Fact Sheet - Request For Standing Offer – AVIATION FUEL

November 28, 2006

What are we doing?

The Government of Canada (GC) is streamlining and transforming its procurement approach to provide better value for Canadian taxpayers. The goal of procurement transformation is to improve the design, management and delivery of procurement across government so that the government becomes not only a better buyer, but a better customer.

As part of this transformation, the government is inviting suppliers of aviation fuel to compete for this Request for Standing Offer (RFSO).

The government will reach its goal in keeping with the following commitments:

• Ensuring increased transparency and accountability in the procurement process;
• Making it easier and less costly for suppliers to do business with government;
• Improving access for Small and Medium Enterprises (SMEs) to compete for procurement;
• Considering economic and social impacts (Aboriginal, regional and environmental); and,
• Consulting with affected industry sectors.

What is the current situation for aviation fuel?

Currently, the government has an established procurement process for fuels that consolidates requirements to benefit from lower fuel prices. Through the existing Standing Offer for aviation fuel, the government spends an estimated $155M annually.

Aviation fuel requirements from different departments are consolidated geographically in a national bid solicitation. Fuel requirements with the same product type and delivery method are further consolidated for bidding purposes.

Solicitations are advertised on MERX, the government’s electronic tendering service, where interested suppliers bid a unit price per litre. The unit price is adjusted by PWGSC on a monthly basis to accommodate fluctuations in the oil market.

What is changing?

Under the new RFSO, the price of fuel will be adjusted on a weekly basis to more accurately reflect fluctuations in the oil market and provide better value for money on the purchase of aviation fuel.

Further, based on recommendations from industry, the solicitation will allow bidders to select the day of the week that price adjustments take effect. PWGSC has upgraded its system to meet this adjustment and ensure a smooth process.

How will this change impact the industry?

PWGSC expects that this will be mutually beneficial for both industry and government as this change streamlines the current procurement process.

The government is committed to working closely with industry to meet the needs of suppliers and address their concerns while achieving value for Canadians.

Supplier Consultations

Through consultations, industry has indicated that they welcome the change to weekly price adjustments, which will allow them to better manage the risk of bidding on a commodity that has a fluctuating cost. The change will streamline the procurement process and make it easier for suppliers to do business with the government.

PWGSC is committed to working in partnership with industry to improve the procurement process while ensuring value for taxpayers’ dollars.