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Chapter 3 - Procurement Strategy

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3.1 Introduction

(2010-01-11)

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

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3.1.1 Procurement Plan

(2010-01-11)

As soon as the key elements of the procurement strategy have been determined, the contracting officer should prepare a procurement plan (or Contract Planning and Advance Approval (CPAA) as applicable) for approval. The contracting officer should carefully address all the pertinent factors that an approval authority considers when making an approval.
A non-exhaustive list of some of the factors that the client and the contracting officer can take into account when developing the procurement plan are listed as follows:
1. the method of supply;
2. total estimated cost including all options, as well as maintenance and storage costs, as applicable;
3. contract period;
4. delivery requirements;
5. the procurement schedule;
6. evaluation procedures and method of selection;
7. environmental factors;
8. commercial products versus customized solutions;
9. risk factors;
10. possible use of a fairness monitor;
11. the participation of small and medium enterprises;
12. aboriginal considerations;
13. other national objectives;
14. compatibility with existing solutions,
15. the opportunity to consolidate requirements;
16. disposal of the product, if applicable, and
17. renewal (procurement of a replacement good or service and all transfer costs).
The approval authority must be given the opportunity to approve or reject the proposed procurement plan as early as possible in the process, to avoid the situation where a contracting officer has done significant work following a strategy which may not be approved.
The procurement plan must identify any deviations to contracting policies.
If events during the procurement process result in a significant change in the procurement strategy, a revised procurement plan must be approved before implementation or completion of the procurement process.
For more information on elements and process for a procurement plan, see 6.5.1 Procurement Plan.

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3.5 Existing Procurement Instruments

(2011-05-16)

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

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3.5.1 Mandatory Standing Offers and Supply Arrangements

(2010-08-16)

PWGSC has put in place a number of standing offers and supply arrangements that must be used before any new procurement is considered in accordance with the Treasury Board Policy Notice: Business Transformation Initiative – The Way Forward.
The use of standing offers and supply arrangements for the commodity groups listed below is mandatory and these mandatory commodities are listed in the Standing Offer Index (SOI) Website under the Mandatory Standing Offer Categories (accessible to federal government employees only).
1. N23: Ground Effect Vehicles, Motor Vehicles, Trailers, and Cycles/Véhicules à l'effet de sol, véhicules-moteur, remorques et cycles
2. N58: Telecommunications Equipment and Accessories/Equipements des télécommunications, de détection et à rayonnement cohérent
3. N70: General Purpose Automatic Data Processing Equipment, including Firmware, Software, Supplies and Support Equipment/Équipement pour le traitement automatique de données à usage général, logiciel, comprenant la microprogrammation, fournitures et équipement de soutien
4. N71: Furniture/Mobiliers
5. N74: Office Machines, text processing systems and visible recording equipment/Machines de bureau, systèmes de traitement des textes et équipement à classement visible
6. N75: Office Supplies and Devices/Fournitures de bureau
7. N84: Clothing, Accessories and Insignia/Vêtements, équipement individuel et insignes
8. N91 : Fuels, Lubricants, Oils and Waxes/Carburants, lubrifiants, huiles et cires
9. D: Information Processing and Related Telecom Services/Traitement de l'information et services de télécommunications connexes
10. R: Professional, Administrative and Management Support Services/Services professionnels, administratifs, et de soutien à la gestion
These mandatory standing offer and supply arrangements apply to all departments, as defined in Section 2 of the Financial Administration Act, including the Canadian Forces, and to Crown procurement contracts subject to the Government Contracts Regulations and the Treasury Board Contracting Policy.
Client departments and agencies continue to be able to acquire goods and services as they have in the past. However, they must first verify whether a mandatory standing offer or supply arrangement exists that meets their requirements. If one does, clients must use it.
On receipt of a requisition for any goods or services within these identified commodity groups, contracting officers must determine if an existing standing offer or supply arrangement can meet the requirement. If so, that standing offer or supply arrangement must be utilized.
The goods or services should not duplicate those already provided under an existing standing offer or supply arrangement at the national or regional level. If the required goods or services are similar, or identical, in nature to goods or services available under existing standing offers or supply arrangements, a full rationale must be provided to justify using another procurement instrument or method of supply. For the process on creating a new standing offer or supply arrangement, see 3.205 Review Process for Creation, Renewal and Extension of Standing Offers and Supply Arrangements.
It should be pointed out to clients that when they use a mandatory standing offer or supply arrangement (with the exception of Departmental Individual Standing Offers), they can receive the goods or services faster and with less administrative cost than by sending a requisition to PWGSC. The value of the acquisition will be limited to their Treasury Board Secretariat delegated purchasing authorities.
Mandatory procurement instruments, such as standing offers and supply arrangements, must be used by client departments acting on their own behalf, or by PWGSC handling a requisition, unless one of the following applies:
1. The good or service available through the mandatory standing offer or supply arrangement does not meet justifiable operational requirements, including specifications or delivery dates.
2. The value of the requirement exceeds the call-up limitation of the standing offer or the scope of the supply arrangement.
3. An existing contract is in place, which guarantees the work to another supplier.
4. The requirement is subject to contracting obligations under Comprehensive Land Claims Agreement(s) (CLCA), and no mandatory standing offer/supply arrangement addressing the contracting obligations of the applicable CLCA(s) exists;
5. The requirement will be set-aside under the Procurement Strategy for Aboriginal Business (PSAB), and no mandatory procurement instrument exists for PSAB set-asides;
If PWGSC is handling a requisition, and the contracting officer informs the client that a mandatory standing offer or supply arrangement exists for the client's requirement, and the client disputes the opinion, the contracting officer will seek a decision from the appropriate manager or director responsible for that standing offer or supply arrangement. If the client believes that the decision rendered is not appropriate, the client may refer the issue to their respective Acquisitions Account Executive in the Client Engagement Sector. Although, the Account Executives do not make the final decision, they will carefully assess the issue with the director responsible for that standing offer or supply arrangement, in order to have a clear and timely resolution.
If a client department is handling its own procurement, and does not want to use a mandatory standing offer or supply arrangement, it must contact the contracting officer responsible for the appropriate standing offer or supply arrangement (the one that the client department does not want to use), and explain the reason(s).
1. If the reason(s) are disputed by the contracting offer, the contracting officer will discuss the issue with his manager and director, as required for a decision. If the client considers that the decision rendered is not appropriate, the client may refer the issue with their respective Acquisitions Account Executive in the Client Engagement Sector. Although, the Account Executives do not make the final decision, they will carefully assess the issue with the director responsible for that standing offer or supply arrangement, in order to arrive at a clear and timely resolution.
The contracting officer should record all procurements where an applicable mandatory standing offer or supply arrangement was not used, and the associated reason(s).
Note 1: Departments can not put their own standing offers or supply arrangements in place, so as to avoid having to use PWGSC standing offers or supply arrangements, as this would defeat the long term benefits and savings of the PWGSC government wide approach.

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

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3.10 Competitive Contracting Process

(2010-01-11)

The Government Contracts Regulations (GCRs) require the competitive soliciting of bids before any contract is entered into, though the GCRs do provide for exceptions to the competitive soliciting of bids.
Whenever possible, contractors must be selected using a competitive process. The flexibility to depart from this approach depends on the procurement framework being followed. The type of competitive solicitation that may be used will also depend on the procurement framework.
It is the contracting officer's responsibility to select the most effective process for notifying suppliers of an opportunity by taking into consideration the requirements of the trade agreements and the policies set out in the Supply Manual.
For procedures relative to public advertisement and for publication of a Notice of Proposed Procurement and posting solicitation documents, see 4.75.10 Public Advertisement to 4.75.25 Procedures for Posting Solicitation Documents on GETS. For procurements not publicly advertised, see 4.75.45 Use of Source Lists. For more information on trade agreements, see 3.50 Procurements Subject to Trade Agreements.

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3.15 Non-competitive Contracting Process

(2010-01-11)

When a non-competitive (sole source) procurement strategy is chosen, the legal authority to use an exception to competitive bidding must be fully justified by the client department with a reference to all exceptions to competitive bidding which may apply under the Government Contracts Regulations (GCRs) of the Financial Administration Act, and the limited tendering provisions of Canada's national and international trade agreements. Contracting officers are also reminded to take into account the procurement provisions under the Comprehensive Land Claims Agreements (CLCAs).
The GCRs require the competitive soliciting of bids before any contract is entered into. However, contracts may be entered into without soliciting bids when:
1. the need is one of pressing emergency in which delay would be injurious to the public interest (GCRs 6.(a));
  An emergency may be an actual or imminent life-threatening situation, a disaster which endangers the quality of life or has resulted in the loss of life, or one that may result in significant loss or damage to Crown property.
2. the estimated expenditure does not exceed,
  1. $25,000;
  2. $100,000 where the contract is for the acquisition of architectural, engineering and other services required in respect of the planning, design, preparation or supervision of the construction, repair, renovation or restoration of a work;
  3. $100,000 where the contract is to be entered into by the member of the Queen's Privy Council for Canada responsible for the Canadian International Development Agency and is for the acquisition of architectural, engineering or other services required in respect of the planning, design, preparation or supervision of an international development assistance program or project; (GCRs 6.(b))
3. the nature of the work is such that it would not be in the public interest to solicit bids; or (GCRs 6.(c));
4. only one person is capable of performing the contract (GCRs 6.(d)).
  The exception should only be invoked where patents, copyright requirements, or technical compatibility factors and technological expertise suggest that only one contractor exists.
  
  When invoking exception 6.(d), the questions found in Annex 3.1: Treasury Board Questions for Sole Source must be answered by the contracting officer with the assistance of the client department. The answers to these questions must be appended to all approval documents and also placed on the procurement file for all procurements above $25K (see 6.5.5.1 CPAA Instructions, Annex 6.2: Contract Request Instructions and TB Contracting Policy Notice 2007-04).
The TB Contracting Policy Notice further defines the use of exceptions to competitive contracting. This policy notice describes specifically the need to provide more rigor when invoking exception 6.(d) of the Government Contract Regulations (GCR) where only one person is capable of performing the contract. For all procurements above $25,000, the questions must be answered, accompany the approval document and be placed on the procurement file. See Annex 3.1: Treasury Board Questions for Sole Source for a copy of these questions along with additional information on how to respond to each of them.
Exception 6.(b)(i) of the GCRs states that where the estimated expenditure does not exceed $25,000, contracts can be awarded without soliciting bids. However, contracting officers are expected to solicit bids whenever it is cost effective to do so.
With respect to the trade agreements, contracting officers may award a contract without soliciting bids, only if one or more of the limited tendering reasons stated in each applicable trade agreement can be applied. The relevant articles are as follows:
1. NAFTA Article 1016: Limited Tendering Procedures;
2. WTO-AGP Article XV: Limited Tendering (www);
3. AIT Article 506: Procedures for Procurement, paragraphs 11 and 12.
Note: A copy of these limited tendering reasons are provided in Annex 3.2: Limited Tendering Reasons contained in the Trade Agreements.

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3.15.1 Justification of Non-competitive Process

(2010-01-11)

While the client department must provide the rationale for any exception to competitive procurement, it is the responsibility of the contracting officers to make sure that the rationale can be adequately supported. Contracting officers are also reminded to take into account the procurement provisions under the Comprehensive Land Claims Agreements.
If there is inadequate substantiation, the contracting officer should advise the client of alternative products or sources, if known, and attempt to reach agreement with the client on the most appropriate procurement strategy. When agreement cannot be reached by the contracting officer, the next level of management should be consulted.
Use of any of the GCRs exceptions must be fully justified by the contracting officer with appropriate documentation placed on the contract file. The trade agreements also contain provisions to document on file the reasons for the use of limited tendering and the appropriate article must be provided as justification, where applicable. See 3.25 Trade Agreements Tendering Approaches(b).

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3.15.5 Advance Contract Award Notice

(2010-01-11)

An Advance Contract Award Notice (ACAN) is a public notice indicating to the supplier community that a department or agency intends to award a good, service or construction contract to a pre-identified supplier believed to be the only one capable of performing the work, thereby allowing other suppliers to signal their interest in bidding by submitting a statement of capabilities. If no other supplier submits a statement of capabilities that meets the requirements set out in the ACAN, the contracting officer may then proceed with awarding the contract to the pre-identified supplier. It is important to note that an ACAN is not a competitive process; however, competitive approval authorities may be used if there is no successful challenge.
ACANs may be published pursuant to article 10.7.13 of the Treasury Board (TB) Contracting Policy. When an ACAN is not published, Contract Award Notices will continue to provide transparency and it is therefore important that they be issued shortly after contract award.
In addition, contracting officers should review the TB Guide for Managers - Best Practices for Using Advance Contract Award Notices, Contracting Policy Notice 2000-4.
As stated in the TB Guide for Managers, the objectives of the ACAN process are to:
1. provide a procurement process that is efficient and cost effective;
2. provide potential suppliers with the opportunity to demonstrate, by way of a statement of capabilities, that they are capable of satisfying the requirements set out in the ACAN, and
3. respect the principles of government contracting by enhancing access and transparency.
The ACAN notice must be published on the Government Electronic Tendering Service (GETS) currently provided through MERX.
An ACAN may be published only for requirements where Canada is able to accept a statement of capabilities from another supplier. Contracting officers must ensure that Canada is in a position to accept a statement of capabilities before publishing an ACAN. In circumstances where there is no possibility of another supplier submitting a statement of capabilities or where Canada cannot, for program or policy reasons, accept a statement of capabilities from another supplier, an ACAN must not be published. For more information on statements of capabilities, see 3.15.5.10 Statement of Capabilities (Challenge Process).
Accordingly, the use of an ACAN for sole source contracts is not mandatory and there is no requirement to seek approval not to publish an ACAN for a requirement.
Where the ACAN process is not used, the non-competitive approval authorities apply to the procurement strategy.
ACANs are not to be used to circumvent electronic bidding or other bidding procedures when it is clear that more than one supplier exists that can perform the work.
ACANs are not to be structured in ways that discourage submissions of statements of capabilities. For example, the notice should not say: "This is not a competitive solicitation", "This is a sole source requirement", or other language that is not consistent with the spirit of the TB Contracting Policy on competitive contracting.
An ACAN process, even if conducted in accordance with the Policy, does not constitute a "competitive" process for the purposes of the trade agreements and any Canadian International Trade Tribunal (CITT) challenge. For the purposes of contract approval authorities, ACANs are classified under the "electronic bidding" category.

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3.15.5.1 ACAN Time Limit

(2010-01-11)

Although ACANs are posted for a minimum of 15 calendar days on GETS, the contracting officer should determine the posting period based on the individual circumstances for each procurement, including the complexity associated with the procurement.
Furthermore, while for reasons of timeliness and efficiency, contracting officers may enter into negotiations with the pre-identified supplier before the closing of the ACAN posting period, care should be exercised to ensure that any such negotiations do not put the pre-identified supplier at an advantage should a successful challenge take place before contract award. Due to this inherent risk, the pre-identified supplier must be cautioned not to commence any work or incur any costs before contract award.

3.15.5.5 ACAN Content

(2010-01-11)

Contracting officers are responsible for preparing an ACAN for publication on GETS.
The text of the notice must clearly state that the proposed procurement meets one of the Government Contracts Regulations exceptions to soliciting bids (see 3.15 Non-competitive Contracting Process(c)). The text must also reference the limited tendering reasons being invoked for all applicable trade agreements. Such exceptions must be fully and clearly justified in writing on the procurement file.
A sample of texts to be used in an ACAN notice can be found in Annex 3.3: Model Advance Contract Award Notice.
Further information on notice content and additional models can be found in TB Guide for Managers - Best Practices for Using Advance Contract Award Notices.
When additional information not specifically set out in the ACAN is provided on the requirements, it must be provided equally to all interested parties. If the information provided is considered a significant clarification to the information provided in the ACAN, an amended ACAN should be issued. Extending the closing date would be appropriate in such cases.

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3.15.5.10 Statement of Capabilities (Challenge Process)

(2010-01-11)

The ACAN process provides suppliers with an opportunity to submit a statement of capabilities regarding work identified in an ACAN.
Statements of capabilities submitted by suppliers:
1. should be provided in writing within the specified timeframe indicated on the ACAN; and
2. must include documentation demonstrating that the supplier meets the requirements as set out in the ACAN.
Despite the timeframe indicated in the ACAN, there may be circumstances when a contracting officer could consider a statement of capabilities received after the specified date but before the award of the contract. Contracting officers should discuss this with their management and Legal Services.
Following receipt of a statement of capabilities, the process is as follows:
1. All statements of capabilities received by the timeframe indicated in the ACAN are reviewed by the contracting officer.
2. When a supplier's statement of capabilities provides sufficient information to indicate that it meets the requirements set out in the ACAN, the supplier is notified of the decision to compete the requirement before proceeding to a full bidding process.
3. If a statement of capabilities is rejected, a separate review of the rejection is conducted. This review would be made at one level higher than the original approval authority, but not lower than that of Manager and not higher than the Assistant Deputy Minister.
4. With respect to statements of capabilities that are rejected, suppliers should be advised in writing of the decision to reject a statement of capabilities before a contract is awarded.
5. The reasons for the decision to reject a statement of capabilities are included in the file.
6. Suppliers that have submitted a statement of capabilities are given the reasons why their statement of capabilities was rejected.
7. The request from a supplier to withdraw/cancel its statement of capabilities is documented on file, and should be provided in writing by the supplier.
If the procurement is being set aside under the Procurement Strategy for Aboriginal Business, statements of capabilities must only be considered from Aboriginal suppliers.
If the requirement subject to an ACAN is cancelled, suppliers that submitted statements of capabilities should be notified in a timely manner.
Contracting officers may request additional information from suppliers or third parties, as appropriate, to ensure that the interested supplier has the capability to meet the requirements set out in the ACAN.

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3.15.5.15 ACAN Exceptions

(2010-01-11)

ACANs must not be posted in situations where the competitive process using electronic or traditional bidding cannot be used. Examples of such situations include:
1. when, for reasons of security or public interest, the information contained in an ACAN cannot be provided to the public;
2. confirming orders;
3. Corps of commissionaires, if right of first refusal applies;
4. government direction, such as Munitions Supply Program;
5. works of art;
6. where, for reasons of extreme urgency brought about by events unforeseeable by the entity, the goods or services could not be obtained in time by means of open or selective tendering procedures;
7. tobacco products purchased for inmates by Correctional Service Canada;
8. regulatory body determined sole source service contracts (e.g. National Transportation Agency, Canadian Radio-Television and Telecommunications Commission);
9. consolidated announcements that advertise a program consisting of several non-competitive standing offers/contracts (pharmaceutical and medical supplies are the only products currently eligible for this exclusion);
10. when an entity needs to procure consulting services regarding matters of a confidential nature, the disclosure of which could reasonably be expected to compromise government confidences, cause economic disruption or similarly be contrary to the public interest.
ACANs must also not be posted in situations where a statement of capability cannot be accepted. For example, in circumstances where detailed market knowledge confirms that only one supplier can perform the work,then the contract should be awarded on a non-competitive basis with transparency achieved through a Contract Award Notice.
In such cases, the rationale underlying the decision not to publish an ACAN should be well documented on the procurement file.

3.15.5.20 Documenting the Procurement File

(2010-01-11)

Contracting officers are required to exercise due diligence in documenting on the procurement file the actions taken in each phase of the ACAN process. As a minimum, this involves documentation of the following justifications, reasons and associated steps:

justification for the sole source (see 3.15.1 Justification of Non-competitive Process);
what actions, if appropriate, were taken to determine if other suppliers may have been capable of performing the work;
the requirement or rationale for issuing the AACAN (bearing in mind that Canada must be able to accept a statement of capabilities from another supplier if an ACAN is issued);
the process followed in either accepting or rejecting a statement of capabilities from another supplier, including the independent review, if required (see 3.15.5.10.(d));
details of any resulting competitive process, if conducted;
evidence that all suppliers that submitted a statement of capabilities were notified and were given the reasons why their statement of capabilities was rejected, if requested.

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3.20 Procurement Schedule

(2010-01-11)

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

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3.21 Managing Urgent Acquisitions

(2011-05-16)

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

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3.25 Trade Agreements Tendering Approaches

(2010-01-11)

The government achieves competitive contracting through two sourcing methodologies, which include: electronic bidding through an open bidding process, and traditional bidding using suppliers lists.
The three tendering approaches under the trade agreements are:
1. Open Tendering: Where a Notice of Proposed Procurement (NPP) is advertised and, any supplier may submit a bid;
  Open Tendering is the preferred approach.
2. Selective Tendering:
  1. involving the use of a one-time list of qualifed suppliers:
    
    This is a two stage procurement where potential suppliers express an interest in participating and meet predetermined qualifications for participation publicized in the NPP at the first stage. Tender documentation is issued to those suppliers meeting the qualifications at the second stage. For the North American Free Trade Agreement (NAFTA) and the World Trade Organization Agreement on Government Procurement (WTO-AGP), an NPP must be published at both stages of the procurement (it is also acceptable to amend the original NPP once the tender closing date has been determined). Any supplier who wishes to bid at the second stage may do so, as long as there is sufficient time to carry out the qualification process;
  2. involving the use of a permanent list of qualified suppliers^*:
    
    This is where a source list is developed and maintained and qualified suppliers for the product or service in question are issued the bid documentation. Any other potential supplier who requests bid documentation must be considered. For NAFTA, WTO-AGP and the Agreement on Internal Trade (AIT), an annual notice of the existence of the source list must be published (use the NPP form). For AIT, when using a source list, all qualified suppliers in a given category on a source list must be invited to bid for all procurement in that category.
3. Limited Tendering: A process that allows for deviations from the above procurement practices. In situations, where a specific limited tendering justification can be applied, limiting the number of suppliers, to one or more suppliers, is allowed. While limited tendering is often used for sole source procurements, it can also be used in competitive procurements.
*A permanent list of qualified suppliers is also known as a source list.
For a procurement subject to the Comprehensive Land Claims Agreements (CLCAs), the contracting officer must check the particular CLCA to ensure that correct notification has been provided.
For the procedure for publication on GETS, see 4.75.20 Procedure for Publication of Notice of Proposed Procurement on GETS. In addition to the above, specific government enterprises (Crown corporations) subject to NAFTA, Annex 1001.1a-2 Government Enterprises), may use a notice of planned procurement to advertise potential procurements. This notice is normally published at the start of a fiscal year and lists potential procurements for the enterprise in the upcoming fiscal year.
A response from potential suppliers to a notice of planned procurement is not required.

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

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3.30 Methods of Supply

(2011-05-16)

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

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3.35 Contracts

(2011-05-16)

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

3.35.1 Contracts with Task Authorizations

3.35.1.1 Definition

(2011-05-16)

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

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3.35.1.5 Application

(2011-05-16)

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

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3.35.1.10 Conditions of Use

(2011-05-16)

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

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3.35.1.15 Approval Documents for Contracts with Task Authorizations

(2011-05-16)

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

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3.35.1.20 Bid Solicitations and Resulting Contract Documents

(2011-05-16)

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

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3.35.1.25 Forms

(2011-05-16)

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

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3.35.1.30 Setting financial limits on Individual Task Authorizations

(2011-05-16)

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

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3.35.1.35 Separation of Duties

(2011-05-16)

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

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3.35.1.40 Authorizing and Issuing Task Authorizations

(2011-05-16)

The client organization authorized to issue tasks to the contractor is responsible for authorizing and issuing TAs in accordance with the process detailed in the contract. As a minimum, the client organization is responsible for:
1. ensuring the work requirement of the TA including the deliverables and the schedule, as applicable, is in accordance with the scope of the contract.
2. providing the contractor with the task description, the payment provisions and obtaining the level of effort, as applicable.
  
  Setting dates or timeframes for completing tasks must take into consideration the expiry date of the contract. A task must be completed on or before the expiry date of the contract, however, if a task cannot be completed by such date, a contract amendment to extend the contract period to the task completion date must be issued by the contracting officer before the TA can be issued.
3. finalizing the task authorization, including the total value of the TA (GST/HST extra), in accordance with the contract.
4. obtaining all applicable signatures (client, or PWGSC, or both, as applicable; and contractor), and the date of these signatures on the TA.

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3.35.1.45 Administration of the Task Authorizations by PWGSC's Clients

(2011-05-16)

For details, see the Guide to Preparing and Administering Task Authorizations - for PWGSC's Clients in Annex 3.4.1.

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3.35.1.50 Revision of a TA by the Client

(2011-05-16)

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

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3.35.1.55 Monitoring and Oversight

(2011-05-16)

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

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3.35.1.60 Reporting

(2011-05-16)

After issuing a contract with TAs or an amendment to this type of contract, contracting officers must report on the procurement as follows:

For Automated Buyer Environment (ABE) users: on the main page of the Procurement Summary, click on "Program ID", and select "Contract that allows Task Authorizations".
For Automated Data Capture (ADC) users: include the following statement when submitting the ADC procurement report, "Program ID: Contract that allows Task Authorizations".

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3.40 Standing Offers

(2011-05-16)

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

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3.45 Supply Arrangements

(2011-05-16)

A supply arrangement (SA) is a non-binding arrangement between Canada and a pre-qualified supplier that allows departments and agencies to award contracts and solicit bids from a pool of pre-qualified suppliers for specific requirements within the scope of the SA.
An SA is not a contract for the provision of the goods and services described in it and neither party is legally bound, as a result of signing a supply arrangement alone. The intent of a supply arrangement is to establish a framework to permit expeditious processing of individual bid solicitations, which result in legally binding contracts for the goods and services described in those bid solicitations.
An SA may be used when:
1. the overall requirement cannot be clearly defined at the outset and it is proposed to establish a pool of screened suppliers from which clients and PWGSC solicit bids for individual requirements;
2. a commodity is procured on a regular basis (goods or services);
3. a standing offer is not suitable, due to variables in resulting call-ups (e.g. varying methods/basis of payment, or the statement of work or commodity cannot be adequately defined in advance);
4. a simplified solicitation, undertaken by users/clients, can be used to obtain competitive bids from the pre-qualified suppliers;
5. selection will be based on best value, as described in the SA and the subsequent solicitation; and
6. it is more efficient for PWGSC to operate as the provider of the framework on behalf of other users/clients and not as the contracting officer.
Supply arrangements are generally issued following a Request for Supply Arrangement process. For more information on the solicitation process, see Chapter 4 - Solicitation Process. When developing the procurement strategy, contacting officers should consider the following:
1. if national and international trade agreements apply to the solicitation (see 3.50 Procurements Subject to Trade Agreements);
2. whether or not ceiling prices will be included in the SAs;
3. how security requirements will be managed (i.e. what are the base security requirements and how are different security requirements managed.). The contracting officer must ensure that a contract resulting from an SA contains the proper security requirements;
4. how the use of the SA will be monitored and reported.
Each SA should contain clear instructions on how to use the SA and identify which departments and agencies can use them.
A requirement that would normally be covered by the trade agreement is still covered when solicited or contracted through the use of a supply arrangement method of supply.
1. The use of this method of supply is considered selective tendering under the North American Free Trade Agreement and the World Trade Organization Agreement on Government Procurement. Therefore, a Notice of Proposed Procurement (NPP) must be posted for each separate procurement under an SA that is over the relevant trade agreement threshold and to provide the time periods required by the agreements. For more information, see 4.10.25.5 International Trade Agreements and Use of Supply Arrangements and 4.10.25.10 Ongoing Qualification Process.
2. The use of this method of supply is considered to be the use of a source list under the Agreement on Internal Trade (AIT). The AIT does allow the use of source lists without publication of a separate NPP for each requirement, provided that all suppliers on the source list are invited to bid and that suppliers be able to get on the list at any time.

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3.50 Procurements Subject to Trade Agreements

3.50.1 General Procurement

(2010-01-11)

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

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3.50.5 Applicability of Trade Agreements to Standing Offers and Supply Arrangements

(2010-01-11)

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

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3.55 Industrial Security Requirements (Personnel or Organization)

(2010-01-11)

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

3.55.1 Security and Timelines

(2010-01-11)

Procurement schedules must take into account that the organization and personnel security screening process may take a considerable length of time. The contracting officer must provide as much lead time as possible to Canadian Industrial Security Directorate (CISD) to process organization or personnel security screenings, as well as to give time to bidders to implement security recommendations before contract award.
Note: If foreign-based suppliers are identified, contact CISD for applicable clauses and verification of security. If security clearances are required for foreign-based suppliers, the timeframes required to provide them could have a significant impact on the procurement schedule.
Personnel Security Screening
The approximate timeframes for completing a personnel security screening are as follows:
1. Simple Reliability Status: 2 working days;
2. Complex Reliability Status: 52 days (100 days if out of country check is required);
3. "Confidential"/"Secret" Clearance: 62 days (an additional 100 days if out of country check is required);
4. Top Secret Clearance: 100 days (an additional 100 days if out of country check is required), and
5. NATO Clearance: 100 - 200 days (non-Canadian citizen).
Note: Reliability checks may be more complex and take additional time to process. This occurs when a request for fingerprints is made in order for Canada to uniquely identify the individual applying for a reliability clearance.
Organization Security Screening
The approximate timeframes for an organization security screening are as follows:
1. Designated Organizational Screening (DOS): two months (faster if the supplier responds in a timely manner), and
2. Facility Security Clearance (FSC): up to one year depending on the complexity of the supplier's organization. All key senior officials need to be cleared as well as those performing the work of the contract.

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3.60 Low Dollar Value Procurements

3.60.1 Requirements

(2010-01-11)

Requirements below $25,000, including all applicable taxes, are considered to be low dollar value (LDV) procurements. When identifying an LDV requirement, based on the estimated value of the final contract, contracting officers must:
1. not split or artificially divide requirements to meet the LDV threshold (see 6.1 General);
2. procure LDV requirements below $25,000, including all applicable taxes, using the most efficient and cost effective approach to select a contractor, either by soliciting bids or by directing the requirement to a sole supplier when it is not cost effective to solicit bids;
3. determine the most appropriate procurement strategy for each LDV requirement in order to obtain best value and ensure the timeliness and cost effectiveness of each contract, while respecting Public Works and Government Services Canada (PWGSC's) guiding principles, which include client service, competition, accountability and equal treatment (see 1.10.5 Guiding Principles).
Contracting officers should use the electronic tools available to identify and select a supplier on a competitive or directed basis. Examples of such tools include:
1. Supplier Registration Information (SRI) service;
2. Automated Vendor Rotation System (AVRS);
3. SELECT;
4. Government Electronic Tendering Service (GETS);
5. telephone and online trade directories.
Contracting officers must document the procurement file with the rationale to support the procurement strategy, and must also document the basis on which the estimated value of the contract, that is, below $25,000, was established.

3.60.5 Geographic Factors and Low Dollar Value

(2010-01-11)

Regional offices will source requirements below $25,000, including all applicable taxes, within their geographic area, provided the area has adequate sources of supply, which may include foreign-based suppliers of foreign goods or services, and offers the required level of service to clients and fair market value for the taxpayer's dollar.

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3.65 Green Procurement Strategy

(2010-01-11)

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

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3.70 Industrial and Regional Benefits (IRB) Program

(2010-01-11)

The government has determined that its procurement actions should be consistent with and supportive of such national objectives as industrial and regional development, and other national objectives such as aboriginal economic development, the environment and other approved socio-economic objectives.
The objective of the Treasury Board Procurement Review Policy is to enhance the use of procurement in support of national socio-economic objectives in a manner that is fully consistent with the government's other objectives, e.g., the pre-eminence of operational requirements, competition, fairness and accessibility, all within Canada's international trade obligations.
The procurement strategy for goods and services over $2,000,000 must be considered for potential socio-economic benefits to ensure that maximum benefit to Canada is achieved. The primary mechanism for selection for the review for socio-economic benefits is inclusion in the department's annual short range acquisition plan.
The review process is carried out by the interdepartmental Procurement Review Committee (PRC), which is responsible for providing linkages between the government's national objectives and individual procurements. Contracting officers should refer to Annex 3.5: Procurement Review Committee Requirements and Approval Process for details on the process to be followed.
The PRC consists of a number of federal departments: PWGSC (the chair), the client department, Industry Canada, the regional agencies/departments, Indian and Northern Affairs Canada, Environment Canada, Human Resources and Skills Development Canada, National Research Council, Finance Canada and the Treasury Board Secretariat.
Industry Canada and the regional economic agencies/departments review procurements for potential industrial and regional benefits. For more information on the Industrial and Regional Benefits Program, see 9.45. The other departments, such as Indian and Northern Affairs Canada, review the procurements for opportunities to achieve other national objectives, such as Aboriginal economic development.
The PRC makes recommendations to the operating and contracting departments regarding appropriate procurement strategies and other initiatives that would support government objectives in individual acquisitions.
Mandatory procurement review does not apply in the following situations:
1. foreign aid by or on behalf of the Canadian International Development Agency;
2. procurements by the Canadian Commercial Corporation on behalf of entities not subject to this policy, for example, foreign governments;
3. the acquisition, modification and routine maintenance of real property, and
4. security requirements by or on behalf of the Communications Security Establishment of the Department of National Defence; the Canadian Security Intelligence Service; and the Royal Canadian Mounted Police for the purpose of pursuing criminal investigations.
Note: Notwithstanding this exemption, the above organizations must apply the principles of the Policy where appropriate, consistent with the security requirements of their procurement.
In cases of emergency, as defined in the Treasury Board (TB) Contracting Policy, departments may enter into contract without submitting the strategy for procurement review pursuant to TB Procurement Review Policy. Such action should be noted in any subsequent submission or report to TB or TB Secretariat (if such a submission or report is required), and should also be reported to the PRC Secretariat within 60 days.
The PRC divides procurements into the following categories:
1. those covered by international trade agreements, and
2. all others, including requirements subject to the Agreement on Internal Trade (AIT), with the following exceptions:
  1. Foreign Military Sales;
  2. security services;
  3. temporary help services;
  4. procurements under the Munitions Supply Program;
  5. requirements subject to the Shipbuilding Policy.
Note: Procurement covered by international trade agreements is not reviewed for socio-economic benefits, except for set-aide for minority business.
The Advisory Council on Repair and Overhaul (ACRO) will carry out the socio-economic benefits review for military repair and overhaul requirements, under the strategic direction of the Procurement Review Committee (PRC).
For Major Crown Projects (MCPs), or those requirements exceeding $100 million, a Senior Project Advisory Committee (SPAC) will normally be set up and the SPAC will, in accordance with the TB Policy on Management of MCPs and will carry out procurement review function. If a SPAC is not set up, then the PRC will review the procurement. For more information on MCPs, see 9.5 Major Crown Projects.
For proposed procurements between $2 million and $100 million, the contracting officer must complete a "Detail Document" to be forwarded to the PRC Secretariat, once it has undergone the respective sector approval processes. It must be kept on the contract file.
Copies of the Detail Document and the Record of Decision must be retained on the procurement file.

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3.75 Small and Medium Enterprise

3.75.1 Office of Small and Medium Enterprises Role and Initiatives

(2010-01-11)

The Office of Small and Medium Enterprises (OSME), as part of the government of Canada, supports the government agenda to provide value for Canadians by:
1. encouraging and assisting small and medium enterprises (SMEs) to participate in the federal government procurement process;
2. improving the links between supply and demand and influencing change within government acquisitions, and
3. conducting economic analysis of Government of Canada procurement and the private sector.
For more information, visit the Office of Small and Medium Enterprises Web site.
The Office performs six activities in support of smaller suppliers, as follows:
1. provides information and advisory services to SMEs that want to do business with the government;
2. helps reduce competition barriers and simplify the government contracting process;
3. identifies and pursues opportunities that encourage the introduction of innovative new goods and services;
4. collaborates to improve procurement policies and best practices;
5. works closely with the SME community to ensure their concerns and views are brought forward and heard; and
6. engages with SMEs to interest them in federal government opportunities.

3.75.5 PWGSC On-Line Tools/Services and OSME Role

(2010-01-11)

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

Supplier Registration Information (SRI) service: Directory of suppliers who want to do business with the federal government. This database is accessible to all federal government buyers and administrative authorities. It is important that suppliers register with SRI as this database is the start of the contracting process.
Procurement Allocations Directory is a list of key purchasing contacts in PWGSC offices.
Government Electronic Tendering System (MERX™) (www): This is the Government of Canada's tool for advertising federal procurement opportunities, subject to trade agreements. The SRI places the supplier in the contracting process while MERX is a major source of information on contract opportunities for suppliers.

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3.80 Comprehensive Land Claims Agreements

(2010-01-11)

Any contracting officer who receives a requisition with deliveries to a location that is subject to a Comprehensive Land Claims Agreement (CLCA) must consult 9.35 Comprehensive Land Claims Agreements for information on the CLCA obligations that have to be addressed during the procurement process.

3.85 Procurement Strategy for Aboriginal Business

(2010-01-11)

All federal government departments are encouraged to set-aside some procurements for competition by Aboriginal suppliers provided operational requirements are fully met. For more information on the Procurement Strategy for Aboriginal Business, see 9.35 Comprehensive Land Claims Agreements.

3.90 Former Public Servants

(2010-01-11)

Contracts with former public servants in receipt of a pension or of a lump sum payment must bear the closest public scrutiny, and reflect fairness in the spending of public funds. (See 16.8 Former public servants in receipt of a pension or a lump sum payment of the Treasury Board Contracting Policy.)
A former public servant is any former member of a department as defined in the Financial Administration Act, a former member of the Canadian Armed Forces or a former member of the Royal Canadian Mounted Police. A former public servant may be:
1. an individual;
2. an individual who has incorporated;
3. a partnership made of Former Public Servants, or
4. a sole proprietorship or entity where the affected individual has a controlling or major interest in the entity.
Retirement Waiting Period
When contracting for the services of a former public servant or a former public officer holder, the provisions of the Conflict of Interest Act, the Post-Employment Measures contained in the Values and Ethics Code for the Public Service, and the Conflict of Interest and Post-Employment Code for Public Office Holders apply. These codes provide information on the applicability of the retirement waiting period.
Approval Authority
Treasury Board approval may be required for a contract with a former public servant, depending on the value or the situation. For more information, see Annex 6.4.1: Approval Authorities and Additional Signing Authorities in Support of Clients' Programs Only - Other than for Canadian Commercial Corporation, section 1.1.1. The retirement waiting period does not apply to former members of the Canadian Forces or the Royal Canadian Mounted Police (RCMP).
Fee Abatement
1. For non-competitive contracts with former public servants in receipt of a pension pursuant to the Public Service Superannuation Act, the fee abatement formula below applies in the determination of the maximum fee payable during the one-year fee abatement period.
2. For non-competitive contracts with former public servants in receipt of a pension and a lump sum payment, the application of the fee abatement formula is postponed to have it begin at the conclusion of the lump sum payment period.
3. Fee Abatement Formula
  D = ((M+F)/260) - (P/260)
  
  D = maximum payable per diem rate;
  
  M = maximum salary of the former public servant, updated to the current level, or the estimated salary cost of having the work done by a qualified public servant;
  
  F = cost of usual fringe benefits, 30 percent;
  
  P = total annual pension in pay:
  
  Example:
  
  Maximum salary = $60,000; benefits are 30 percent of salary;
  Pension after 35 years of service = $42,000 ($60,000 x 0.7);
  
  Per Diem = (60,000 + 18,000)/260 - 42,000/260 = $138.46
  
  Note: A "pension" in the context of the fee abatement formula is a pension or annual allowance paid under the Public Service Superannuation Act (PSSA) and any increases paid pursuant to the Supplementary Retirement Benefits Act, as it affects the PSSA. It does not include pensions payable pursuant to the Canadian Forces Superannuation Act, the Defence Services Pension Continuation Act, the Royal Canadian Mounted Police Pension Continuation Act and the Royal Canadian Mounted Police Superannuation Act, the Members of Parliament Retiring Allowances Act and that portion of pension payable to the Canada Pension Plan Act.
4. In accordance with Workforce Reduction Programs, for non-competitive contracts with former public servants in receipt of a pension AND a lump sum payment, the application of the fee abatement formula is postponed to have it begin at the conclusion of the lump sum payment period. See article (f) below.
5. No exceptions to the application of the formula or to the maximum rate allowed must be permitted without prior TB approval.
Workforce Reduction Programs
1. In addition to the requirements of the Contract Fee Abatement Policy for former public servants in receipt of a pension, the amount payable for professional fees to former public servants, whether they are in receipt of a pension or not, members of the Canadian Forces, and members of the RCMP, who have received a lump sum payment for employment termination under a workforce reduction program or adjustment initiative, has been limited during the lump sum payment period.
2. The Contract Fee Limit Policy does not apply if the contract is not specifically for the services of a former public servant.
3. For purposes of this policy, the "lump sum payment period" is defined as the period measured in weeks of salary, for which payment has been made to facilitate the transition to retirement or to other employment as a result of the implementation of various programs to reduce the size of the Public Service. The lump sum payment period does not include the period of severance pay, which is measured in a like manner.
4. For competitive or non-competitive service contracts awarded to a former public servant during the lump sum payment period, the total amount of fees that may be paid is $5,000, including Goods and Services Tax or Harmonized Sales Tax, as applicable. The Contract Fee Limit Policy applies to all former public servants, including former members of the Canadian Forces and the Royal Canadian Mounted Police, in receipt of a lump sum payment.
5. Reasonable overhead costs, such as travel expenses, are excluded from the $5,000 limit. However, due to the sensitivity of these contracts, these costs should be strictly controlled. Departments and agencies must obtain Treasury Board approval for all contract situations where former public servants could receive fees totalling more than $5,000 during the lump sum payment period.
6. When a former public servant works as a salaried employee of, or a subcontractor to, an established supplier contracting with Canada, the Contract Fee Limit Policy does not apply.

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3.95 Intellectual Property

(2010-01-11)

Before issuing a solicitation or awarding a contract, the contracting officer must identify what intellectual property (IP) is already existing before contract award and, conversely, what IP will be generated as a result of the contract. In addition to reducing future costs, disputes can be avoided by being clear upfront.
Intellectual property is anything resulting from a contract that can be copyrighted, trademarked, patented, licensed, etc. Potentially, any contract can have IP. The likelihood for IP is much greater where the goal of the contract is something new, or might incorporate new processes. IP considerations are most relevant to research and development contracts, software development, or where the production of new written material occurs. A definition of "Intellectual Property" and Intellectual Property Rights" can be found in Standard Acquisition Clauses and Conditions Manual general conditions 2040.
Contracting officers can find complete details on the IP policy as per following Treasury Board policies:
1. Policy on Title to Intellectual Property Arising Under Crown Procurement Contracts;
2. Implementation Guide for the Policy: Title to Intellectual Property Arising Under Crown Procurement Contracts;
3. TBS Contracting Policy Notice 2000-2: Revised Policy on Ownership of Intellectual Property Arising Under Crown Procurement Contracts.
The default position of the government policy is to allow contractors to retain the rights to IP generated under government contracts. This is designed to promote the commercialization of new ideas, under the premise that the private sector has a greater capacity in this regard. Exceptions are described in the Policy references above.
The contracting officer must therefore determine at the planning stage, how IP will be handled, what IP is anticipated and how the IP will be identified and secured for the use of the client and Canada. Once again, this process can have very long timeframes and can have extremely complex processes. The greatest pitfall with IP is in not identifying what is the foreground information and the background information upfront and if left to the end of the contract, Canada is at a severe disadvantage.
The client department must decide to what extent IP rights are to be retained by Canada. However, the contracting officer should discuss with the client department their needs in order to ensure that the client department is aware of the extent to which PWGCS can obtain for them the rights they need to use the IP created under their contract, whether Canada or the contractor owns the IP. For instance, subject to industry practice, Canada may not be able to obtain IP ownership, even when desired. In such cases, Public Works and Government Services Canada (PWGSC) contract clauses are designed with the goal of ensuring that even where the contractor owns the IP, this does not affect the client department's ability to use the IP, except that such use would not extend to commercialization of the IP by Canada.

A summary of PWGSC's contractual options is shown in the table below.

Table 1: Contractual Options for Ownership of Intellectual Property
		Research and Development (R&D)	Goods with Associated R&D	Goods with no R&D Expected	Services with no R&D Expected
Intellectual Property Options	Default	Contractor to Retain IP Ownership	Contractor to Retain IP Ownership	Canada to Retain Copyright	Canada to retain copyright
	Options	Canada to Retain IP Ownership	Canada to Retain IP Ownership	Contractor to Retain IP, including Copyright	Contractor to Retain IP, including Copyright
	Options	Canada to Retain IP Ownership	Canada to Retain IP Ownership	No IP Terms in the Contract	No IP Terms in the Contract

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3.100 Vendor Performance Corrective Measures

(2010-01-11)

For more information on the Vendor Performance Policy, contracting officers should consult 8.180 Vendor Performance Policy. For more information on the vendor performance during the evaluation process, see 5.55 Vendor Performance.

3.105 National Security Exceptions

3.105.1 Trade Agreements and Invoking a National Security Exception

(2010-01-11)

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

3.105.5 Texts of the National Security Exceptions

(2011-05-16)

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

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

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3.105.10 Procedures for Invoking a National Security Exception

(2010-01-11)

All requests to invoke an NSE to exclude a procurement from the WTO-AGP, NAFTA, CCFTA or the AIT, or any combination of the agreements, will normally be submitted by the client department to the ADM/AB for approval, regardless of dollar value, where PWGSC/AB is the contracting officer.
A request must be in the form of a letter from the responsible ADM, or equivalent to the ADM level, at the client department. The letter must explain the nature of the proposed procurement and, depending upon which trade agreement(s) applies, how it relates to:
1. Canada's "national security interests" or, pursuant to Canada's international obligations, "the maintenance of international peace and security". (AIT: Article 1804); and/or
2. Canada's "essential security interests relating to the procurement of arms, ammunition or war materials, or to procurement indispensable for national security or for national defence purposes". (NAFTA: Article 1018 (1) / WTO-AGP: Article XXIII (1) / CCFTA: Article Kbis-16 (1) ).
In reviewing requests to invoke the NSE, the ADM/AB will be considering only the issue of whether or not to invoke the NSE and will not be considering, at that time, other matters such as procurement methods, procurement plans or authority to enter into the contract. Client departments should work with the contracting officer in determining which method of procurement to be used, in parallel with any request for approval of an NSE. In situations where the NSE is invoked, it remains government policy to compete the requirement, subject to the exceptions to competitive contracting provided in the Government Contracts Regulations (GCRs).
Requests for an NSE are reviewed by the Acquisition Program Integrity Secretariat (APIS) who makes recommendations to the ADM/AB. Once the ADM/AB has made a decision whether or not to invoke an NSE, the ADM/AB will advise the client department in writing of the decision. For the approval process for NSE, see section 1.1.4 of Annex 6.4.1: Approval Authorities and Additional Signing Authorities in Support of Clients' Programs Only - Other than for Canadian Commercial Corporation.
Note: Contracting officers seeking advice to aid client departments in properly framing and requesting an NSE should contact APIS at 819-934-1382. It is strongly recommended that a draft of the NSE request letter be forwarded to APIS for review before having it signed by the responsible ADM at the client department. For a template of the NSE request letter, see Annex 3.7: National Security Exception Request Letter – Template.
The utilization of the NSE must be documented. In documents used to seek authority to enter into contract, and on the file, the contracting officer must explain clearly that the NSE is being invoked, specifying each of the trade agreements from which the procurement is being excluded, and include a copy of the NSE approval on the file.

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3.110 Legal Services

(2010-01-11)

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

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3.115 Bidders' Conferences and Site Visits

(2010-01-11)

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

3.120 Roles and Memorandum of Understanding

(2010-01-11)

Contracting officers should consider client department memorandums of understanding (MOUs) when determining roles and responsibilities in the planning and management of procurements. Contracting officers shoud consult Annex 1.1: Matrix of Responsibilities between PWGSC and Client Departments for the Procurement of Goods and Services (Generic) and Annex 1.2: Specific Division of Responsibilities Agreements relative to the division of responsibilities between PWGSC and the client department, as well as 9.5.15 Memorandum of Understanding with Client Department relative to Major Crown Projects.

3.125 Canadian Commercial Corporation

(2010-01-11)

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

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3.130 Canadian Content

(2010-01-11)

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

3.135 Fairness Monitors

(2010-01-11)

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

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

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3.140 Life Cycle Costing

(2010-01-11)

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

3.140.1 General Requirements

(2010-01-11)

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

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3.145 Cost and Profit

(2010-01-11)

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

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3.150 Standards and Quality Assurance

3.150.1 Standards, Specifications and Purchase Descriptions

(2010-01-11)

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

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

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3.150.5 Government Quality Assurance at Source

(2010-01-11)

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

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3.150.10 Listing Programs

(2010-01-11)

Listing programs are designed to expedite procurement by establishing, in advance and independent of any specific purchase, a listing of those products or services that comply with recognized performance standards or specifications. Listing/Qualification Programs are normally established in situations where:
1. test requirements would adversely affect delivery;
2. costs of acceptance inspection would be excessive;
3. prior assurance of product conformance and/or supplier capability is necessary;
4. complex test equipment and procedures are required; or
5. for products purchased on a regular basis and in large quantities.
Note: Before contracting, contracting officers should verify with the standards (listing) organization, which product or service offered has been approved. (See 3.150.10 (d).)
The inclusion of a product or service on a list implies only that the product or service complies with recognized performance standards or specifications. Listing does not relieve the supplier of contractual obligations to deliver items or services meeting all specified requirements, nor does it guarantee acceptance under a contract.
The CGSB and the Department of National Defence (DND) both develop and maintain lists. The responsible qualifying authority may discontinue the qualification and delete the product from an existing listing under the following conditions:
1. Formula change. A change in the supplier's formulation of the product that impairs product quality.
2. Process change. A change in the supplier's production process that impairs product quality.
3. Field failure. Authenticated field failure in use, which is attributable to non-conformance of the product to the relevant standard or specification. Authentication of field failure generally requires extensive investigation and supporting laboratory tests. Perceived field failures should be reported by users to the qualifying authority.
4. Verification failure. Failure to meet requirements in a verification test of the product and/or system, or failure to submit samples for testing, where requested, or to submit data for qualification maintenance when requested.
5. Withdrawal for cause. Supplier has ceased operation, changed location, or has consistently failed to respond to requests for quotation.
6. Changes to standard or specification. Listings may be cancelled by the responsible qualifying authority when the governing standards or specifications are cancelled, superseded or amended in such a manner as to affect existing qualification.
7. Appeals. Discontinuance may be appealed by the supplier in accordance with appeal procedures established by the qualifying authority.
Note: When there are indications of non-conformance, and if PWGSC and a client determine that a qualified bidder does not conform to the applicable standard, the contracting officer must notify the qualifying authority.
When a listing program is used for a procurement, contracting officers must state in the Notice of Proposed Procurement (NPP), bid solicitation and contract documents that the supplier and its product must be listed in the following appropriate listing:
1. Qualification Program List (QPL):
  1. underlay;
  2. security guards;
  3. remanufactured toner cartridges;
  4. protective clothing;
  5. polyethelene vapour barrier;
  6. paints;
  7. office furniture;
  8. medical gloves;
  9. Laboratory Acceptance Program;
  10. Dockside Monitoring Company;
  11. capets;
  12. Canadian Non-Destructive Testing Personnel Certification Program;
  13. Canadian Air Transport Security Authority screening contractors;
  14. breather type sheathing membrane.
2. Certification Program List (CPL):
  1. polyethylene vapour barrier;
  2. surgical and patient examination rubber gloves;
  3. breather type sheathing membrane;
  4. firefighter's protective clothing, protecting against heat and flame;
  5. fireline workwear for forest firefighters;
  6. Laboratory Acceptance Program.
3. Registered Quality Systems List ISO 9001 (ISO 9000 Quality Management Systems):
  This is a list of companies that are compliant with ISO 9001: 2000 models for quality systems.
  
  Note: ISO 9001: 2000 has replaced ISO 9001, 9002 or 9003.
  ISO 9001: 2000 is currently being transitioned to the latest standard version; ISO 9001:9008.
4. Registered Environmental Management Systems List:
  This is a list of companies that are compliant with the ISO 14001:2004 standard for environmental management systems.
5. Certified Occupational Health and Safety Standards (OHSAS) List
  This is a list of companies that are compliant with the OHSAS 18001:1999 specification for health and safety management systems.
6. Certified Food Safety Management Systems (Alberta and Ontario Hazard Analysis and Critical Control Point [HACCP] Advantage) List:
  1. The Alberta HACCP Advantage (AHA!) Certification Program is the formalized process whereby a food safety management system is assessed against the AHA! standard of the Alberta Ministry of Agriculture and Rural Development.
  2. The Ontario HACCP Advantage Certification Program is the formalized process whereby a food safety management system is assessed against the Advantage HACCP standard of the Ontario Ministry of Agriculture, Food and Rural Affairs.
7. Certified Drinking Water Quality Systems (Ministry of Ontario) List:
  The purpose of the Registration Program is to recognize operating authorities of municipal residential drinking water systems that demonstrate, through accreditation by an independent third party, that their quality management systems meet the requirements of the Ontario Drinking Water Quality Standard, and to recognize operating authorities that are managing their drinking water systems in a planned and systematic manner.

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3.150.15 Department of National Defence Qualified Products Lists

(2010-01-11)

batteries;
decals, for military identification;
electronic components, active: electron tubes, electronic modules, discrete;
semiconductors, filters, microcircuits, piezoelectric crystals and oscillators;
electronic components, passive: capacitors, connectors, relays and resistors;
fire fighting agents and chemicals;
flux, liquid soldering, rosin base;
gaskets;
hose fittings;
hydraulics;
insulation and packing materials;
marine and industrial coatings and related products;
mechanical hardware;
panels, information, integrally illuminated;
petroleum products;
plastic sheet, laminated, metal-clad;
printed-wiring boards;
rubber hoses, tires and tubes;
solder, for electronic use;
wire and cable.

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3.150.20 Canadian General Standard Board

3.150.20.1 Canadian General Standard Board

(2010-01-11)

The contracting officer must be aware of the Canadian General Standard Board (CGSB) and its responsibilities. The CGSB is a federal government organization that offers client-centred, comprehensive standards development and conformity assessment services in support of the economic, regulatory, procurement, health, safety and environmental interests of our stakeholders - government, industry and consumers. In the procurement planning stages, the contractor may be required to meet the standards or specifications of the CGSB for certain requirements and provide a reference in the solicitation and contract documents.
CGSB is accredited by the Standards Council of Canada as a standards-development, product/service/personnel certification and quality and environmental management systems registration organization. It is PWGSC's independent, third party qualifying authority.
Note: There are other accredited standards organizations in Canada, and contracting officer should contact CGSB for further information.
CGSB manages the development and maintenance of consensus standards and specifications, and develops and maintains qualification, certification and quality and environmental management systems registration, listing programs to support procurement, good business practice and trade.
CGSB also provides expertise and information on standardization, both nationally and internationally; the assessment of the suitability of standards and specifications; quality and environmental management systems registration; and qualification/certification of personnel and listing programs for products and services.
The CGSB Catalogue contains: a listing of over 900 standards and specifications in approximately 80 subject areas, in French and English, for products and services; listing programs for a selected number of these products and services; and other services offered by CGSB.
The Personnel Certification Division of CGSB has been selected by the Treasury Board Secretariat as the certifying body for the Procurement, Material Management and Real Property Certification Program.
Government organizations, suppliers and the general public can obtain CGSB publications, information on the listing programs or documentation required to apply for a listing by contacting:
Canadian General Standards Board
Place du Portage III, 6B1
11 Laurier Street
Gatineau, Quebec K1A 1G6

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

OR

By visiting the Canadian General Standards Board Web site.

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3.150.20.5 New Standards, Specifications or Listings

(2010-01-11)

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

3.150.25 Electrical Equipment

(2010-01-11)

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

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3.155 Acquisition Cards

3.155.1 Acquisition Cards In Contracting

(2010-01-11)

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

3.155.5 Acquisition Card Management

(2010-01-11)

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

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3.160 Royalty Payments and License Agreements

(2010-01-11)

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

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3.165 Controlled Goods

(2010-01-11)

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

3.170 Shipbuilding, Repair, Refit and Modernization

(2010-01-11)

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

3.170.1 Information to be included in NPP and Contact Award Notice

(2010-08-16)

The NPP or bid solicitation must contain the following statement:

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

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

3.170.5 Shipbuilding Procurement

(2010-08-16)

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

Terms specific to the sourcing strategy of shipbuilding, ship repair, refit and mid-life modernization procurements are as follows:
1. Origin of the vessel - the operational home port of the vessel.
2. Area of Origin - the following Areas of Origin are recognized: Eastern Canada: Atlantic Canada (Newfoundland and Labrador, Prince Edward Island, Nova Scotia and New Brunswick), Quebec and Ontario. Western Canada: All shipyards west of Ontario and those in the Yukon, Nunavut and Northwest Territories.
3. Province or Territory of Origin - All Provinces or Territories of Origin are recognized.
For procurements $25,000 and below, competitions may be limited to the Province or Territory of Origin of the vessel.
For new construction requirements over $25,000, competitions are to be conducted on a nation-wide basis when the following conditions are present:
1. The statement of requirement is sufficiently defined to permit assessment of competing bids by common standards.
2. Available shipyards, both in Eastern Canada and in Western Canada, have the technical capability to perform the work.
3. The vessel being procured is of a type that can be transferred and for which contingency costs (see 3.170.10 (c)) are not unrealistic in relation to the total price.
For new construction requirements over $25,000, competitions are to be conducted within the Area of Origin when all conditions, except 9c) above, are present.

3.170.10 Ship repair, refit and modernization

(2010-08-16)

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

3.175 United States Defense Related Procurement

(2010-01-11)

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

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3.180 Joint Certification Program

(2010-01-11)

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

3.185 Foreign Military Sales

(2010-01-11)

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

3.190 U.S. Defense Priorities and Allocations System

(2010-01-11)

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

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3.195 Risk Management

3.195.1 Treasury Board Secretariat Risk Management Policy

(2010-01-11)

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

3.195.5 Risk Management Process

3.195.5.1 General

(2010-01-11)

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

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

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3.195.5.5 Risk Assessment

(2010-01-11)

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

3.195.5.10 Risk Control

(2010-01-11)

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

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

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3.195.5.15 Risk Financing

(2010-01-11)

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

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3.200 Contractor Liability

3.200.1 General

(2010-01-11)

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

3.200.5 Indemnification

(2010-01-11)

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

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

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

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

3.205.1 Review Process

(2010-01-11)

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

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3.205.5 Reviewer Evaluation

(2010-01-11)

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

3.205.10 Publishing Information on the Standing Offer Index

(2010-01-11)

Contracting officers must ensure:

that all SOs and SAs are posted according to the Standing Offer Index (SOI) (accessible to federal government employees only) Instructions.
that the information presented to the client departments is accurate and includes the original SO/SA document, the sequence of amendments and tombstone documentation, such as contracting officer name and phone number.

3.205.15 Duplication of Coverage in Standing Offers and Supply Arrangements

(2010-01-11)

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

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Annex 3.1: Treasury Board Questions for Sole Source

(2010-01-11)

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

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

NO.	QUESTION	CLIENT'S ANSWER
1	Is the proposed sole source contract linked to a previous procurement and strategy for obtaining additional quantities and/or in-service support? If yes, what was the approved strategy?	If answer is "YES", identify what was the previous procurement strategy that was conducted with PWGSC. Identify the PWGSC file number for the previous contract (i.e. original procurement was posted "competitively" and it was identified that additional equipment would be purchased in the future with the successful vendor).
	Notwithstanding the approved strategy, is it feasible and/or affordable to compete the requirement?	If the answer was "YES" to question %1, can this requirement be issued as a competitive requirement? If the answer is "NO", then answer the additional question below.
	If not, provide the related rationale in terms of cost, schedule, etc.	Explain why this requirement cannot be issued as a "competitive" requirement.
2	Does the Vendor or its approved distributors have exclusive ownership of, and rights to use, the intellectual property (IP) for the goods or services in question? If yes, provide details. What rights, if any, does the Crown have to use the IP?	If answer is "YES", you would indicate the vendor details and state whether they are: the Original Equipment Manufacturer (OEM) or the sole authorizer value-added reseller. Clearly indicate why we are going directly to this company, for ex.: We are dealing directly with the OEM, ABC Ltd, as they are the owners, developers of the equipment and owners of the IP. They DO NOT authorize value-added resellers or distributors for their equipment. We are dealing with XYZ Distribution Inc. as they are the sole distributor and only approved value-added reseller authorized to sell and support in Canada the equipment built by the OEM, ABC Ltd.
3	Are there legal and/or regulatory considerations precluding open competition for this good or service? If yes, provide details.	Is there any provincial and federal legislation that directs client to only purchase the described requirement.
4	Are there alternative sources of supply for the same or equivalent materiel/support? If no, explain.	If you are using Government Contracts Regulations, exception 6 d), then you would indicate there are no alternate sources of supply that can meet the mandatory performance specifications identified by you the client. You would reference the attached sole source justification.
4	If yes, what other options were considered and why were they not recommended?	If the answer is "Yes", and there are alternate sources of supply, then we should be going out to competition. If research has been done, to confirm there is only a manufacture than can meet the mandatory performance specifications, then we should indicate what has been done. Note: To have different manufacturers "pre-tested" or "benchmarked" thru an evaluation process is not acceptable, unless it was done thru a competitive process with PWGSC. Also, simply because the manufacturer is the "best" or the "lowest price" is not acceptable, without a competitive process thru PWGSC.
5	Is the proposal related to commonality/compatibility with existing equipment? If yes, what are the operational costs/implications of managing multiple versions?	Must the equipment required be compatible with existing equipment?… existing software? Or existing equipment at other facilities in Canada, North America, and the World? If the answer is "Yes", at a minimum, we need to: Clearly identify which equipment and or software the client (or other research centers) has that must be compatible with current requirement. Identify what "compatible" means to client. Do the machines communicate with one another from facility-to-facility? Are samples cross-examined and compared from facility to facility? We need to be specific. Identify what the operational costs and the implications of managing multiple versions. (multiple manufacturers, multiple software programs). What would be the price of non-conformance for client? Cost to retrain? Cost to revise protocols, procedures, processes? Is there a cost to delaying this program any further?
6	Explain why the price is fair and reasonable; describe how price support was obtained; and summarize negotiations.	Client can provide any preliminary information received from the vendor. (financial quote). Also, PWGSC, as the contracting officer will be responsible for negotiating a fair and reasonable price and ensuring the prices are fair and reasonable to Canada.
7	Are there any other factors that have led to a recommendation for a non-competitive process? If yes, provide details and rationale.
	(a) What is the likelihood of an amendment or follow-on contract to the same person?	Is there the possibility of additional equipment, additional warranty services? Then we should be implementing "options-to-purchase" within the contract.
	Describe the efforts taken to identify a variety of suppliers and explain any impact the Trade Agreement thresholds or TB Contracts Directive contract entry/amendment limits will have on the proposed procurement strategy.	Have there been any efforts made by client to identify potential suppliers and determine what is available within the vendor community? PWGSC will advise which trade agreements would be applicable. "PWGSC Supply Specialist consulted with the client in regards to future requirements and the client has confirmed that no follow-on equipment will be required"… OR … "PWGSC Supply Specialist consulted with Client in regards to future requirements and the client has confirmed that there could be the potential for follow-on equipment, therefore options to purchase additional equipment will be incorporated within the contract." PWGSC will post a ACAN on the GETS (MERX) to ensure there are no suppliers that can actually meet this requirement. This requirement is subject to the following trade agreements: AIT, NAFTA, WTO-AGP.
	(b) Given the nature of your organization's mandate, describe any efforts taken to put in place long-term procurement arrangements to address similar requirements/activities in future (e.g., establish standing offer).	Client to identify any long-term procurement strategies to address future needs: Client to investigate potential consolidation of opportunities with other departments. Client to encourage PWGSC to include an additional range of equipment in any future standing offers whenever possible. PWGSC will also identify the National Commodity Team Lead and discuss the possibility of including this requirement with any future standing offers.

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Annex 3.2: Limited Tendering Reasons contained in the Trade Agreements

(2010-01-11)

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

The limited tendering reasons for the North American Free Trade Agreement (NAFTA) are included below.
Article 1016: Limited Tendering Procedures
1. An entity of a Party may, in the circumstances and subject to the conditions set out in paragraph 2, use limited tendering procedures and thus derogate from Articles 1008 through 1015, provided that such limited tendering procedures are not used with a view to avoiding maximum possible competition or in a manner that would constitute a means of discrimination between suppliers of the other Parties or protection of domestic suppliers.
2. An entity may use limited tendering procedures in the following circumstances and subject to the following conditions, as applicable:
  1. in the absence of tenders in response to an open or selective call for tenders, or where the tenders submitted either have resulted from collusion or do not conform to the essential requirements of the tender documentation, or where the tenders submitted come from suppliers that do not comply with the conditions for participation provided for in accordance with this Chapter, on condition that the requirements of the initial procurement are not substantially modified in the contract as awarded; (CAP Code 05)
  2. where, for works of art, or for reasons connected with the protection of patents, copyrights or other exclusive rights, or proprietary information or where there is an absence of competition for technical reasons, the goods or services can be supplied only by a particular supplier and no reasonable alternative or substitute exists; (CAP Code 71)
  3. in so far as is strictly necessary where, for reasons of extreme urgency brought about by events unforeseeable by the entity, the goods or services could not be obtained in time by means of open or selective tendering procedures; (CAP Code 81)
  4. for additional deliveries by the original supplier that are intended either as replacement parts or continuing services for existing supplies, services or installations, or as the extension of existing supplies, services or installations, where a change of supplier would compel the entity to procure equipment or services not meeting requirements of interchangeability with already existing equipment or services, including software to the extent that the initial procurement of the software was covered by this Chapter; (CAP Code 74)
  5. where an entity procures a prototype or a first good or service that is developed at its request in the course of and for a particular contract for research, experiment, study or original development. Where such contracts have been fulfilled, subsequent procurement of goods or services shall be subject to Articles 1008 through 1015. Original development of a first good may include limited production in order to incorporate the results of field testing and to demonstrate that the good is suitable for production in quantity to acceptable quality standards, but does not include quantity production to establish commercial viability or to recover research and development costs; (CAP Code 72)
  6. for goods purchased on a commodity market; (CAP code 20)
  7. for purchases made under exceptionally advantageous conditions that only arise in the very short term, such as unusual disposals by enterprises that are not normally suppliers or disposal of assets of businesses in liquidation or receivership, but not routine purchases from regular suppliers; (CAP code 21)
  8. for a contract to be awarded to the winner of an architectural design contest (CAP code 22), on condition that the contest is:
    1. organized in a manner consistent with the principles of this Chapter, including regarding publication of an invitation to suitably qualified suppliers to participate in the contest,
    2. organized with a view to awarding the design contract to the winner, and
    3. to be judged by an independent jury; and
  9. where an entity needs to procure consulting services regarding matters of a confidential nature, the disclosure of which could reasonably be expected to compromise government confidences, cause economic disruption or similarly be contrary to the public interest.
3. An entity shall prepare a report in writing on each contract awarded by it under paragraph 2. Each report shall contain the name of the procuring entity, indicate the value and kind of goods or services procured, the name of the country of origin, and a statement indicating the circumstances and conditions described in paragraph 2 that justified the use of limited tendering. The entity shall retain each report. They shall remain at the disposal of the competent authorities of the Party for use, if required, under Article 1017, Article 1019 or Chapter Twenty (Institutional Arrangements and Dispute Settlement Procedures)
The limited tendering reasons for the World Trade Organization – Agreement on Government Procurement (WTO-AGP) are included below.
Article XV: Limited Tendering Procedure
1. The provisions of Articles VII through XIV governing open and selective tendering procedures need not apply in the following conditions, provided that limited tendering is not used with a view to avoiding maximum possible competition or in a manner which would constitute a means of discrimination among suppliers of other Parties or protection to domestic producers or suppliers:
  1. in the absence of tenders in response to an open or selective tender, or when the tenders submitted have been collusive, or not in conformity with the essential requirements in the tender, or from suppliers who do not comply with the conditions for participation provided for in accordance with this Agreement, on condition, however, that the requirements of the initial tender are not substantially modified in the contract as awarded; (CAP code 05)
  2. when, for works of art or for reasons connected with protection of exclusive rights, such as patents or copyrights, or in the absence of competition for technical reasons, the products or services can be supplied only by a particular supplier and no reasonable alternative or substitute exists; (CAP code 71)
  3. in so far as is strictly necessary when, for reasons of extreme urgency brought about by events unforeseeable by the entity, the products or services could not be obtained in time by means of open or selective tendering procedures; (CAP code 81)
  4. for additional deliveries by the original supplier which are intended either as parts replacement for existing supplies, or installations, or as the extension of existing supplies, services, or installations where a change of supplier would compel the entity to procure equipment or services not meeting requirements of interchangeability with already existing equipment or services⁵; (CAP code 74)
  5. when an entity procures prototypes or a first product or service which are developed at its request in the course of, and for, a particular contract for research, experiment, study or original development. When such contracts have been fulfilled, subsequent procurements of products or services shall be subject to Articles VII through XIV⁶. (CAP code 72)
  6. when additional construction services which were not included in the initial contract but which were within the objectives of the original tender documentation have, through unforeseeable circumstances, become necessary to complete the construction services described therein, and the entity needs to award contracts for the additional construction services to the contractor carrying out the construction services concerned since the separation of the additional construction services from the initial contract would be difficult for technical or economic reasons and cause significant inconvenience to the entity. However, the total value of contracts awarded for the additional construction services may not exceed 50 per cent of the amount of the main contract;
  7. for new construction services consisting of the repetition of similar construction services which conform to a basic project for which an initial contract was awarded in accordance with Articles VII through XIV and for which the entity has indicated in the notice of intended procurement concerning the initial construction service, that limited tendering procedures might be used in awarding contracts for such new construction services;
  8. for products purchased on a commodity market; (CAP code 21)
  9. for purchases made under exceptionally advantageous conditions which only arise in the very short term. This provision is intended to cover unusual disposals by firms, which are not normally suppliers, or disposal of assets of businesses in liquidation or receivership. It is not intended to cover routine purchases from regular suppliers; (CAP code 21)
  10. in the case of contracts awarded to the winner of a design contest provided that the contest has been organized in a manner which is consistent with the principles of this Agreement, notably as regards the publication, in the sense of Article IX, of an invitation to suitably qualified suppliers, to participate in such a contest which shall be judged by an independent jury with a view to design contracts being awarded to the winners. (CAP code 22)
2. Entities shall prepare a report in writing on each contract awarded under the provisions of paragraph 1. Each report shall contain the name of the procuring entity, value and kind of goods or services procured, country of origin, and a statement of the conditions in this Article, which prevailed. This report shall remain with the entities concerned at the disposal of the government authorities responsible for the entity in order that it may be used if required under the procedures of Articles XVIII, XIX, XX and XXII.
  "Notes:
  
  5. It is the understanding that "existing equipment" includes software to the extent that the initial procurement of the software was covered by the Agreement.
  
  6. Original development of a first product or service may include limited production or supply in order to incorporate the results of field testing and to demonstrate that the product or service is suitable for production or supply in quantity to acceptable quality standards. It does not extend to quantity production or supply to establish commercial viability or to recover research and development costs."
3. The limited tendering reasons for the Agreement on Internal Trade (AIT), as stated in paragraphs 11 and 12 of article 506 are included below.
  "11. An entity of a Party may use procurement procedures that are different from those described in paragraphs 1 hrough 10 in the following circumstances, provided that it does not do so for the purpose of avoiding competition between suppliers or in order to discriminate against suppliers of any other Party:
  1. where an unforeseeable situation of urgency exists and the goods, services or construction cannot be obtained in time by means of open procurement procedures; (CAP code 81)
  2. where goods or consulting services regarding matters of a confidential or privileged nature are to be purchased and the disclosure of those matters through an open tendering process could reasonably be expected to compromise government confidentiality, cause economic disruption or otherwise be contrary to the public interest;
  3. where a contract is to be awarded under a cooperation agreement that is financed, in whole or in part, by an international cooperation organization, only to the extent that the agreement between the Party and the organization includes rules for awarding contracts that differ from the obligations set out in this Chapter;
  4. where construction materials are to be purchased and it can be demonstrated that transportation costs and technical considerations impose geographic limits on the available supply base, specifically in the case of sand, stone, gravel, asphalt, compound and pre-mixed concrete for use in the construction or repair of roads;
  5. where compliance with the open tendering provisions set out in this Chapter would interfere with a Party's ability to maintain security or order or to protect human, animal or plant life or health; and
  6. in the absence of a receipt of any bids in response to a call for tenders made in accordance with the procedures set out in this Chapter. (CAP Code 05)"
  12. Where only one supplier is able to meet the requirements of a procurement, an entity may use procurement procedures that are different from those described in paragraphs 1 through 10 in the following circumstances:
  1. to ensure compatibility with existing products, to recognize exclusive rights, such as exclusive licences, copyright and patent rights, or to maintain specialized products that must be maintained by the manufacturer or its representative;
  2. where there is an absence of competition for technical reasons and the goods or services can be supplied only by a particular supplier and no alternative or substitute exists; (CAP code 71)
  3. or the procurement of goods or services the supply of which is controlled by a supplier that is a statutory monopoly; (CAP code 86)
  4. the purchase of goods on a commodity market; (CAP code 20)
  5. or work to be performed on or about a leased building or portions thereof that may be performed only for work to be performed on property by a contractor according to provisions of a warranty or guarantee held in respect of the property or the original work;
  6. for work to be performed on property by a contractor according to provisions of a warranty or guarantee held in respect of the property or the original work;
  7. for a contract to be awarded to the winner of a design contest;
  8. for the procurement of a prototype or a first good or service to be developed in the course of and for a particular contract for research, experiment, study or original development, but not for any subsequent purchases; (CAP code 72)
  9. for the purchase of goods under exceptionally advantageous circumstances such as bankruptcy or receivership, but not for routine purchases; (CAP code 21)
  10. for the procurement of original works of art;
  11. for the procurement of subscriptions to newspapers, magazines or other periodicals (CAP code 87); and
  12. for the procurement of real property. (CAP code 87)

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Annex 3.3: Model Advance Contract Award Notice

(2010-01-11)

An Advanced Contract Award Notice (ACAN) must include, in both official languages, the following information:

An explanation of what an ACAN is. The following explanation must be included:
An ACAN is a public notice indicating to the supplier community that a department or agency intends to award a contract for goods, services or construction to a pre-identified supplier, thereby allowing other suppliers to signal their interest in bidding, by submitting a statement of capabilities. If no supplier submits a statement of capabilities that meets the requirements set out in the ACAN, on or before the closing date stated in the ACAN, the contracting officer may then proceed with the award.
Definition of requirements or expected results. Provide in sufficient detail, so that other potential suppliers can determine if they possess the capabilities to satisfy them and to provide the contracting officer with an adequate basis to evaluate the statement of capabilities from potential suppliers.
Statement regarding applicability of trade agreements or other obligations. Include, where applicable, a statement indicating if the proposed procurement is subject to one of the trade agreements, the Procurement Strategy for Aboriginal Business (PSAB), or to one of the Comprehensive Land Claims Agreements (CLCAs). When the procurement is set aside under the PSAB, include the following statement at the beginning of the ACAN:
"This requirement is set aside for an Aboriginal supplier in accordance with the government's Procurement Strategy for Aboriginal Business (PSAB). Therefore, only suppliers who meet the definition of an Aboriginal business, as defined in the PSAB, may submit a statement of capabilities".
Government Contracts Regulations Exception and Limited Tendering Reason, if applicable. Indicate all relevant exceptions to the Government Contracts Regulations and, if applicable, the limited tendering reasons (see Annex 3.2: Limited Tendering Reasons contained in the Trade Agreements) in the trade agreements being invoked. Indicate the reason(s) for the proposed contract award. This should clearly demonstrate why this supplier has been identified as the only supplier capable of performing the work.
Ownership of Intellectual Property. Where intellectual property will be created during the course of the contract, a statement should indicate whether an exception set out in the Treasury Board's Policy on Title to Intellectual Property Arising under Crown Procurement Contracts is being invoked or if the ownership of intellectual property will rest with the contractor.
The period of the proposed contract or the required delivery. Provide the period of the proposed contract or the required delivery, including potential renewal or option years.
A cost estimate of the proposed contract. This should be included, where appropriate, provided that it will not prejudice negotiations with the proposed contractor, or compromise the contractor's competitive position if the contract proceeds to a traditional or electronic bidding process (could be provided as a range).
Name and, usually, the address of the proposed contractor must be identified in the ACAN.
Suppliers' right to submit a statement of capabilities. An explanation to suppliers of how they may proceed in responding to the ACAN.
"Suppliers who consider themselves fully qualified and available to provide the services and/or goods described herein, may submit a statement of capabilities in writing to the contact person identified in this notice on or before the closing date of this notice. The statement of capabilities must clearly demonstrate how the supplier meets the advertised requirements."
The closing date for a submission of a statement of capabilities. Include the Day, Month and Year for the closing date for accepting statements of capabilities, i.e. 15 calendar day period.
Inquiries and submission of statements of capabilities. Include the name, position, address, phone, fax and e-mail address where suppliers may inquire or submit a statement of capabilities.

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Annex 3.4.1: A Guide to Preparing and Administering Task Authorization for PWGSC Clients

(2011-05-16)

1.0 Purpose

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

2.0 Definitions

2.1 Contracts with Task Authorizations

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

2.2 Task Authorization

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

3.0 Application of Contracts with Task Authorizations

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

4.0 Conditions of Use

As a condition of use of contracts with TAs, the PWGSC contracting officer will, as a minimum:
1. ensure the contract with TAs is the appropriate method of supply for these required services in consultation with the client.
2. decide whether the client will be allowed to authorize and issue TAs, and determine the financial limit of this authority. These decisions will be made in consultation with the client and the associated provisions will be detailed in the contract. All TAs in excess of the determined limit must be forwarded to PWGSC for authorization and issuance.
3. consult with the client to reach an agreement on the roles and responsibilities of both organizations including the client's responsibilities for reporting.
4. discuss, as required, the use of contracts with TAs with the client and in particular the administration of TAs.

5.0 Task Authorization Process and Administration

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

The responsibilities of the client are detailed below:

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

Work on a TA cannot commence until a contract allowing task authorizations has been awarded and the TA has been authorized and issued in accordance with the conditions of the contract. Contracts must never be awarded and TAs must never be authorized retroactively. The TA form must be authorized by the client and/or, if required, by PWGSC and signed by the contractor before the work starts.
Task Authorization Management
1. before the contract is issued or the TA process implemented, the client must inform PWGSC when personnel other than the project or technical authority are involved in the TA process. The client must also confirm that appropriate training on the use of TAs has been provided to such personnel.
2. the client must notify the PWGSC contracting authority when the client authority named in the contract is to be replaced so that the contract can be amended.
3. the client must create and update a record of all tasks authorized under a contract and provide such a record to PWGSC as agreed between the two organizations.
4. the client must monitor task performance, work delivered, conduct proper cost review and provide reports to the PWGSC contracting authority as agreed between both organizations.
5. The client must have specific processes in place to ensure that billing rates and categories of resources or other payment provisions included in authorized and issued TAs are in accordance with the conditions of the contract.
6. the client must provide complete and timely reporting of performance or arising issues under a TA to the PWGSC contracting authority.
7. the client must ensure that the dollar value does not exceed the individual TA financial/dollar limit(s) specified in the contract with task authorizations or any limit placed on the cumulative value of TAs under the contract.
8. before authorizing payment of an invoice in accordance with departmental procedures for an authorized and issued TA , the client must ensure that:
  1. the timesheets are in accordance with the contract, where applicable;
  2. the services have been performed, received and accepted; if applicable, an individual who has direct knowledge of the level of effort reported must verify the level of effort reported on the timesheet for the contractor resource;
  3. the invoice is consistent with the conditions and payment provisions stipulated in the contract or subsequent amendments and all required substantiating documentation is completed, approved and on file. See paragraph 7 below relative to separation of duties.

6.0 Revising a TA authorized by the client

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

7.0 Separation of duties

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

8.0 Corrective measures

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

9.0 Tips

9.1 Method of Supply Planning

Do not request that PWGSC establish more labour categories and contracts than are necessary.
Do not add new contract categories to engage specific individuals.

9.2 Employer-Employee Relationships

Avoid using employment-type language in describing the work such as specifying the number of hours of work per day/week or the manner in which the work is to be conducted.
Avoid long-term assignments or a continuing relationship where a steady income stream from the department or agency is involved; state clearly the start and completion dates and ensure the contractor sets his or her hours of work.
Avoid controlling how the contractor carries out the work; work and results should only be overseen by the project/technical authority.
Avoid having the contractor work on government premises.

9.3 Administration of Task Authorizations

Do not split a requirement to get around the client authority limit stipulated in the contract.
Avoid task descriptions for TAs that could create a conflict of interest.
Ensure the price is fair and reasonable for the specific task and in accordance with the basis of payment in the contract.
Ensure there are sufficient funds.

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Annex 3.4.2: Record of Agreement Template – for PWGSC Clients

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

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

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

Dear _________ (Insert client name)

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

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

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

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

Yours truly,

______________ (Insert name of the PWGSC Contracting Authority)

RECORD OF AGREEMENT BETWEEN

PUBLIC WORKS AND GOVERNMENT SERVICES CANADA

_______________ (insert PWGSC Division name) AND

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

(hereinafter identified as the Authorized Client)

PERTAINING TO THE USE OF TASK AUTHORIZATIONS

UNDER CONTRACT NO ____________ (Insert contract number)

Purpose

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

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

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

The Authorized Client understands that it must not request the contractor to perform any work in excess of or outside the scope of the contract and it must not issue TAs where the cumulative value of all TAs would exceed the contract value. Any anticipated changes to the contract must be authorized, in writing, by the PWGSC contracting authority through the issuance of a contract amendment before any additional work or TA is authorized. At any time during the contract period, when there is a need to amend the contract, the Authorized Client must inform the PWGSC contracting authority accordingly, in writing (email), and provide him/her the following:
1. a clear and accurate rationale for amending the contract; e.g. the reason why the work cannot be completed by the contract expiry date, why there is a shortfall of funds, etc.;
2. the cumulative value of all TAs (GST or HST extra) issued to date;
3. the total contract expenditures (GST or HST extra) to date;
4. the estimated price breakdown for any additional work required;
5. the consequences of not amending;
6. justification for the required amendment versus initiating a new procurement; and
7. the status of the replacement procurement in the case of on-going work.
If PWGSC determines that the contract cannot be amended, the Authorized Client will be advised accordingly. If the contract can be amended, the Authorized Client will then forward to the PWGSC contracting authority a duly signed requisition amendment (PWGSC-TPSGC 9200).

Contract Management – Corrective Measures

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

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

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

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

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Annex 3.5: Procurement Review Committee Requirements and Approval Process

(2010-01-11)

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

(2010-01-11)

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

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

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

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

Project Title / Operating Department / Ministère opérationnel :

Project Ref. No / No du projet :

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

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

Commodity Description / Description des biens ou services :

Project Status / État du projet :

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

Competitive / Concurrentiel ( ) MERX ( ) Directed / Source unique ( ) ACAN/PAC ( )

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

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

Procurement Category Code / Code de catégorie d'achat :

Specifications / Spécifications :

Military / Militaires ( ) Commercial / Commercial ( )

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

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

Contact Points / Points de contact:

PWGSC Contracting Authority / Autorité contractante de TPSGC:

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

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

PRC Secretariat / Secrétariat du CEA
819-956-3513

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Annex 3.6: Canadian Content Policy

(2010-01-11)

Introduction
The Canadian Content Policy is a Cabinet-mandated policy. The Policy encourages industrial development in Canada by limiting, in specific circumstances, competition for government procurement opportunities to suppliers of Canadian goods and services.
Application
1. The Policy applies only to procurements carried out by Supply and Services Canada (SSC), which is now a part of Public Works and Government Services Canada (PWGSC). Therefore, this policy will normally apply to goods and services contracting carried out by Acquisitions Branch, except for those categories of procurements which were not done by the former SSC. Furthermore, the Policy does not apply when another government departments does its own contracting and would not normally apply to construction procurement that had been previously carried out by the former Public Works Canada.
2. The Policy applies to competitive procurements with an estimated value of $25,000 or more, except for the following:
  1. government procurements subject to the international trade agreements;
  2. procurements made in furtherance of aid to developing countries, but does apply to purchases made by the Canadian International Development Agency (CIDA) on its own account;
  3. procurements made by PWGSC Acquisitions offices located outside Canada; and
  4. Cabinet-mandated sourcing, including sourcing related to shipbuilding, ship repair, refit and mid-life modernization.
Determining Eligible Bidders
1. Eligible bidders are those supplying Canadian goods and/or services.
2. A good wholly manufactured or originating in Canada is considered a Canadian good. A product containing imported components may also be considered Canadian for the purpose of this policy when it has undergone sufficient change in Canada, in a manner that satisfies the definition specified under the North American Free Trade Agreement (NAFTA) Rules of Origin. For the purposes of this determination, the reference to "territory" in the NAFTA Rules of Origin is to be replaced with "Canada".
3. For photocopiers, computers and office equipment within Federal Supply Classification (FSC) groups 36, 70 and 74, there are special rules – see paragraph (e), "Other Canadian Goods and Services", below.
4. A service provided by an individual based in Canada is considered a Canadian service. Where a requirement consists of only one service, which is being provided by more than one individual, the service will be considered Canadian if a minimum of 80 percent of the total bid price for the service is provided by individuals based in Canada.
5. Other Canadian Goods and Services
  1. For photocopiers, computers and office equipment within FSC groups 36, 70 and 74, only the products of the following firms are considered Canadian goods:
    1. MERIT Partner under the MERIT Partnership Program (administered by Industry Canada [IC] and PWGSC);
    2. companies which, on March 31, 1992, were allocated to Priority Group 1 under the Priority Groups Policy in effect at that time; or
    3. CIRCLE Canada companies as agreed on by IC and PWGSC.
  2. Textiles: Textiles are considered to be Canadian goods according to a modified rule of origin, copies of which are available from the Clothing and Textiles Division, Logistics, Electrical, Fuel and Transportation Directorate.
Preparing a Bid Solicitation
1. When a requirement is covered by the Canadian Content Policy, the bidder must certify the Canadian content by submitting a certification that the good or service offered meet the definition of Canadian goods and/or services.
2. When the requirement consists of one good or service, the bidder must certify that the good or service is Canadian. See section 9, "The Rules of Origin Determination", for examples of how to determine whether a good is Canadian.
3. When requirements consist of more than one good and/or service, the contracting officer must decide, at the procurement planning stage, whether the Canadian content certification will be done on an aggregate or individual basis:
  1. aggregate: multi-item requirements will be certified on an aggregate basis. A minimum of 80 percent of the total bid price must consist of Canadian goods to meet the requirements of the Policy; or
  2. item by Item: multi-item requirements awarded on an item by item basis will be certified on an item-by-item basis. In these cases, suppliers will be asked to identify separately, each item that meets the definition of Canadian goods.
4. For requirements consisting of more than one service, a minimum of 80 percent of the total bid price must be provided by individuals based in Canada.
5. For requirements consisting of a mix of goods and services, 80 percent of the total bid price must consist of Canadian goods and Canadian services. See section 9, "The Rules of Origin Determination", for an example of, how to determine whether a mix of goods and services meets the 80 percent rule.
6. A bid can be accepted in part without resubmission of a certification.
7. The contracting officer must first decide whether a requirement will be solely or conditionally limited to Canadian goods and or services or whether the procurement will be open to all suppliers.
8. Solely Limited: the bid solicitation or request for standing offers will be solely limited to suppliers who could offer Canadian goods and/or services when the contracting officer believes there exists, in the marketplace, three or more such suppliers. Certifications for competitive procurement solely limited to Canadian goods and/or services are provided in the Standard Acquisition Clauses and Conditions (SACC) Manual, under clause numbers: A3051T, A3052T, A3053T, A3055T, A3056T and A3059T for bid solicitations; and M3051T, M3052T, M3053T, M3055T, M3056T and M3059T for requests for standing offers. Except for bids that will be publicly opened, the contracting officer will determine whether:
  1. the bidder will be required to submit the completed certification of Canadian content with the bid, or
  2. the bidder should submit the completed certification with the bid, but it is not mandatory. If the certification is not completed or submitted with the bid, the contracting officer will contact the bidder and provide the bidder with a timeframe within which to submit the completed certification.
    Note 1: For publicly opened bids, the bidder will be required to submit the completed certification with the bid.
    
    Note 2: The contracting officer will normally not require bidders to submit certifications with their bid unless the requirement is urgently needed by the client.
9. Conditionally Limited: the bid solicitation or request for standing offers will be conditionally limited when the contracting officer is uncertain whether three or more suppliers of Canadian goods and/or services exist. Certifications for competitive procurement conditionally limited to Canadian goods and/or services are provided in the SACC Manual, under clause numbers: A3061T, A3062T, A3063T, A3065T, A3066T and A3069T for bid solicitations; and M3061T, M3062T, M3063T, M3065T, M3066T and M3069T for requests for standing offers. The bidder will be required to submit the Canadian content certification with the bid; or
10. Open: when the contracting officer is of the opinion that three or more suppliers of Canadian goods and/or services do not exist, the bid solicitation or request for standing offers must be open to all suppliers. Bidders are not required to provide a certification.
11. Once the sourcing strategy is determined, the contracting officer will prepare a Notice of Proposed Procurement (NPP). The procurement opportunity will be coded on the Government Electronic Tendering Service (GETS) as:
  1. Solely Limited, Code O-5;
  2. Conditionally Limited, Code O-4; or
  3. Open, Code O-1.
Bid Handling
1. The supplier is responsible to demonstrate that its bid meets the definition of Canadian goods and/or services and must submit a completed certification. When the SACC Manual clauses: A3052T and A3062T for bid solicitations; and M3052T and M3062T for requests for standing offers are used, the supplier must clearly identify the status of each individual product.
2. Bids to which the Canadian Content Policy applies will be evaluated as follows:
  1. If the procurement process was solely limited to Canadian goods and/or services, and
    1. the bidder was required to submit the certification with the bid, only bids with a valid certification will be evaluated. The bid evaluation process can proceed where there is at least one bid with a valid certification otherwise the bid solicitation must be reissued; or
    2. the bidder was not required to submit the certification with the bid, the contracting officer will contact the bidder and provide the bidder with a timeframe within which to submit the completed certification. If the bidder does not comply by submitting the completed certification within the prescribed timeframe, the bid will be declared non-responsive. A bid will only be provided to the client department for evaluation once the completed certification is received. The bid evaluation process can continue as long as there is at least one bid with a valid certification otherwise the bid solicitation must be reissued.
  2. If the procurement process was conditionally limited to Canadian goods and/or services, the contracting officer will determine, first, if there are three or more bids with a valid Canadian content certification. In that event, the evaluation will be limited to the bids with the certification; otherwise, all bids will be evaluated. If the bids with a valid certification are later declared non-responsive or withdrawn, and, and after such there are less than three responsive bids with a valid certification of Canadian goods and/or services, the evaluation will continue among those responsive bids which contain a valid certification. If all bids with a valid certification are subsequently found to be non-responsive or withdrawn, then all other bids received will be evaluated. (See SACC Manual clause A3070T.)
3. PWGSC may verify the validity of the certification. If the certification is declared non-responsive, then the offered goods and/or services are deemed not to meet the definition of Canadian content. Verification of the certification must in no way alter the price quoted or any substantive element of the bid.
Contract Award
Contracts awarded on the basis of the bid having met the definition of Canadian content under the Canadian Content Policy will include SACC Manual clause A3060C or M3060C, as applicable.
Set-asides and Canadian Content
1. The Canadian Content Policy may be applied to procurements set-aside for Aboriginal business.
2. In applying the Policy under a set aside procurement, it must be recognized that there are two levels of certification.
3. The first level of certification will be to qualify the bidder(s) as eligible for set-aside consideration, i.e. bidders must provide a certification that they are an Aboriginal business.
4. As the second level, contracting officers must then apply the Policy, in the same manner as any other procurement, in the context of the supplier community which is eligible to respond (i.e. the Aboriginal business community). Contracting officers must determine, on the basis of their knowledge of this community, whether there are a sufficient number of eligible firms to carry out the procurement as: solely limited (e.g. three or more Aboriginal businesses exist which are able to provide Canadian goods and/or services); conditionally limited (e.g. there may be three or more Aboriginal suppliers of Canadian goods or services); or open (e.g. there is an insufficient number of Aboriginal businesses able to provide Canadian goods and/or services; the procurement is open to all Aboriginal businesses regardless of the origin of the goods and services supplied).
Discretionary Audits and Reviews
The authority for discretionary audits results from either the contractual terms, or statute (Defence Production Act, section 19). If a contracting officer has concerns about the certification of Canadian content under the Canadian Content Policy, the contracting officer should discuss the use of a discretionary audit or review with their management and with the Acquisition Policy and Process Directorate.
The Rules of Origin Determination
1. The Canadian Rules of Origin for Goods (Chapter 4 of the North American Free Trade Agreement) and Canadian Customs Tariff Harmonized System are used to determine if imported components that go into the production of an item for resale to the government are sufficiently altered or converted in Canada to be considered "Canadian."
2. The Harmonized Commodity Description and Coding System is a structured classification system for goods that has been adopted by Canada and most of the world's trading nations, for customs purposes.
3. For the purposes of this determination, the reference to "territory" in the Rules of Origin must be replaced with "Canada".
4. Products containing imported components may be considered Canadian when they have undergone sufficient change in Canada in a manner that satisfies this amended definition. There are three basic steps to determine if any product that is partially or wholly constructed from imported components meets the Rules of Origin definition:
  1. Locate the heading number in the Harmonized System that best reflects the final product for sale.
  2. Find the appropriate heading number in the Harmonized System that identifies imported components used to construct the final product.
  3. Look up the section in the rules of origin that defines whether the conversion that took place in Canada allows the goods to be defined as Canadian.
Example 1 – Determining Whether a Good is Canadian
1. A bidder proposes hats, which are manufactured in Canada that use imported calves leather.
2. Analysis of Canadian content:
  1. Look up "hats" in the index of the Canadian Customs Tariff Harmonized System (HS) and find the type that matches the kinds of hats to be sold: Hats and other headgear, plaited or made by assembling strips of any material, whether or not lined or trimmed. The HS number is 6504.00.00. The first two numbers indicate the good is listed in Chapter 65.
  2. Look up "leather, bovine" in the index: it falls under HS heading 4104.
  3. Finally, refer to the Rules of Origin which lists the conditions for transforming goods listed in the HS into Canadian goods (Chapter 65 is for Headgear and Parts Thereof and is listed in Section XII of the rules). The second rule for Chapter 65 applies: A change from 65.03 to 65.07 from any heading outside that group. As the leather is classified outside 65.03 to 65.07, the final product (the hats) for sale are considered to be sufficiently transformed and therefore the hats are deemed to be Canadian for the purposes of this policy.
Example 2 – Determining Whether a Mix of Goods and Services meets the 80 percent Rule of Origin
1. There is a PWGSC solicitation for:
  1. 100 wooden office desks;
  2. 100 electric space heaters with maintenance and repair included;
  3. 100 telephone sets with maintenance and repair included, and
  4. 100 metal swivel chairs.
2. A bidder has proposed:
  1. unfinished wooden office desks which are imported into Canada and finished in Canada;
  2. electric space heaters which were constructed using domestic labour/materials and imported parts. The maintenance/repair of the electric space heaters is being done by Canadian-based personnel;
  3. telephone sets which were constructed using domestic labour/materials and some imported parts. The maintenance/repair of the telephones is being done by United States-based individuals;
  4. metal swivel chairs which were constructed using domestic labour/materials and some imported parts.
3. Below are the prices for the goods and services offered in the bid:
  100 wooden office desks @ $150 each = $15,000
  100 electric space heaters @ $200 each = $20,000
  Maintenance/Repair = $5,000
  100 telephone sets @ $50 each = $5,000
  Maintenance/Repair = $1,000
  100 metal swivel chairs @ $25 each = $2,500
  Total Bid Price = $48,500
4. Analysis of Canadian content:
  1. Wooden office desks:
    1. Unfinished wooden office desks (HS 9403.30) were imported and finished in Canada. The final good (finished wooden office desks) falls in same the subheading (HS 9403.30) as the unfinished good.
    2. The NAFTA rules of origin covering HS 9403.30 (wooden office desks) require a change from another chapter, or a change from parts heading 9403.90, provided there is sufficient regional value content. These rules are not satisfied.
    3. Therefore, the wooden office desks are not considered Canadian goods.
  2. Electric space heaters:
    1. Electric space heaters (HS 8516.21) were constructed using domestic labour/materials and imported parts (HS 8516.90).
    2. The NAFTA rules of origin covering HS 8516.21 (electric space heaters) allow a change from subheading 8516.90, provided there is a regional value content of not less than 60 percent where the transaction value method is used or 50 percent where the net cost method is used.
    3. After calculations are done, the regional value content is found to be 65 percent using the transaction value method.
    4. Therefore, the electric space heaters are considered Canadian goods.
  3. Telephone sets:
    1. Telephone sets (HS 8517.11) were constructed using domestic labour/materials and some imported plastic tubes (HS 3917).
    2. The NAFTA rules of origin covering HS 8517.11 (telephone sets) require a change to subheading 8517.11 from any other subheading, except 8517.90.11, 8517.90.12, 8517.90.13, 8517.90.14 or 8517.90.41.
    3. Therefore, the telephone sets are considered Canadian goods.
  4. Metal swivel chairs:
    1. Metal swivel chairs (HS 9401.30) were constructed using domestic labour/materials and some imported parts (HS 9401.90).
    2. The NAFTA rules of origin covering HS 9401.30 (metal swivel chairs) allow a change from subheading 9401.90, provided there is a regional value content of not less than 60 percent where the transaction value method is used or 50 percent where the net cost method is used.
    3. After calculations are done, the regional value content is found to be 37 percent using the transaction value method.
    4. Therefore, the metal swivel chairs are not considered Canadian goods.
  5. Maintenance/repair of telephones:
    The maintenance/repair of telephones is being done by U.S.-based individuals. Therefore, this service is not considered a Canadian service.
  6. Maintenance/repair of electric space heaters:
    The maintenance/repair of electric space heaters is being done by Canadian-based individuals. Therefore, this service is considered a Canadian service.
5. Calculation of Percent of Bid Price Considered Canadian
  1. Canadian goods and services
    100 electric space heaters = $20,000
    100 telephone sets = $5,000
    Maintenance/Repair = $5,000
    Total Canadian Goods and Services = $30,000
  2. Non-canadian goods and services
    100 wooden office desks = $15,000
    100 metal swivel chairs = $2,500
    Maintenance/Repair = $1,000
    Total non-Canadian Goods and Services = $18,500
    Total Bid Price = $48,500
  3. Percent of the Bid Price that is composed of Canadian goods and services = $30,000/$48,500 = 62%
6. Conclusion
  The supplier has not met the Canadian content requirement that "no less than 80 percent of the bid price consists of Canadian goods and services".

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Annex 3.7: National Security Exception Request Letter – Template

(2010-01-11)

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

Date:

Address:

_________ (insert name of Assistant Deputy Minister)
Acquisitions Branch
Public Works and Government Services Canada
11 Laurier Street
Gatineau, Quebec K1A 0S5

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

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

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

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

Yours sincerely,

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

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Annex 3.8: Comparaison of Different methods of Supply

(2011-05-16)

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

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

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Proactive Disclosure

Chapter 3 - Procurement Strategy

Table of Contents

3.1 Introduction

3.1.1 Procurement Plan

3.5 Existing Procurement Instruments

3.5.1 Mandatory Standing Offers and Supply Arrangements

3.10 Competitive Contracting Process

3.15 Non-competitive Contracting Process

3.15.1 Justification of Non-competitive Process

3.15.5 Advance Contract Award Notice

3.15.5.1 ACAN Time Limit

3.15.5.5 ACAN Content

3.15.5.10 Statement of Capabilities (Challenge Process)

3.15.5.15 ACAN Exceptions

3.15.5.20 Documenting the Procurement File

3.20 Procurement Schedule

3.21 Managing Urgent Acquisitions

3.25 Trade Agreements Tendering Approaches

3.30 Methods of Supply

3.35 Contracts

3.35.1 Contracts with Task Authorizations

3.35.1.1 Definition

3.35.1.5 Application

3.35.1.10 Conditions of Use

3.35.1.15 Approval Documents for Contracts with Task Authorizations

3.35.1.20 Bid Solicitations and Resulting Contract Documents

3.35.1.25 Forms

3.35.1.30 Setting financial limits on Individual Task Authorizations

3.35.1.35 Separation of Duties

3.35.1.40 Authorizing and Issuing Task Authorizations

3.35.1.45 Administration of the Task Authorizations by PWGSC's Clients

3.35.1.50 Revision of a TA by the Client

3.35.1.55 Monitoring and Oversight

3.35.1.60 Reporting

3.40 Standing Offers

3.45 Supply Arrangements

3.50 Procurements Subject to Trade Agreements

3.50.1 General Procurement

3.50.5 Applicability of Trade Agreements to Standing Offers and Supply Arrangements

3.55 Industrial Security Requirements (Personnel or Organization)

3.55.1 Security and Timelines

3.60 Low Dollar Value Procurements

3.60.1 Requirements

3.60.5 Geographic Factors and Low Dollar Value

3.65 Green Procurement Strategy

3.70 Industrial and Regional Benefits (IRB) Program

3.75 Small and Medium Enterprise

3.75.1 Office of Small and Medium Enterprises Role and Initiatives

3.75.5 PWGSC On-Line Tools/Services and OSME Role

3.80 Comprehensive Land Claims Agreements

3.85 Procurement Strategy for Aboriginal Business

3.90 Former Public Servants

3.95 Intellectual Property

3.100 Vendor Performance Corrective Measures

3.105 National Security Exceptions

3.105.1 Trade Agreements and Invoking a National Security Exception

3.105.5 Texts of the National Security Exceptions

3.105.10 Procedures for Invoking a National Security Exception

3.110 Legal Services

3.115 Bidders' Conferences and Site Visits

3.120 Roles and Memorandum of Understanding

3.125 Canadian Commercial Corporation

3.130 Canadian Content

3.135 Fairness Monitors

3.140 Life Cycle Costing

3.140.1 General Requirements

3.145 Cost and Profit

3.150 Standards and Quality Assurance

3.150.1 Standards, Specifications and Purchase Descriptions

3.150.5 Government Quality Assurance at Source

3.150.10 Listing Programs

3.150.15 Department of National Defence Qualified Products Lists