10.25.15 Agreement on Internal Trade, Canadian Free Trade Agreement and Use of Supply Arrangements

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

Where CFTA or AIT apply to a bid solicitation under a supply arrangement, the CFTA and AIT allow 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 CFTA and 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
    1. 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.
    2. 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. RMSOs 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.
    3. For additional information, consult the contact person identified on the Temporary Help Services (On-Line System) Web site.
  2. ProServices is a professional services mandatory method of supply for requirements below the North American Free Trade Agreement (NAFTA) threshold and is available through the Centralized Professional Services ePortal.
  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 CFTA or 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 are encouraged to obtain a review of the solicitation documents prior to release.
  3. 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 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. 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 Templates

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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. There are five standard procurement templates, available in Microsoft Word (.doc) and Word Pro (.lwp). Associated marked-up PDF files showing the latest changes are also available for each template. Standard Procurement Template ProceduresThe information is only accessible to federal government department and agency employees. are also provided to instruct contracting officers on how to use the templates.
  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 Regime as summarized in section 3.51 Integrity Overview, all solicitations must include the appropriate standard instructions and general conditions which include the Integrity Provisions. Any request for modification to the Integrity Provisions or exemption, in part or its entirety, from the application of the Ineligibility and Suspension Policy must be escalated to the Assistant Deputy Minister, Acquisitions Branch through the Acquisitions Program Integrity Secretariat, by email at TPSGC.DGAIntegrite-ABIntegrity.PWGSC@tpsgc-pwgsc.gc.ca.
  2. The Ineligibility and Suspension Policy identifies certain contracts and types of contracts that are exempted from the application of the Policy, however all solicitations and contracts must include the Integrity Provisions. As the Policy is incorporated by reference, any applicable exclusion will therefore apply.
  3. In accordance with the Integrity Provisions and the Ineligibility and Suspension Policy, the following must be provided as part of the solicitation process.
    1. Bidders, offerors or suppliers that are corporate entities, including those bidding as joint ventures, must provide a complete list of names of all current directors or, for a privately owned corporation, the names of the owners of the corporation.
    2. Bidders, offerors or suppliers bidding as sole proprietors, including sole proprietors bidding as joint ventures, must provide a complete list of the names of all owners.
    3. Bidders, offerors or suppliers that are a partnership do not need to provide a list of names. Contracting officers only need to submit the information provided by the bidder, offeror or supplier when requesting an integrity verification.
      1. The Integrity Database Services (IDS) will determine whether additional information is required and will ask the contracting officer to contact the bidder, offeror or supplier if needed.
      2. If required by IDS, contracting officers must notify the bidder, offeror or supplier and request that a list of names be provided within a recommended 10 business days. Failure to provide the names within the specified timeframe will render the bid, offer or arrangement non-responsive.
    4. All bidders, offerors or suppliers must provide, if applicable, a complete list of all foreign criminal charges and convictions pertaining to itself, its affiliates and its proposed first tier subcontractors that, to the best of their knowledge and belief may be similar to one of the listed offences in the Ineligibility and Suspension Policy. This is to be provided using the Declaration form for procurement. See 5.5.5 Certifications, declarations and proofs.
  4. For existing contracts that do not contain the most recent Integrity Provisions:
    1. Contracting officers are to propose adding the new Integrity Provisions to the contract when exercising an option or modifying the terms of the contracts.
    2. Where the contractor refuses to make changes to the Integrity Provisions or provide the Certification as requested in the Template Letter for Addition of Provisions to an Existing Contract (see Annex 8.13: Letter Templates for Integrity), best efforts should be made to ensure that the supplier has a clear understanding of the terms of the new Integrity Provisions. This may include having a manager contact the contractor directly.
    3. Where the contractor still refuses to update the Integrity Provisions, the refusal should not prevent the continuation of business operations and the contract amendment may proceed.
    4. For assistance, contact the Acquisitions Program Integrity Secretariat (APIS) by email at TPSGC.DGAIntegrite-ABIntegrity.PWGSC@tpsgc-pwgsc.gc.ca.
  5. 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.

4.21.1 Administrative Agreements

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Administrative Agreements are managed by the Departmental Oversight Branch (DOB). They are negotiated agreements between Public Works and Government Services Canada (PWGSC) and a bidder, offeror, or supplier, current or potential, to, among other things:

  1. reduce the period of ineligibility to contract with Canada;
  2. enter into a contract where the Public Interest Exception (PIE) is invoked and where time is not of the essence; or
  3. continue a contract where the contracting authority has a right to terminate the contract due to non-compliance with the Ineligibility and Suspension Policy.

Additional information on Administrative Agreements can be found in Section 14. Administrative Agreements of the Ineligibility and Suspension Policy.

4.21.2 Public Interest Exception (PIE)

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  1. Where it is necessary to do so in public interest, Public Works and Government Services Canada may enter into a contract with a bidder, issue a standing offer with an offeror, or a supply arrangement with a supplier, that has been determined to be ineligible or has been suspended under the Ineligibility and Suspension Policy.
  2. A Public Interest Exception (PIE) cannot be invoked in situations where the supplier has no capacity to contract with Canada pursuant to subsection 750(3) of the Criminal Code.
  3. If a contract must be awarded to an ineligible or suspended supplier, the contracting officer must escalate the request to the Assistant Deputy Minister, Acquisitions Branch through the Acquisition Program Integrity Secretariat by email at TPSGC.DGAIntegrite-ABIntegrity.PWGSC@tpsgc-pwgsc.gc.ca.
  4. Complete details regarding Public Interest Exceptions are available in Section 15. Public Interest Exception of the Ineligibility and Suspension Policy.

4.21.3 Contracting with Subcontractors

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  1. When contracting with the Government of Canada, contractors understand that they cannot enter into a contract with first tier subcontractors that have been determined to be ineligible or suspended under the Ineligibility and Suspension Policy. A first tier contractor is defined in the Policy as “a subcontractor with whom a supplier has a direct contractual relationship to perform a portion of the work pursuant to a contract or real property agreement between the supplier and Canada, unless the subcontractor merely supplies commercial-off-the-shelf goods to the supplier”.
  2. Bidders are responsible for verifying the status of first tier subcontractors prior to submitting a bid that identifies first tier subcontractors and before entering into a contractual relationship with first tier subcontractors.
  3. If a contractor must enter into a first tier subcontract with an ineligible or suspended subcontractor, they must first obtain written approval of the appropriate deputy head or delegate by forwarding this request to the contracting authority. Contractors who enter into a first tier subcontract with an ineligible or suspended first tier subcontractor without the prior written consent from the relevant deputy head can be declared ineligible for a period of five years from the date of Public Works and Government Services Canada (PWGSC)’s determination.
  4. If a successful bidder wishes to replace a first tier subcontractor that has been determined ineligible or suspended prior to contract award, a rigorous re-evaluation process that ensures that all bidders are treated fairly and equally must be followed. This process will be tailored, as appropriate, to individual situations and the specific procurement circumstances at hand.
  5. Any request from successful bidders wishing to replace a now ineligible or suspended first tier subcontractor, or from contractors wishing to enter into a first tier subcontract with an ineligible or suspended subcontractor must be sent to the Acquisition Program Integrity Secretariat (APIS) by email at TPSGC.DGAIntegrite-ABIntegrity.PWGSC@tpsgc-pwgsc.gc.ca.
  6. In situations where there is a prolonged bid evaluation period, contracting officers must remind the successful bidder, using the template provided by APIS, that:
    1. they are obligated to obtain PWGSC approval prior to entering into a contractual relationship with an ineligible or suspended first tier subcontractor; or
    2. they can replace a now ineligible or suspended first tier subcontractor, whose eligibility standing has changed since the bid was originally submitted, as long as the subcontractor suggested as a replacement is accepted by Canada.
  7. Additional information regarding contracting with ineligible or suspended subcontractors can be found in Section 16. Subcontractors of the Ineligibility and Suspension Policy.

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 ProcessThe information is only accessible to federal government department and agency 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 Contract Security Program's Security and Information Services at ssi-iss@pwgsc-tpsgc.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 online security requirements checklist (SRCL) service. To use the online service register online or contact the Contract Security Program.
  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 Contract Security Program (CSP). 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 CSP. Verification of the FOCI and the required Facility Security Clearance of the potential Canadian or United States-based supplier must be obtained from CSP 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 CSP.

4.30.35 Information on Comprehensive Land Claims Agreements

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

4.30.40 Information on the Procurement Strategy for Aboriginal Business

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For more information on the 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), Canada-European Union Comprehensive Economic and Trade Agreement (CETA), World Trade Organization Agreement on Government Procurement (WTO-AGP), Canadian Free Trade Agreement (CFTA) 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, CETA or WTO-AGP or CFTA.

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. The purpose of a bidders' conference is to provide information to suppliers and to ensure that all suppliers receive the same information. For detailed information on bidder’s conferences, refer to section 3.115 Bidders' Conference.
  2. Site visits are meetings held on site to provide suppliers with opportunities to view and assess aspects of the work that cannot be adequately described in performance specifications or the statement of work. For more information on site visits, please see section 3.116 Site Visits.

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, ARCHIVED - 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.

4.30.45.25 Former Public Servants

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  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, Standard Acquisition Clauses and Conditions (SACC) Manual clauses A3025T, A3026T, M3025T and M3026T, 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 information identified in the SACC clause (A3025T, A3026T, M3025T, or M3026T) before contract award or issuance of a standing offer. Canada will declare a bid or offer non-responsive if the required information is not completed and submitted as requested.
  4. The required information will be a condition precedent to contract award, as opposed to a mandatory requirement for evaluation purposes.
  5. All information that suppliers provide to Canada is 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.

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 Goods and Services Tax/Harmonized Sales Tax 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 ProcessThe information is only accessible to federal government department and agency 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 and additional information

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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:

  • 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 with certification will or may 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 (See 5.5.5 Certifications, declarations and proofs)
    1. The Federal Contractors Program (FCP) for employment equity is a program administered by Employment and Social Development Canada (ESDC) – Labour Program. 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 (PWGSC) is to request and obtain from the bidder or 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 ESDC-Labour Program and to make a formal commitment to implement employment equity. Consult Annex 5.1 Federal Contractors Program for Employment Equity for more information.
  2. Canadian content (See 5.5.5 Certifications, declarations and proofs)
    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.
  3. Price certification and rate certification (See 5.5.5 Certifications, declarations and proofs)
    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.
  4. Integrity Provisions (See 5.5.5 Certifications, declarations and proofs)
    1. Integrity Provisions must be included in all procurement instruments. All competitive solicitations must include standard instructions 2003, 2006 or 2008 and the applicable general conditions. All solicitations negotiated on a sole source basis must either include standard instructions 2004 or 2007.
    2. By submitting a bid, an offer or an arrangement, the bidder, offeror or supplier is certifying that:
      1. they have read and understand the Ineligibility and Suspension Policy;
      2. they understand that certain domestic and foreign criminal charges and convictions, and other circumstances, as described in the Policy, will or may result in a determination of ineligibility or suspension under the Policy;
      3. they are aware that Canada may request additional information, certifications, and validations from the Bidder or a third party for the purpose of making a determination of ineligibility or suspension;
      4. they have provided with their bid, if applicable, a complete list of all foreign criminal charges and convictions pertaining to them, their affiliates and their proposed first-tier subcontractors that, to the best of its knowledge and belief, may be similar to one of the listed offences in the Policy;
      5. none of the domestic criminal offences, and other circumstances, described in the Policy that will or may result in a determination of ineligibility or suspension, applies to them, their affiliates and their proposed first- tier subcontractors; and
      6. they are not aware of a determination of ineligibility or suspension issued by PWGSC that applies to them.
    3. Declaration Form: The bidder, offeror or supplier must provide a completed Declaration Form with its bid, offer or arrangement only if the following situations apply:
      1. it is unable to certify to the statements in section d.ii. above for itself, its affiliates and its proposed first tier subcontractors; or
      2. it must provide a complete list of all foreign criminal charges and convictions pertaining to itself, its affiliate and its proposed first tier subcontractor that, to the best of its knowledge and belief, may be similar to one of the listed offences in the Policy.
    4. See section 4.21 Integrity Provisions for details.

4.45.1 Code of Conduct (Certification)

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The content of this section was reviewed and moved to section 4.21 Integrity Provisions. For reference purposes, section 4.45.1 is available in the Supply Manual ArchiveThe information is only accessible to federal government department and agency employees., Version 2013-7.

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 the Bank of Canada rate published on the solicitation closing date. The Bank of Canada publishes its rates each business day by 16:30 Eastern Time (ET).
  5. The solicitation must also indicate the date to be used in determining the exchange rate for adjustment purposes. This will be the rate published by the Bank of Canada on such a date, by 16:30 ET. 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:
    Exchange Rate Adjustment = FCC x Qty x ( i1 - i0 ) / i0
    where formula variables correspond to:
    FCC
    Foreign Currency Component (per unit)
    Qty
    quantity of units
    i0
    initial exchange rate (CAN$ per unit of foreign currency [for example US$1])
    i1
    exchange rate for adjustment (CAN$ per unit of foreign currency [for example US$1])
    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:
    Exchange Rate 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 present 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 adequately the requirement was defined. Multiple bases of payment may be used in one contract.
  3. A contract or part of a contract with a fixed time rate or a cost reimbursable basis of payment must include either a ceiling price or a limitation of expenditure.

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 identify in their approval documents (including any approval documents subject to Treasury Board approval) any provisions for EPA and/or FCA.
  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, Canada-European Union Comprehensive Economic and 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. This basis of payment provides for the payment to the contractor for the actual amount of time spent in performance of the work. The actual amount of time spent in performance of the work may be subject to government audit. The amount paid for these hours is calculated based on a predetermined fixed time rate. The fixed time rate usually includes direct labour rates, overhead rate and profit. Refer to 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. For a contract or part of a contract with a fixed time rate basis of payment, which include a ceiling price, the contractor must complete the prescribed work without additional payment, whether or not the actual costs exceed the ceiling price. When a ceiling price is 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 contract 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. When a contract or part of a contract with a fixed time rate basis of payment does not include a ceiling price, SACC Manual clause C6001C - Limitation of expenditure must be included in the contract. A limitation of expenditure is the maximum amount the contractor may be paid for the prescribed work. The limitation of expenditure is normally used when the level of effort cannot be accurately estimated at the outset. At the client’s request, the contracting authority will amend the contract to provide additional funds, or request the contractor to complete the work to the extent that the original funding permits.
  5. Following the negotiation of fixed time rates, the contractor must resubmit the price bid based on the agreement reached and include a rate certification.
  6. 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. This basis of payment provides for the reimbursement to the contractor of 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. A contract or part of a contract 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 a contract or part of a contract with this basis of payment, which does not include a ceiling price, SACC Manual clause C6001C - Limitation of expenditure must be included in the contract.

4.70.20.20 Cost reimbursable with fixed fee

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  1. This basis of payment provides for the payment to the contractor for the actual amount of time spent in performance of the work. The actual amount of time spent in performance of the work may be subject to government audit. The amount paid for these hours is calculated based on a predetermined fixed fee. Although the fixed fee does not vary with actual costs incurred, it may be renegotiated under certain circumstances. Refer to 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. In a contract or part of a contract with this basis of payment, which include a ceiling price, the contractor must complete the prescribed work without additional payment, whether or not actual costs exceed the ceiling price.
    When a ceiling price is 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 contract where it is necessary to ensure against the contractor making changes or carrying out additional work without the prior approval of the contracting officer. 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.
  5. In a contract or part of a contract with this basis of payment, which does not include a ceiling price, SACC Manual clause C6001C - Limitation of expenditure must be included in the contract.

4.70.20.25 Cost reimbursable with fee based on actual costs

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  1. This basis of payment provides for the payment to the contractor for the actual amount of time spent in performance of the work. The actual amount of time spent in performance of the work may be subject to government audit. The amount paid for these hours is calculated based on actual costs incurred. Refer to 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 a contract or part of a contract with this basis of payment, SACC Manual clause C6001C - Limitation of expenditure must be included in the contract.

4.70.20.30 Cost reimbursable with no fee

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  1. This basis of payment provides only for the reimbursement to the contractor of actual costs incurred, as determined by government audit. Refer to 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 contract or part of a contract 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.
  4. In a contract or part of a contract with this basis of payment, which does not include a ceiling price, SACC Manual clause C6001C - limitation of expenditure must be included in the contract.

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 ServicesThe information is only accessible to federal government department and agency employees. (PDF).
  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 cost3:
      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 year4:
        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 Contracts3:
        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).

3The percentages shown apply to incurred costs (incurred hours for fixed time rate contracts).

4The percentages shown apply to the previous year's rates.

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.

4.70.35.15 Audit of contract with a foreign contractor

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When there is a requirement for an audit of a contract with a contractor, or that includes a subcontractor where a significant portion has been subcontracted, from a North Atlantic Treaty Organization (NATO) allied country, the contracting officer should consider using the services of the foreign contractor or subcontractor's country's government to conduct the audit. This service can be called up by submitting a request through the Price Support Directorate (PSD). More information on this service is provided at 9.56 Price certifications and audits of foreign contractors.

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 instruments

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  1. The Government of Canada (GC) can use various methods to settle the payment of a good or a service, which are referred to as "payment instruments". These instruments determine how the contractor will be paid.
  2. Contractor invoices may be paid using the following payment instruments:
    1. Direct Deposit (for domestic and international payments);
    2. GC acquisition card (GC Visa and GC MasterCard for domestic and international payments);
    3. Electronic Data Interchange (for domestic payments);
    4. Wire Transfer (for international payments only);
    5. Large Value Transfer System (for domestic payments over $25M);
    6. Cheque (for domestic and international payments); and
    7. Petty cash (for domestic payments).
  3. With the exception of cheque and petty cash, all of the above are electronic payment instruments. Electronic payment instruments are GC's preferred payment instruments.
  4. In instances where the client department or agency wishes to make payment using electronic payment instruments, they may identify their preference in the bid solicitation and resulting contract document(s), allowing bidders or contractors to indicate their capacity to accept various forms of electronic payment. Refer to the SACC Manual clauses H3027T and H3027C.
  5. For more information on the electronic payment instruments, please consult the Receiver General website.

4.70.55.5 Direct deposit

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  1. Contractor invoices may be paid via direct deposit. Direct deposit is an electronic fund transfer and is the preferred payment instrument by the Government of Canada (GC). Contractors are strongly encouraged but not obligated to accept payment via direct deposit. The GC offers direct deposit in Canada as well as in a large number of foreign countries (for a list, please consult the Receiver General website).
  2. While direct deposit does not carry the remittance information or "stub information", client departments and agencies can now send payment details via an email to contractors.
  3. If contractors want to receive a payment through direct deposit, they must follow the appropriate enrolment steps with the client department or agency responsible for issuing payment. Normally, a void cheque is required to document the accurate banking information.

4.70.55.10 Payment by acquisition card

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  1. Contractor invoices may be paid using Canada acquisition cards (credit cards), which includes Visa and MasterCard. However, contractors are not obligated to accept acquisition cards as a payment instrument.
  2. The decision to use acquisition cards for payment of contractor invoices or for payment at point of sale is a cash management decision made by the client department or agency.
  3. Acquisition cards can also be used for call-ups under certain established standing offers (SOs). Where it is anticipated that the client department or agency may use the acquisition card for procurement and/or payment at point of sale in an SO, consult the clauses contained in the Request for Standing Offers Template (RFSO)The information is only accessible to federal government department and agency employees. and General Conditions 2005.

4.70.55.15 Electronic Data Interchange

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  1. Electronic Data Interchange (EDI) payments are electronic payments used for domestic payments, that include structured remittance information or "stub information" concerning the payment (e.g., describing the purpose of the payment).
  2. When the payment is made into the contractor’s account, additional remittance information is also provided to the contractor. The manner in which the contractor receives the information from its financial institution is determined between the contractor and its financial institution. It is the contractor’s obligation to ensure that its account is EDI-capable.

4.70.55.20 Wire transfer

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  1. A wire transfer is an electronic transfer of funds that is often the most expedient method for transferring funds to a bank account in a foreign country. Unlike foreign direct deposit, it is possible to issue a wire transfer in a currency other than the local currency of the country where the bank account resides.
  2. Due to high transaction costs to the Government of Canada, wires should be limited to large value, low volume, and time-sensitive foreign payments or to payments that need to be issued in a currency other than that of the country of destination.

4.70.55.25 Large Value Transfer System

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  1. The Large Value Transfer System (LVTS) is an electronic wire transfer system, which is used to facilitate the transfer of irrevocable payments in Canadian dollars within Canada.
  2. Although LVTS payments can be of any value, they should be used mainly for large value payments. All Government of Canada domestic payments greater than $25 million must be issued with LVTS.
  3. Through LVTS, funds are transferred in real time between participating financial institutions on behalf of client departments and agencies, and the money is available to the contractor immediately.

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 standard procurement templates (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 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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This section is removed from the Supply Manual as a result of the repeal of the Fair Wages and Hours of Labour Act on January 1, 2014.

For reference purposes, section 4.70.95 is available in the Supply Manual ArchiveThe information is only accessible to federal government department and agency employees., Version 2014-2.

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), Canada-European Comprehensive Economic and Trade Agreement (CETA) 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 US 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), Canada-European Union Comprehensive Economic and Trade Agreement (CETA) 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, CETA 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.
    5. When using electronic tendering, CETA (Article 19.10.5) allows for a reduction of the minimum tendering period by five days for each one of the following circumstances:
      1. the notice of intended procurement is published by electronic means;
      2. all the tender documentation is made available by electronic means from the date of the publication of the notice of intended procurement; and
      3. the entity accepts tenders by electronic means.
  4. NAFTA, CETA 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 the Government Electronic Tendering Service (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 posted on GETS or made available separately.
  4. Many procurement units have developed templates to assist contracting officers to develop NPPs. 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 NPPs 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")".
    Note: This notice is not automatically generated by the system.
  2. Contracting officers who are identified in NPPs 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 NPPs issued by unilingual offices will provide service in the language of that office. Contracting officers identified in the NPP should be familiar with the requirements associated with the NPPs.

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, CETA, WTO-AGP, CFTA and AIT, posting on GETS is required when using:
    1. open tendering; and,
    2. selective tendering:
      1. subject to NAFTA, CETA and WTO-AGP (or these agreements in combination with other agreements, including the CFTA or 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 (see CETA Article 19.8.7(b)), 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 CFTA or 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 and the Canadian Free Trade Agreement, 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, Article 19.8 of CETA, Article VIII of WTO-AGP and Article 508 of the CFTA.

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 only to 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.
  5. It is the responsibility of the bidder to monitor the Government Electronic Tendering Service (GETS) for any updates or amendments to the solicitation notices.

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 Bid Receiving Unit (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.
  3. 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.
      1. If a significant change affects the procurement strategy or has an impact on the level of risk, another procurement risk assessment must be performed.
      2. For example, if the original strategy was to compete electronically and the revised strategy is to direct (or sole source) the requirement, then another procurement risk assessment must be performed to determine if the change in strategy has an impact on the risks already identified.
      3. At the same time, the procurement risk assessment will also identify the appropriate level of contract entry approval based on the revised identified risks.
      4. Approval of the revised procurement strategy is required even if the risk assessment indicates the same approval level as was originally sought.
      5. The approval document must include the details about the new solicitation.
    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 Canada-European Union Comprehensive Economic and Trade Agreement (CETA), the World Trade Organization Agreement on Government Procurement (WTO-AGP), the Canadian Free Trade Agreement (CFTA) and the Agreement on Internal Trade (AIT) permit limited tendering procedure in such circumstances.
    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. Complexity Level 1: Contracting Officer
    2. Complexity Level 2: Manager
    3. Complexity Level 3: Manager
    4. Complexity Level 4: Director/Regional Director
    5. Complexity Level 5: Director General/Regional Director General
  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 and the Canadian Free Trade Agreement (CFTA), 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.
  9. If a solicitation is cancelled or reissued, the procurement file must be documented to provide details on the rationale to support such a decision.

Annex 4.1: General Conditions and Supplemental General Conditions

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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 4011
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 ARCHIVED - 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, ARCHIVED - 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, ARCHIVED - 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, ARCHIVED - 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 Goods and Services Tax/Harmonized Sales Tax), 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.
  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 Goods and Services Tax/Harmonized Sales Tax. 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 Goods and Services Tax/Harmonized Sales Tax.
    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 Acquisitions Program Policy 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 US 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) ARCHIVED - 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). ARCHIVED - 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 ARCHIVED - 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 $20 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. Employment Standards Act, 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 4.6.1: 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 4.6.2: 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
Number Description
G6001C Vehicles - Long Term Lease
G6005C Short Term Lease
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
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
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
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. 1. 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. 2. 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