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Public Works and Government Services Canada 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.