Vendor Performance Management policy

Pilot version for vendor performance Management (VPM) testing period.

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1. Effective date

1.1 The policy takes effect on August 1, 2023.

2. Context

2.1 Federal government procurement is required to be fair, open, and transparent, while providing value for money and demonstrating sound stewardship in support of the delivery of programs and services to Canadians.

2.2 Public Services and Procurement Canada (PSPC) is the Government of Canada's common service provider for procurement services, offering federal organizations a broad range of procurement solutions.

2.3 The policy establishes a vendor performance management approach for PSPC and its client departments to assess vendor performance and use vendor past performance information in awarding contracts.

3. Policy statement

3.1 Objective

3.2 Expected results

An approach to vendor performance management that:

4. Application

4.1 The policy applies to contracts under PSPC's authority.

4.2 Vendors will be informed in bid solicitation documents if the contract is subject to the policy under the pilot.

4.3 Exceptions to the above may be made with the approval of the Assistant Deputy Minister (or equivalent) of the contracting authority, provided that at least one of the following justifications applies and is documented on file:

4.4 This policy does not apply to contracts entered into before the effective date of the policy, unless the contract is amended to incorporate the policy.

5. Definitions

5.1 See Annex A: Definitions.

6. General requirements

6.1 Solicitations and contracts subject to the policy must contain standard clauses to inform vendors that their performance will be evaluated.

6.2 Scorecards for each Commodity Group will be used to determine vendor performance scores. These include key performance indicators which are generally grouped into the performance categories of cost, schedule, quality, and management.

6.3 Vendor performance scores gathered during the pilots will be used for testing and verification purposes, to inform the development of the vendor performance Management policy. A minimum of 90 days advance notice will be provided to the vendor, informing them of a decision to retain and use finalized evaluation results. Evaluation results will be used in future bid evaluation in accordance with Section 8.

6.4 Vendor performance scores and vendor performance ratings will be treated by Canada as commercially confidential information, subject to:

6.5 PSPC may determine that a successor entity to a vendor with an existing history of performance is the same vendor as that original vendor for the purposes of this policy. If PSPC is considering making such a determination, it must provide the successor entity an opportunity to make written submissions on the issue.

6.6 The determination of whether the conditions required to certify payment to a vendor under section 34 of the Financial Administration Act are met is made independently of vendor performance Scores.

7. Performance evaluations

7.1 Performance evaluations must take place at least every six months during the contract (interim performance evaluation), and once at the end of the contract (final performance evaluation). For contracts where the first milestone or deliverable is to be provided after a period longer than six months, the first performance evaluation must be completed at the time of the first milestone or deliverable. For contracts of less than twelve months, only a final performance evaluation must be completed.

7.2 At the start of the contract, The client, together with the contracting authority, must discuss with vendors the performance expectations associated with the key performance indicators. They must also discuss the planned performance evaluation dates.

7.3 The client, together with the contracting authority, must have ongoing communications with vendors about performance and proactively raise issues as they occur. Clients must inform contracting authorities of vendor performance issues promptly during the life of a contract. Clients must give vendors feedback on their performance against the key performance indicators at regular intervals, either as part of ongoing discussions about contract work or (if there are no such discussions) in clear written communications specific to performance.

7.4 The client, together with the contracting authority, must undertake performance evaluations. They must substantiate vendor performance scores with metrics, narratives or supporting documentation that is appropriate to the type of key performance indicators in question.

7.5 Performance evaluations use the scorecards, including the vendor performance evaluation scale, and the key performance indicators of the applicable Commodity Group.

7.6 The client, together with the contracting authority, must discuss the draft vendor performance scores with vendors. vendors may request to meet with the client and the contracting authority to discuss the draft vendor performance scores.

7.7 The client has 10 business days from the applicable milestone or interval to send the results of the performance evaluation (the draft vendor performance scores) to the contracting authority. The contracting authority then has 10 business days to review the draft vendor performance scores, and send them to the vendor.

7.8 If a vendor’s concerns about a vendor performance score cannot be resolved in discussions between the original parties, the matter will be escalated to the senior management up to the director(s) general or regional director(s) general (or equivalents) responsible for the procurement.

7.9 Further dispute or appeal mechanisms are not available for the testing period, as the vendor performance scores and vendor performance ratings will only be used to inform the development of the vendor performance policy. A minimum of 90 days advance notice will be provided to the vendor informing them of a decision to begin the retention and use of finalized evaluation results. At that time, instructions will be provided on dispute mechanisms available for use if, required.

8. Vendor performance ratings

8.1 Vendor performance ratings must be calculated as follows:

8.2 Vendor performance ratings are determined differently in the following cases:

9. General responsibilities

9.1 The vendor performance Management centre of expertise is responsible to:

9.2 Clients are responsible to:

9.3 Contracting authorities are responsible to:

9.4 vendors are responsible to:

10. Monitoring and compliance

10.1 PSPC will monitor the application of the policy to assess adherence and interpretation. This may include periodic audits or reviews in order to verify that the policy is appropriately implemented.

11. References


Related publications

12. Enquiries

Please direct enquiries about this policy to the Vendor Performance Management Centre of Expertise.


Annex A: Definitions

The official who initiates a procurement based on operational needs, and who is responsible for matters concerning the technical content of a procurement. This term may be equivalent to the technical authority or project authority.
Commodity Group:
A good, service, service related to goods, or construction. Each group has a Goods and Services Identification Number (GSIN) or United Nations Standard Products and Services Code (UNSPSC). For the purposes of this policy, PSPC determines whether the GSIN or the UNSPSC will be used during the federal GSIN to UNSPSC transition process.
As per the definitions of levels of complexity in the Supply Manual, Annex: Characteristics of Acquisitions Program Procurement Complexity Levels, as amended from time to time.
Contracting authority:
The PSPC procurement official who holds or reports to the official who holds contract signing authority for the procurement. (For general information only, see the definition of “Contract signing authority” in the Supply Manual.)
For the purpose of this policy, department has the same meaning as in section 2 of the Financial Administration Act.
Key Performance Indicators (KPIs):
The set of measures used during Performance Evaluations and throughout the contract lifecycle. KPIs fall generally under the following performance categories: cost, quality, schedule, and Management.
Performance Evaluation:
An evaluation by clients and contracting authorities using PSPC scorecards, including key performance indicators, to determine a vendor’s level of performance in delivering upon their contractual obligations. Results of performance evaluations are called vendor performance scores. 
A legal entity with a unique business number that has or previously had a contract with, or has submitted a bid for a contract to, one or more contracting authorities.
Vendor Performance Evaluation Scale:
A 1 to 5 scale used to evaluate Vendor performance, according to the Commodity Grouping scorecard and key performance indicators. A general definition of the levels follows.
  1. 5. Exceptional: The Vendor’s performance greatly exceeds the expected performance
  2. 4. Surpassed: The Vendor’s performance exceeds the expected performance
  3. 3. Achieved: The Vendor’s performance meets the expected performance
  4. 2. Moderate improvement needed: The Vendor’s performance is below the expected performance
  5. 1. Significant improvement needed: The Vendor’s performance is significantly below the expected performance
VPM Centre of Expertise:
An office in PSPC dedicated to vendor Performance Management.
Vendor Performance Ratings:
An overall rating for a vendor in a Commodity Group, based on the Vendor’s Vendor Performance Scores under that Commodity Group. This rating is calculated using a formula contained in this Policy, which takes as input the Vendor Performance Scores and calculates as output a single Vendor Performance Rating. A Vendor may have more than one Vendor Performance Rating if they contract under different Commodity Groups.
Vendor Performance Score:
Score assigned through a Performance Evaluation.
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