15.1.1 With the coming into force of the Federal Real Property Act and Regulations and the consequent related amendment to the Government
Contracts Regulations, both leases as well as contracts for the fit-up of an office or residential accommodation, where such contracts are part of a transaction done
under the Federal Real Property Act or its Regulations, are excluded from the ambit of the Government Contracts Regulations and the government's
Contracting Policy.
15.1.2 All enquiries and questions concerning real property management, including leases and other matters covered by the Federal Real Property Act and its
Regulations, may be directed to the Real Property Management Division, Comptrollership Branch, Treasury Board Secretariat.
16.1.1 This section sets out the Treasury Board policy for service contracts.
16.1.2 Statement of work. The statement of work or requirements description should clearly describe the work to be carried out, the objectives to be attained
and the time frame. It should be:
- explicit about the client's requirements and the contractor's responsibilities so that questions of interpretation can be avoided; and
- detailed enough to ensure that the client department receives the services or advice that it requires but, at the same time, flexible enough to permit
innovation and initiative by the contractor in the interests of the client department.
16.1.3 The statement of work should identify the specific stages of the work, their sequence, their relationship to the overall work in general and to each other in
particular. The type, magnitude and complexity of the work will determine the degree of detail required.
The following elements may be included as applicable:
- a background statement outlining the situation leading to the requirement;
- a clear statement describing the objective of the task and the work to be achieved;
- an accurate description of the scope of the work, including its range, extent and bounds;
- details of any constraints imposed, such as government or other policies and standards, current and proposed related activities, security, sensitivity to other
interests, employment equity, protection of the environment, conservation of resources and other relevant restrictions;
- availability of relevant existing studies or other resource material;
- the manner in which the output of the contract, such as work documents, progress reports, etc., should be presented or submitted;
- a time schedule for the completion of each stage of the work and for the entire work;
- when the work is being carried out on behalf of another department or agency, details of available client support and responsibilities;
- progress report requirements and other control procedures required by a client agency during the work;
- requirements relating to performance of the several stages and the work as a whole.
16.1.4 Bidding. Section 5 of the Government Contracts Regulations requires that bids be solicited before contracts are awarded. This may include
giving public notice, for example by means of the electronic bidding methodology, public notice in advertisements in trade publications and newspapers, or solicitation of
bids from suppliers on a list representative of the suppliers of the required services. Section 6 of the Regulations describes when the bidding requirement may be set
aside. Paragraphs 6(b)(ii) and (iii) apply specifically to service contracts. Although provision is made for non-competitive procurement of services, an exception to
the general government policy and practice of competitive solicitation should not be necessary in these situations. Contracting authorities may use an Advance Contract
Award Notice (ACAN) to satisfy the requirement for competition, which will then allow the use of the higher competitive contracting authority levels if there are no valid
challenges to the notice.
16.1.5 Contracting for services has traditionally been accepted as an effective way to meet unexpected fluctuations in workload, to acquire special expertise not
available in the Public Service, or to fill in for public servants during temporary absences in certain circumstances. At the same time, excessive or improper contracting
for services can result in circumvention of government legislation, regulations and policies covering such matters as the merit principle and bilingualism. As stipulated
in article 4.2, Related requirements, contracting authorities are to avoid any contracting situation that would be contrary to or conflict with the Public Service
Employment Act and common law principles dealing with master-servant relationships.
16.1.6 As stated in clause 4.2, Related requirements, contracts for the services of former government officials are to bear the closest public scrutiny and reflect
fairness in the spending of public funds. Contracting authorities are expected to exercise extreme discretion when contracting with former government officials to ensure
that the public interest will not suffer and the Crown will not be criticized. While contracts with former employees may be cost effective, the public perception that
these individuals have priority over individuals who are not former public servants should be corrected. Because of its transparency, electronic bidding is an excellent
vehicle by which contracting authorities can obtain bids or announce proposed directed contract awards with former public servants.
16.1.7 Categories of service contracts. Distinction has heretofore been made between "consulting" and "non-consulting" service contracts. This differentiation
has lost its effectiveness and has been changed so that there is only one category, "service contract." The contracting authority levels have subsequently been adjusted
and the generally higher levels for the former non-consulting service contracts now apply to all service contracts (refer to Appendix C for greater detail).
16.2 Contracting for the services of individuals and Public Service employment
16.2.1 The goal of this policy is to explain the difference between contracting for the services of individuals and Public Service employment. It outlines how to avoid
entering into contracts of services with the Crown which create an employer-employee relationship, and how to avoid conflicting with staffing legislation. A contract of
service results in the establishment of employee-related benefits, which include, for example, health and dental care, long-term disability coverage, government pensions,
Employment Insurance, Canada Pension Plan and income tax source deductions. Factors that may create an employer-employee relationship include the degree of supervision;
provision of working space and equipment; type of work (i.e. is the contractor doing the same work as employees); and basis of payment and benefits.
16.2.2 The Public Service consists of the positions in departments and other government entities that are listed in Schedule I of the Public Service Staff
Relations Act. Part I of the Schedule, which lists those positions for which the Treasury Board is employer, represents the vast majority of Public Service
employees. Part II of the Schedule lists "separate employers," that is, entities that establish their own terms and conditions of employment.
16.2.3 Employment in the Public Service is generally determined according to a statutory regime. In particular, employment in that part of the Public Service for which
the Treasury Board is employer is governed by three statutes:
- the Public Service Employment Act, which gives the Public Service Commission, with exceptions, the exclusive authority to appoint persons to positions in
the Public Service;
- the Financial Administration Act, which gives the Treasury Board the power of personnel management in the Public Service; and
- the Public Service Staff Relations Act, which governs collective bargaining in the Public Service.
16.2.4 The Supreme Court of Canada has ruled that, for labour relations purposes (i.e. whether an individual is an employee for collective bargaining purposes), a
person can be employed in that part of the Public Service for which the Treasury Board is employer only if
- a position has been created by a Minister or deputy head,
- the position has been classified by the Treasury Board, and
- the Public Service Commission, or its properly authorised delegate, has appointed the person to the position.
Only a duly appointed employee of the Public Service can enjoy the benefits of a public servant under the Public Service Employment Act (employee rights) and
the Public Service Staff Relations Act (right to collective bargaining).
16.2.5 While the Public Service Commission's appointment authority can be delegated to departments and agencies, contracting authorities cannot employ persons in the
Public Service without complying with the Public Service Employment Act. Appointments to positions in the Public Service must be made under the statutory regime
established by that Act and not under contract. Contracting authorities, therefore, do not have the legislative authority to create employer-employee relationships by way
of contract, however an improperly construed contract for services may evolve into an employer-employee relationship at common law.
16.2.6 There are exceptions to these rules. For example, Cabinet directly appoints a number of high ranking officials in the Public Service and ministers can hire
members of their own offices. In addition, while many of these rules apply to employment by "separate employers," each separate employer has a distinctive employment
regime.
16.2.7 Contracting authorities cannot use contracts for services to circumvent the requirements of the statutory employment regime established by the Public Service
Employment Act. In other words, contracting authorities cannot sign contracts with individuals that would, in the absence of the Public Service employment regime,
create employer-employee relationships according to the rules of the common law.
16.2.8 Contracting authorities who circumvent the requirements of the Public Service Employment Act, by signing contracts that create employer-employee
relationships at common law risk incurring liability under the following statutes the Canada Pension Plan, the Canadian Human Rights Act, theCrown
Liability Act, the Government Employees Compensation Act, theIncome Tax Act, the Official Languages Act and the Employment Insurance
Act. Under those statutes, the Crown may incur liability for persons having the attributes of employees, or "servants," at common law. For example, the Minister of
National Revenue may assess a department for source deductions pursuant to the Employment Insurance Act.
16.2.9 On the other hand, contracting authorities may be able to respond to challenges, especially to challenges or liabilities related to employee-related benefits, by
using the rationale of the "trilogy" of statutes argument cited in paragraph 16.2.3 (above).
16.3.1 Outside the Public Service, the existence of employer-employee relationships is determined according to a number of tests established by the common law (droit
coutumier). It is virtually impossible to lay down general rules on the meaning of employment at common law that apply uniformly and without exception; each relationship
is assessed individually. That said, an employee (or "servant") at common law is a person who works for salary and wages and is under the supervision and direction of his
or her employer; an independent contractor, in contrast, is his or her own master.
16.3.2 As provided in paragraph 4.1, Contract Policy Requirements, contracting authorities are to ensure that an employer-employee relationship will not result
from a contract for services. A contract for services that is initially sound should not develop over a period of time into a work situation that would constitute an
employer-employee relationship according either to the Public Service Employment Act or the common law. Therefore there should be appropriate safeguards in
contracting procedures to avoid such relationships.
16.3.3 Appointment under the Public Service Employment Act. In order to be appointed to a position under the Public Service Employment Act, (i.e. to
be employed in the Public Service), there must be evidence of:
- financial approval (classification) for the position by the Treasury Board or its delegate;
- an administrative decision to make an appointment to a position;
- a process of selection according to merit;
- a process of personnel selection by competition or otherwise.
16.3.4 For guidance in assessing an employer-employee relationship:
- consult CRA's current guidance, for example, "Employee or Self-Employed?", publication number RC4110, or visit http://www.cra-arc.gc.ca/E/pub/tg/rc4110/README.html
- refer to the following sections of the Contracting Policy,
- 16.2 Contracting for the services of individuals and Public Service Employment, and
- 16.3 Employer-employee relationships in its entirety
- seek legal advice from the Department of Justice, where it is not feasible for officials to determine whether a contract is a contract for services or a
contract of employment (i.e, employment status is not easily identifiable). However, the role of the Department of Justice in these cases is only advisory. It
is ultimately the responsibility of Contracting Authorities to ensure that contracts do not create employer-employee relationships.
16.3.5 Deleted.
16.3.6 Deleted.
16.3.7 Deleted.
16.3.8 Deleted.
16.3.9 Deleted.
16.3.10 Deleted.
16.3.11 Deleted.
16.3.11.1 Deleted.
16.3.11.2 Deleted.
16.3.11.3 Deleted.
16.3.12 Deleted.
16.4.1 Research and development services and related scientific activities may be obtained from the private sector.
16.4.2 Research and development service contracts may be entered into when:
- there is an established government contracting-out policy, or it is demonstrably more cost-effective to have the work done by the private sector;
- the requirement can be defined in advance well enough that it will not depend on a series of ad hoc assignments over the course of the contract; and
- an employer-employee relationship will not develop.
16.5.1 Market rates. Normally, the use of the competitive process will result in the establishment of appropriate market rates under a contract. Remuneration,
including fees that are not established by price competition, should be negotiated on the basis of usual market rates for the type of work required. Market rates are
comparable to those the contractor has charged for similar work under the same conditions in the same geographical area. Market rate may therefore be considered the same
as going rate.
16.5.2 In all cases, the fees or remuneration should be in line with the contractor's established market rate.
16.5.3 When the work contains a number of related phases, separate fee arrangements may be necessary for each phase.
16.5.4 Fees for consulting and professional services. Remuneration for consulting and professional services depends on the type of service provided, its
complexity and the conditions under which it is performed. The competitive process should be the norm for establishing appropriate fees. In most cases, remuneration is in
two parts: the fee for the services rendered and expenses for overhead, administration, and profits. Fees may be determined on the basis of time and rates, as an agreed
lump sum (firm price or ceiling price) or, in the case of architectural or engineering contracts, as a percentage of the estimated or contract cost of the work. Expenses,
on the other hand, are authorized direct out-of-pocket costs incurred by the contractor in providing the required services.
16.5.5 The various standard methods for calculating fees, definitions of costs, and the more common bases of payment for consulting and professional services contracts
are shown in Appendix J.
16.5.6 Fee schedules of associations. In determining the market rate of an individual or firm, fee schedules issued by professional associations may be used
only as a guide. The fees suggested by professional associations may, in fact, be paid by the contracting authority only when the fee reflects the market or going rate of
the individuals.
16.5.7 In rare cases, when the work requirement is unique and no comparable fee can be determined, pay scales for positions in the public service requiring similar
qualifications may be used as a guide in negotiating an appropriate fee.
16.5.8 Fee thresholds. As long as the proposed contract amount is within the approval authority of the department or agency, there are no threshold
restrictions on per diem or other time-rate fees in contracts for consulting and professional services selected competitively except for certain authority levels in
contracts for the services of former public servants in receipt of a pension (see article 16.8.12).
16.5.9 The equivalent ceiling in time rates should be established by the contracting authority, based on the definition of a normal working day appropriate to the
particular requirement.
16.5.10 Per diem rates are payable for a minimum of 6 hours' work in a 24-hour period. Less than this should result in prorating of the per diem
rate.
16.5.11 As discussed in article 10.6.10, a multi-year or time-phased contract should clearly indicate in the "Terms of Payment" the cost for each phase. If this is
not feasible, the contract should provide for adjustments to the contract price on the basis of an agreed rate or formula set out in the same section. Single contracts
with multiple phases and established costs for each phase are preferable to separate consecutive contracts that give the previous contractor a competitive advantage. When
it is impossible to establish rates for future years and/or contract phases at the time the contract is awarded, a formula should be developed that relates current prices
to appropriate published data such as the price indices published by Statistics Canada. This formula should be used for negotiating any future price changes.
16.5.12 Consistent with section 12.11.10, contracts should include an appropriate penalty clause where the deliverable involves reports or studies.
16.5.13 Prospective contractors are expected to divulge whether they have previously undertaken similar or related studies at federal expense. Contracting authorities
should follow up affirmative responses to ascertain whether earlier studies will satisfy all or part of the current need.
16.5.14 Honorarium payments. An honorarium payment is not one made under a contractual arrangement; rather, it is a gratuitous payment as distinguished from
compensation for service or hire, and the recipient, if not paid, cannot sue in a Court of Law. Accordingly, the Contracting policy does not govern honoraria.
16.6.1 The total value of any service contract includes the basic remuneration or fee, all overhead, administration, profit, travel and living expenses and all
applicable taxes, including GST and HST.
16.7.1 As stated in article 4.2, Related requirements, contracts for service are to reflect current federal policies on international relations. Where it is not
possible to satisfy the requirement with Canadian contractors, foreign firms or individuals may be awarded contracts. Where it is proposed that a foreign contractor carry
out the work within Canada, the requirements of federal immigration and health policies are to be observed. The contractor is responsible for satisfying these
requirements.
16.8.1 As stated in article 4.2, Related requirements, contracts for the services of former public servants in receipt of a pension or of a lump sum payment (the
definition of "former public servant" can be found in Appendix A) are to bear the closest public scrutiny and reflect fairness in spending public funds. Contracting
authorities should exercise extreme discretion when contracting with former employees in receipt of a pension or of a lump sum payment. These contracts should be subject
to the usual review and approval procedures required by the Contracts Directive and departmental policy. When negotiating the rate for the services of any former employee
in receipt of a pension or of a lump sum payment, contracting authorities are expected to obtain the lowest or most cost effective rate. No contract for the services of a
former public servant in receipt of a pension or of a lump sum payment may be entered into unless it is in the public interest to do so. There must be no suggestion of
special favouritism or privilege.
16.8.1.1 For the 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 for public servants whose employment would be terminated because of the down-sizing expected to result from
various initiatives required to adjust government spending. The lump sum payment period does not include the period of severance pay, which is measured in a like manner.
The lump sum payment period represents a transition period to secure and adjust to employment outside the public sector. If the former public servant returns to public
service employment during this transition period, the balance of the lump sum payment has to be returned in the form of forfeited salary, as provided in the Work Force
Adjustment Directive (WFAD).
For employees who have left the public service pursuant to one of the existing or any future early departure incentives, which involve the payment of a lump sum of
money based on a number of weeks, commonly known as a "lump sum payment period", the fee limit that may be paid under any contract with such an individual, continues to be
$5,000 during the lump sum payment period. This restriction applies in both competitive and non-competitive contracts. After the lump sum payment period is completed, then
the one year fee abatement period begins for any non-competitive contract with an individual.
16.8.2 Electronic bidding is very effective in addressing the aforementioned sensitivity of contracting with former public servants. Because of its transparency,
electronic bidding demonstrates the fairness of the contracting process, contracting authorities are encouraged to use this procedure to obtain bids or to announce, via an
ACAN, proposed contract awards involving these individuals. It is also recommended in these situations that contracting authorities consider using electronic bidding even
if the contract's value is below the $25,000 threshold normally associated with the use of this methodology.
16.8.3 Contracts with former public servants in receipt of a pension paid pursuant to the Public Service Superannuation Act (PSSA) as indexed by the Supplementary
Retirement Benefits Act. Contracts with a former employee receiving a government pension may prompt accusations that public funds are being abused or that influence
was improperly exerted in the contract award, particularly if those involved occupied more senior positions or took early retirement. Contracting authorities should
therefore recognize the delicate balance between the desire to respect individuals' rights to use their knowledge and abilities for economic gain and personal development
on the one hand, and, on the other, to protect the public's right to reasonable assurance that the public interest will not suffer in the process. If the contract work is
substantially like that performed by the pensioner before retirement, contracting authorities should ensure that they can justify why the work is not being done by a
successor.
Contracts for the services of individuals who have been retired for less than one year and who are in receipt of a pension, must include a contract fee that is
abated in accordance with the formula outlined below, regardless of fee or contract value.
16.8.4 Consequential to article 4.2, the following procedures are to be followed for any contract for the services of former public servants in receipt of a
pension:
- Competitive contracts (awarded using traditional or electronic bidding procedures):
- may be awarded by any contracting authority based on the lowest or best value bid without application of the fee abatement formula; ACANs for which no valid
statements of capabilities have been received within fifteen calendar days are deemed to be competitive and may be awarded the same way;
- do not require retirement waiting periods except where the provisions of the Conflict of Interest and Post Employment Code for Public Office Holders
apply, or unless special retirement conditions apply to the individual;
- may be awarded even when there are fewer than two valid bids from individuals who are not former public servants;
- in which the total value, including amendments, exceeds $100,000, require the approval of the Treasury Board.
- Non-competitive contracts:
- subject to the requirements of Section 5 and Section 6 of the Government Contracts Regulations, may be negotiated and awarded by any
contracting authority where the total value of the contract, including any amendments, is less than $25,000.
16.8.5 A contract with a former public servant in receipt of a pension may be considered competitive when one of the following conditions is met:
- competitive procurement in the form of either traditional or electronic bidding has been used, and the bid offering the services of a former public servant is
the lowest or best value; or
- there have been no valid statements of capabilities received after fifteen calendar days to an electronic bidding ACAN advising of a proposed contract.
16.8.6 A description of the contracting limits with former public servants, which complements those for construction, goods, and service contracts, is also provided in
Schedule IV of Appendix C.
16.8.7 Amendments. When it is necessary to amend either a competitive or non-competitive contract entered into pursuant to (a) or (b) of paragraph 16.8.4,
the authority to make the amendment is based primarily on the total value of the contract.
16.8.8 For a non-competitive contract with a former public servant in receipt of a pension:
- a contracting authority may amend any contract until its total value (including amendments) equals $25,000;
- Treasury Board approval is required to amend any contract whose total value (including amendments) exceeds $25,000.
16.8.9 Notwithstanding the preceding authority to amend these contracts, it is essential that departmental officials carefully review the award of non-competitive
contracts with former public servants.
16.8.10 For a competitive contract (using the traditional or electronic bidding methodologies) with a former public servant:
- a contracting authority may enter into and amend a contract until its total value (including amendments) equals $100,000;
- Approval of the Treasury Board's is required to amend any contract whose total value (including amendments) exceeds $100,000.
16.8.11 Reserved
16.8.12 Abatement formula. The following procedure applies in the determination of the maximum fee for the services of a former public servant in receipt of a
pension. The former maximum salary is updated to the current level, or the estimated salary for having the work done by a public servant (if a qualified public servant
were available), whichever is less,
plus
30 per cent (representing a fringe
benefit factor),
minus
the total annual (gross) pension in pay,
yields
a figure that is divided by 260
(representing the number of working
days in a year),
equals
the maximum daily rate that can be negotiated.
If a rate lower than the above formula yields is negotiated and agreed to, the negotiated rate should be used. The contract amount should be adjusted appropriately
where the fee is a fixed price based on a number of days of work or where the fee is paid on the basis of hourly, weekly, monthly or annual rates. The number of hours
that will constitute a work day should be based on the usually accepted norm for the profession, trade or function being contracted and should be specified in the contract
document.
16.8.13 A "pension" in the context of the 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 paid pursuant to the Canada
Pension Plan Act.
16.9.1 There is no prohibition against contracting with full or part-time public servants. However, any contracts with employees should reflect the provisions of
Paragraph 6(b) of the Conflict of Interest and Post-Employment Code for the Public Service which states, "employees have an obligation to act in a manner
that will bear the closest public scrutiny, an obligation that is not fully discharged by simply acting within the law".
16.9.2 There are rare occasions where it is cost efficient and effective to enter into a contract with an employee of the Government of Canada to provide some unique
service outside the scope of the employee's usual duties. Contracts for services should not be used to acquire overtime services that would normally be an extension of the
employee's regular duties. A contract with a public servant is subject to the same conditions that govern all contracts. The competitive approach should be followed and if
a contract is awarded to a public servant it should not give rise to any suggestion of favouritism or special privilege to the contractor.
16.9.3 Before any public servant accepts a contract from the Crown, Section 121(1)(c) of the Criminal Code requires that the "consent in writing of the
head of the branch... be obtained by the employee". Contracting authorities should make prospective employee/contractors aware of this requirement of the law.
16.10.1 Contracts with consultants or professionals may be entered into for specialized services when:
- the advice or services sought and the resulting expenditure can be justified as necessary to satisfy program requirements;
- the services can be defined well enough to form the basis of a contract;
- the services are available at reasonable cost; and
- their use is consistent with specific government policies.
This policy does not apply to the following:
- legal services,
- training and educational services,
- health and welfare services,
- protection services,
- advertising, printing and publishing services,
- data processing services,
- motion picture production and distribution,
- storage, warehousing and custodial services,
- building cleaning and laundry services,
- transportation and communication services,
- repair, overhaul, maintenance and upkeep services.
16.10.2 Parts of this policy may apply more to complex, higher value contracts and should be used with discretion on contracts valued at $25,000 or less.
16.10.3 Competition for consultants or professionals. Procedures and source lists should be designed to ensure that qualified individuals or firms are not
omitted from consideration and that there is a fair opportunity for those qualified to obtain a share of the available work. Repeat commissioning of a firm or individual
without competition should not become a practice, even if the value of the contract is under the mandatory threshold for the calling of bids.
16.10.4 Inventories and source lists. Representative and up-to-date inventories or source lists of firms that provide consulting and professional services and
wish to do business with the federal government should be maintained for consistency, economy, effectiveness and fairness in selecting and procuring best value. These
inventories should be consulted before inviting bids or proposals or recommending a non-competitive selection.
16.10.5 Contracting authorities who frequently engage the services of consultants or professionals should establish and maintain at least one inventory containing a
representative number of firms and individuals from which consulting and professional services can be obtained. These inventories should be established initially by
recording those firms and individuals who have provided consulting and professional services to the department or have expressed an interest in doing so. Contracting
authorities may solicit expressions of interest by inviting firms and individuals to complete a questionnaire providing standard information such as that shown in
Appendix J. To avoid duplication of effort, contracting authorities should cooperate in exchanging lists and data held in their respective inventories. Inventories
should contain the following data:
- Identification
- Name: of firm or individual as it will appear on contracts.
- Address: branch offices indicated where appropriate.
- Affiliation: names and addresses of other firms and their relationship.
- Ownership: country in which controlling interest is held.
- Qualifications
- Field(s): of expertise.
- Type(s): of service offered.
- Language(s): in which services are available.
- Principals and senior officers: names and resumés showing experience and qualifications.
- Capacity
- Business volume: total sales for each of the past five years.
- Number of staff: in total and by specialty, employed in each of the past five years.
- Facilities: any specialized equipment or facilities such as instruments, computers, special mobile units or laboratories that are owned or
generally leased.
- Work History
- Recent contracts: are representative of the firm's experience and capability (value, type of work and client's name should be stated). When the client was a
federal department or agency, the location, date, dollar value, responsible contracting authority and file reference number should be given.
- Evaluation
- evaluation reports on recent government contracts completed by the consultant or professional, included in the inventory as sensitive information requiring
protection (see article 16.11.6). Firms should be asked to report at least once a year any changes in previously-reported information.
16.11.1 Contracts for consulting and professional services may result in additional administrative or management provisions.
16.11.2 As envisaged in Section 4, Policy requirements, the contracting authority is responsible for including in the contract appropriate mechanisms for
monitoring the work, in co-ordination with other related activities, and its redirection, if necessary.
16.11.3 The contracting authority should appoint a procurement officer and the technical authority should appoint a project officer (who may be the same person), to be
responsible and accountable for monitoring the work through:
- regular physical progress and financial reports from the consultant or professional;
- attending progress meetings with the consultant or professional;
- examining the work in progress to ensure conformity with contract requirements;
- monitoring time, resource, cost and quality aspects of the work against a pre-determined and agreed work plan;
- amending the contract to reflect new requirements, work schedules and payment provisions in response to changing circumstances;
- conducting technical and financial audits;
- accepting or approving the work at intermediate stages and at completion;
- certifying all payments and following up to ensure timely payment.
The division of these responsibilities among authorities should be agreed to before placing the contract.
16.11.4 The consultant or professional is responsible for controlling the work under contract to achieve the objectives within the time and budgetary constraints
established.
16.11.5 Conflict of interest (see article 12.5.3.). A consultant or professional, by virtue of the kind of service provided, may be in a position to
exercise a bias toward a third party that could put the latter in a favoured position for future business with the Crown. If the consultant, professional or
principals have a financial interest in the business of this third party, the possibility of a conflict of interest should be considered. To avoid a conflict of
interest, contracting authorities should, before signing a contract, require the selected consultant or professional to sign a declaration, either as part of the contract
or separately, stating that no pecuniary interest in the business of any third party exists that would affect objectivity in carrying out the contract.
16.11.6 There are also situations where, in meeting its obligations to a contracting authority, a contractor may be in a position of potential conflict with competing
or opposing interests of the contractor's other clients, either during the period of or subsequent to this particular contract. Contractors are expected to inform the
contracting authority of these potentially competing services and interests, and explain why the situation would not represent a conflict of interests. Where appropriate,
a contracting authority should require a contractor to sign a declaration, either as part of a contract or separately, that the contractor has no, and will not have,
during the course of the contract and subsequent to it, any conflict arising from competing or opposing interests of other clients of the contractor. The possible wording
for such a declaration is included in Appendix G.
16.11.7 Contractors should be also made aware that any real or perceived conflict of interest, which has not been satisfactorily resolved, could result in their
contract with a contracting authority being terminated.
16.11.8 Performance evaluation. On completion of the contract, the contracting authority should evaluate the work performed by the consultant or professional.
The evaluation should be undertaken by officials competent in the particular fields involved. If judgmental comments are provided, they should be supported by complete and
factual detail. This is particularly important when the evaluation is not favourable.
16.11.9 The consultant or professional should receive a performance critique and be allowed to respond for the record.
Evaluation reports should include:
- a general description of the work undertaken, its location and the terms of reference;
- the quality of the work performed;
- the efficiency of the consultant or professional in managing time and resources;
- the capabilities of any outstanding specialists assigned to the work;
- an analysis of the cost of the work and the estimated value received;
- recommendations for further consideration.
16.12.1 Contracts for temporary help services are discussed in Section 4, Policy requirements and in article 4.2, Related requirements. Further instructions
related to these types of contracts are found in Appendix I.
16.13.1 When contracting for public opinion research and advertising, reference should also be made to the Communications Policy, the Common Services Policy and the
Management of Government Information Holdings Policy.
16.13.2 At the beginning of a project planning process for public opinion research and advertising, departments and agencies must notify Public Works and Government
Services Canada's Government Information Services Branch, if the project may result in the award of a contract. A project registration number will be provided by that
branch to authorize Public Works and Government Services Canada to award a contract for these services on behalf of departments.
16.13.3 Public Works and Government Services Canada is responsible for awarding public opinion research and advertising contracts.
16.13.4 As part of its contracting responsibilities, Public Works and Government Services Canada ensures that a significant level of Canadian participation is achieved
by having the advertising work performed in Canada in a manner consistent with the nature of the requirements.
16.13.5 A definition of advertising is provided in the Communications Policy of the Government of
Canada.
16.13.6 A definition of public opinion research is provided in the Communications Policy of the Government of
Canada.
16.14.1 When contracting for the services of independent truckers for haulage work on federal projects, either directly or through subcontracts, federal departments and
agencies are to pay at least minimum haul rates established by provincial and territorial governments. Contracts that may require haulage work are to include the necessary
clause to ensure implementation of this policy in contracts between the government's prime contractors and their suppliers of haulage services. For haulage work between
provinces and territories, the applicable rates are to be those that are in effect in the province or territory in which the project, the majority of the project or the
largest component of the project is located.
(Effective August 15, 1999.)
16.15.1 As mentioned at paragraph 4.2.6 of this policy, pursuant to paragraph 221(1)(d) of the Income Tax Act, payments exceeding $500.00 made by
departments and agencies under applicable service contracts, including contracts involving a mix of goods and services, must be reported on a T1204 supplementary slip.
16.15.2 Although the Government Contracts Regulations define printing as a goods contracts, departments must report on a T1204 any payments related to printing
contracts in the manner indicated in this section and section 16.15.
16.15.3 Exceptions. Contract purchases for services that are exempt under this requirement (i.e., do not require T1204 slips) are direct purchases made using
acquisition cards, direct purchases under local purchase orders, grants and contributions, utility payments, and rental or leasing of office space and equipment and other
"goods".
16.15.4 The amount to be reported on each information slip is the total of payments made to the enterprise in the calendar year, including any goods portion, expenses,
indirect costs, etc., but excluding GST/HST.
16.15.5 All forms of enterprises should receive these slips, including sole proprietorships (individuals), corporations and partnerships.
16.15.6 Slips are required for service contracts where a Canadian resident is working outside the country. The payments made to non-residents providing services in
Canada are not reported on T1204 supplementary slips, not being part of this reporting requirement. See section 16.15 for information on tax treatment of
non-residents who perform services in Canada.
16.15.7 To comply with this requirement, T1204 slips must contain the following information:
- the legal name of the contractor, as applicable, i.e. the name associated with one of the CRA identifier (see (c) below), as well as the business address and
postal code. If the contractor is a sole proprietor, the contractor's last name, first name and initial must also be reported;
- a code to distinguish the type of enterprise (sole proprietorship, corporations or partnership);
- the contractor's identifier(s), depending on the contractor's type of enterprise:
- for sole proprietorships, the contractor's SIN and the contractor's Business Number or GST/HST Number if the contractor has one;
- for corporations, the contractor's Business Number or GST/HST Number; alternately, the T2 Corporation Tax Number;
- for partnerships, the contractor's Business Number or GST/HST Number and the Partnership filer Identification Number if the contractor has one.
- The total amount paid to the contractor for the calendar year (e.g., from January 1, 2001 to December 31, 2001).
16.15.8 Departments and agencies will have to certify, as much as possible, that the information the contractor gave is complete and accurate.
16.15.9 Canada Customs and Revenue Agency has prepared a Federal Departments, Agencies and Crown Corporations Guide that provides general information on
reporting and filing payment information. For information on the classification of service contracts, consult the Services section of the Master List of Objects of
Expenditures (economic objects) in the Treasury Board Chart of Accounts (link: http://www.tbs-sct.gc.ca/pubs_pol/dcgpubs/coa/siglist_e.asp
http://www.tbs-sct.gc.ca/Pubs_pol/dcgpubs/COA/2001-02/coa01-02_821_e.html).
16.16.1 Every payer, including a non-resident payer, who makes a payment to a non-resident of Canada for services provided in Canada must withhold and remit an amount
in accordance with the requirements under the Income Tax Act of Canada (the Act).
16.16.2 Generally, the rules for the computation of income from a business apply equally to residents and non-residents. Any exceptions are clearly expressed in the Act
or in the Income Tax Regulations. Under Part I of the Act, a non-resident is subject to tax on the income earned in Canada that is attributable to services
provided.
16.16.3 Paragraph 153(1)(g) of the Act and subsection 105(1) of the Regulations (Regulation 105) are the authority to withhold tax on fees, commissions, and
other amounts paid to non-residents of Canada, other than employees, for services rendered in Canada. The rate of withholding is 15% of the gross amount paid.
16.16.4 The remitting requirements for the Regulation 105 withholding tax are outlined under subsection 108(1) of the Regulations (Regulation 108).
Regulation 108 requires that the withholding taxes are to be remitted by the 15th of the month following the month in which the amounts were deducted or withheld.
16.16.5 The only alternative to the requirements of Regulation 108 is for the non-resident to obtain a waiver, or a reduction in the withholding tax. If the payer
has not obtained written notification from Canada Customs and Revenue Agency, the required withholding tax is mandatory. Failure to deduct or remit an amount under
Regulation 105 may result in an assessment of the outstanding amount, plus interest and penalty, pursuant to section 227 of the Act.
16.16.6 All payers, resident or non-resident, must report to Canada Customs and Revenue Agency payments to non-resident persons for services provided in Canada.
- These payments are to be reported on a T4A-NR Supplementary slip, Statement of Fees, Commissions, or Other Amounts Paid to Non-Residents for Services
Rendered in Canada. This information slip is to be completed and issued by the payer(s), regardless of
the amount paid or the taxes withheld.
- All T4A-NR Supplementary slips must be sent to Canada Customs and Revenue Agency by the payer together with a T4A-NR Summary, Summary of Fees, Commissions,
or Other Amounts Paid to Non-Residents for Services Rendered in Canada, on or before, the last day of February of the year following the year in which the income
was paid. Provide the non-resident recipient with Copy 3 of this slip by the same date as noted above.
16.16.7 The required withholding tax is considered a payment on account of the non-resident's overall tax liability to Canada. It is not Canada Customs and Revenue
Agency's intent to inconvenience non-residents who may not be taxable in Canada. One of the Department's responsibilities is to ensure that all clients are treated in a
consistent and fair manner.
16.16.8 Where a non-resident can adequately demonstrate that the withholding tax normally required is in excess of their ultimate Canadian tax liability, the Department
may reduce or waive the withholding tax accordingly. A waiver or reduction of the withholding requirements is considered pursuant to the application of
subsection 153(1.1) of the Act, "Undue Hardship." The onus is on the non-resident to demonstrate to the Department that a waiver or a reduction of the amount required
to be withheld is justified. This may be based on the application of the treaty of their country of residence or through an estimated income and expense statement.
16.16.9 A waiver application should be submitted to the tax services office that serves the area where the services are to be provided. The Department requires
30 days to process requests for waivers based on treaty protection and 10 days for requests based on an estimated income and expense statement. This allows all
non-residents the opportunity to have their tax affairs reviewed before the services are performed. A waiver application must contain sufficient documentation and
information to establish if a waiver is justified.
16.16.10 Additional information about the withholding, remitting, and reporting responsibilities relating to non-residents who provide services in Canada is available
from any of Canada Customs and Revenue Agency's tax services offices.
16.17.1 The procurement of electricity or natural gas is considered a service procurement.
16.17.2 Departments must meet energy needs in accordance with the federal or provincial jurisdiction of the requirement as applicable. Regulation of energy utilities
ranges from fully regulated, partially deregulated to fully deregulated. The nature of the regulation will govern the procurement arrangements.
16.17.3 Departments may enter into contracts based on the authority and conditions contained in the Treasury Board Contracts Directive, Part II, Exceptional Contracting
Limits, Section 1 (Appendix C of the Contracting Policy).
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