Chapter 6 - Developing the Procurement Strategy

Section 6A: Approval and Signing Limits

Contract Splitting

6A.001 (2002-12-13) 'Contracting authorities must not split contracts or contract amendments in order to avoid obtaining either the approval required by statute, the Treasury Board Contracts Directive or appropriate management approval within the department or agency.'

TB Contracting Policy,
Subsection 11.2.7

Furthermore, contracts must not be split to avoid our obligations under national or international trade agreements, or the application of our procurement policies.

Contracting officers must obtain approval and signing authorities in accordance with the levels established by Treasury Board (TB) and the internal levels established by the department.

Treasury Board Approval

6A.005 (1994-06-23) TB approval is required for any contract or contract amendment exceeding the limits outlined in 6A.020 below.

6A.006 (1998-02-16) TB approval is required for competitive service contracts with former public servants in receipt of a pension, if the total amount payable under the contract for any individual, including any amendments, exceeds $100,000 and non-competitive contracts if the total amount payable under the contract, including any amendments, exceeds $25,000. (See 6D.477.)

6A.007 (1998-02-16) Proposed contracts or contract amendments which require TB approval must be approved by TB before they are entered into and before any work is begun. TB ministers will entertain submissions requesting retroactive approval of a contract or contract amendment only under exceptional circumstances - e.g., urgent cases involving public safety or security. In such cases, TB requires certification that the minister concerned agreed to the commencement of the work before receiving TB approval.

6A.008 (1994-06-23) Public Works and Government Services Canada (PWGSC) cannot enter into a contract, or make any contractual commitment (e.g. Letter of Intent), which constitutes the first step of a project that may subsequently require TB consideration and approval.

6A.009 (1994-06-23) When PWGSC has entered into a contract, the contract may be amended without TB approval if the cumulative value of the amendments does not exceed the amendment levels set out below. (See 6A.020.)

6A.010 (1994-06-23) When TB has approved an amendment, PWGSC may further amend the contract without TB approval if the cumulative value of the amendments after each issuance of an amendment pursuant to a TB approval does not exceed the non-competitive amendment level set out below. (See 6A.020.)

6A.011 (1994-06-23) TB approval is also required for a number of areas described in the TB manuals and in current TB circulars, as well as for the following actions:

1. the making of any "extra payment," i.e. a payment where a legal liability does not exist or has not been accepted by the Crown, or where there is uncertainty that a legal liability exists under the contract;
2. every Electronic Data Processing buy for lease transaction exceeding $1 million. Each submission to TB must include a cost benefit analysis. (See Section 9G.)

Treasury Board Basic Contracting Limits

6A.020 (1998-02-16) PWGSC may enter into or amend a contract to the following limits.

* When the Government Electronic Tendering Service (GETS) was used to provide notice to suppliers either through publication of a Notice of Proposed Procurement, an Advance Contract Award Notice or a Letter of Interest.

Notes:

1. The authorities, as described herein, shall be exercised in accordance with the Minister's internal delegation to specific organizations within PWGSC.
2. Contracting officers must not divide any procurement in order to circumvent these limits (contract splitting).
3. The Treasury Board Open Bidding Contracting Authorities can only be used when a procurement has been advertised on the GETS and/or in the GBO. When the GETS and/or the GBO are not used, the traditional competitive authorities must be used.

Treasury Board Exceptional Contracting Limits

6A.030 (1994-06-23) PWGSC may enter into any form of agreement used by a railway company for permission to construct or maintain a private crossing or a pipe or cable crossing over, across or under the property of the company at a rate or in an amount no greater than those normally charged for each permission.

6A.031 (1994-06-23) PWGSC may enter into any agreement with a railway, telegraph, telephone or power company for permission to attach wire to poles belonging to the company at a rate or in an amount no greater than those normally charged for each permission.

6A.032 (1994-06-23) PWGSC may enter into a good or a service contract, regardless of the amount, if the contract derives from a standing offer already approved by TB.

6A.033 (1994-06-23) PWGSC may enter into and amend contracts with the Government of the United States containing that government's usual terms dealing with indemnity and liability, subject to the limits of the TB Contracts Directive.

6A.035 (1994-06-23) Contracts for the performance of legal services may be entered into only by or under the authority of the Minister of Justice.

6A.036 (1998-02-16) The following special authorities granted to the Minister, PWGSC, are described in detail in the Internal Approval and Signing Authorities (in support of clients' programs only):

1. Repair and overhaul of military equipment
2. Procurement of ammunition
3. Procurement under the U.S. Foreign Military Sales Program
4. Bulk fuels
5. Advertising services
6. Transportation and utilities (all contracting authorities)
7. Energy supply, energy efficiency improvements, energy management services and energy management monitoring and training (all contracting authorities)
8. Former Public Servants in receipt of a pension (all contracting authorities)
9. Telecommunications Services

Internal Approval and Signing Authority (in support of clients' programs only)

6A.040 (2005-06-10) Contract approval and signing authorities in support of clients' programs must be exercised in accordance with the applicable legislation and regulations, and within departmental policies and guidelines.

These authorities and guidelines are detailed in the following annexes, which can be found at the end of this chapter.

Annex 6.1 - Conditions Imposed on the Approval Authority Limits for Departmental Personnel;

Annex 6.1.1 - Contract Approval and Signing Authorities in Support of Clients' Programs Only - Other than for Canadian Commercial Corporation;

Annex 6.1.2 - Approval Authority Limits for Goods, Services, Construction, Telecommunications and A&E Services;

Annex 6.1.4 - Approval and Signing Authority Limits for Defence Construction;

Annex 6.1.5 - Contract Amendment Approval Instructions;

Annex 6.1.6 - Definition of a Competitive Contract;

Annex 6.1.7 - Guidelines for the Determination of a Qualified Firm or Individual;

Annex 6.1.8 - Procurement Information to the Minister;

Annex 6.1.9 - Contract Amendment Approval Process (CAAP);

Annex 6.1.10 -Just in Time Approval Process (JITAP);

Annex 6.2 - Certification and Signing Authorities - Canadian Commercial Corporation (CCC) Contracting Documents;

6A.041 (2005-06-10) The contract approval and signing authorities, in support of clients' programs, apply to all contractual documents and arrangements, including the following:

1. purchase orders;
2. contracts;
3. formal agreements and arrangements (e.g. interdepartmental);
4. standing offers and supply arrangements;
5. letters of intent;
6. go-ahead letters and go-ahead messages;
7. Stores Transfer Orders;
8. Supply Transfer Orders;
9. written direction to the Agency of Record;
10. assignments;
11. consents to subcontract;
12. termination notices; and
13. amendments to any of the above.

Notes:

1. Limits set out in annexes 6.1 through 6.2 will apply to the approval and signing of all contractual documents and arrangements including those arrangements that are not subject to the GCR and TB Contracts Directive, unless approval and signing limits are set out within an existing Memorandum of Understanding. When the value of transfer agreements between departments (e.g. Transfer Orders with CORCAN) exceeds the approval amounts set out in annexes 6.1 through 6.2, the Deputy Minister's approval is required. When the value of contractual arrangements with provincial or municipal governments, or provincial or federal Crown Corporations exceeds the approval amounts set out in annexes 6.1 through 6.2, TB approval is required.
2. The inclusion of a Limitation of Expenditure in standing offers is optional (see 7A.083). Approval and signing authorities for Standing Offers which do not contain a Limitation of Expenditure will be as set out in annexes 6.1 through 6.2 using the requisition value to determine the appropriate approval and signing authority for the Standing Offer.
3. Approval of contracts that include options shall be sought in accordance with the total estimated cost including any options for which funds are available or expected to be provided in the future (see Annex 6.1.5, paragraph 7).
4. The Assistant Deputy Minister, Acquisitions Branch, has unlimited authority to approve and revise standing offers and supply arrangements (see 9J.7), when individual call-ups will not exceed the limits prescribed by Treasury Board.

6A.042 (1994-06-23) More than one contractual document shall not be issued, under any circumstance, in order to circumvent the necessity of obtaining the proper approval authority.

Incumbents' Authority

6A.050 (1998-11-23) The authorities granted by the Deputy Minister to incumbents of designated positions are set out in annexes 6.1.2 to 6.1.4, and 6.2. These are maximum limits which may be reduced at the discretion of the appropriate managers.

A person is normally designated the incumbent of a position following staffing action. Administrative superiors at the level of section chief and above shall inform new incumbents, in writing, of the levels of contract approval and signing authority to be exercised.

Contracting personnel who have previously exercised contract approval and signing authorities in another position may exercise, upon promotion, the authorities delegated to incumbents at the new level.

6A.051 (1994-06-23) Directors general must withhold full signing and contract approval authority from anyone who has had no PWGSC purchasing/contracting experience until competence has been shown at a lower level of authority for at least six months.

Acting Incumbent

6A.060 (1994-06-23) Designation of an alternate or acting incumbent, for a position to which a level of authority has been granted, shall be made by an authority level no less than that of the incumbent's administrative superior.

If an employee is to perform the duties of a position in an acting capacity for an indeterminate period (e.g. pending permanent appointment), then the employee's administrative superior shall state, in writing, the levels at which the employee may approve and sign contracts, and the dates these authorities are to be in effect.

Similarly, if the incumbent of a position is absent for a short period, then the administrative superior of that position may designate another officer to be the acting incumbent of that position. The acting incumbent should normally be given the full contract approval and signing authorities of the position. However, the acting incumbent must not exercise these authorities on a procurement file for which he/she was responsible in his/her normal position.

6A.061 (1994-06-23) To facilitate audit requirements, copies of all acting incumbent designations shall be filed and retained in the office of the appropriate director or director general. In addition, a copy must be placed on the file of any contractual document signed by the officer while exercising the acting incumbent authority.

Forgiveness of Debts

6A.065 (2003-05-30) No employee of the Department is authorized to forgive debts arising out of contractual actions and which are owed to the Crown. For authorities, refer to the Debt Write-off Regulations, 1994.

Trade-ins

6A.070 (2004-05-14) Contracts for which trade-ins have been approved through disposal operations procedures are subject to approval and signing authorities as detailed in annexes 6.1.2. (All trade-ins are disposal operations and, as such, are subject to disposal operations procedures.) The trade-in value will not be considered in determining the required level of authority.

Per Diem Rates

6A.075 (1994-06-23) Directors General may establish, at their discretion, internal authority limits for the approval of non-competitive service contracts containing per diem rates. Where such limits do not exist within a sector/region, contract approval will be in accordance with the delegated authorities in Annex 6.1.2.

No-cost Amendment

6A.080 (1994-06-23) No-cost amendments involving a simple administrative change are the responsibility of each procurement sector/region. For no-cost amendments where risk or liability will be transferred to the Crown refer to Annex 6.1.5, paragraph 5.

Royalty Payments and Licenses

6A.085 (1994-06-23) The Deputy Minister is responsible for the approval of contracts for defence material and services that will bind the Crown to the following:

1. royalty payments by a contractor or its subcontractors that exceeds 5 percent of the selling price of the patented item; and
2. license agreements of intellectual property where either the Crown is to be a licensee or where, in order to carry out certain defence contracts, a contractor is required to obtain a license from the third party.

Section 6B: Defining the Requirement

6B.090 (2005-12-16) A bid solicitation should not specify a product with no substitute. The salient physical, functional or other characteristics essential to the client's needs should be stated. Products known to be equivalent to a "brand name" can also be cited, but caution must be exercised to ensure that there is no conflict between the brand names specified and the description provided.

For procurement subject to either the North American Free Trade Agreement (NAFTA) or World Trade Organization Agreement on Government Procurement (WTO-AGP), technical specifications shall not require or refer to a particular trademark or name, patent, design or type, specific origin or producer or supplier, unless there is no sufficiently precise or intelligible way of otherwise describing the procurement requirements and provided that, in such cases, words such as "or equivalent" are included in the bid documentation.

Standards, Specifications and Purchase Descriptions

6B.096 (1994-06-23) Recognized Canadian standards or specifications should be used in the procurement of goods and services, except when not warranted by the volume or specific nature of the procurement.

6B.097 (1994-06-23) When Canadian national standards are not available, Canadian specifications produced by a recognized standards-writing organization should 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.

6B.098 (1994-06-23) In judging 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 judgement 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.

6B.099 (1994-06-23) 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.

6B.100 (1994-06-23) 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.

6B.101 (1994-06-23) 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.

Listing Programs

6B.105 (1996-01-01) Listing programs are designed to expedite procurement by establishing, in advance and independent of any specific purchase, a listing of those products or services which 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; and,
5. for products purchased on a regular basis and in large quantities.

Prior to contracting, officers should verify with the standards (listing) organization, that the product or service offered has been approved. (See 6B.108.)

6B.106 (1996-01-01) 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.

6B.107 (1994-06-23) The CGSB and the Department of National Defence (DND) both develop and maintain lists. Those currently in effect are in annexes 6.4 and 6.5.

Qualification may be discontinued and the product deleted from an existing listing by the responsible qualifying authority under the following conditions:

1. Formula change. A change in the supplier's formulation of the product which impairs product quality.
2. Process change. A change in the supplier's production process which impairs product quality.
3. Field failure. Authenticated 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.

When there are indications of non-conformance, and if Public Works and Government Services Canada (PWGSC) and a client determine that a qualified supplier does not conform to the applicable standard, the contracting officer must notify the qualifying authority.

6B.108 (1994-06-23) 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 on the appropriate listing.

New Standards, Specifications or Listings

6B.112 (1994-06-23) 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.

6B.113 (1994-06-23) In cases of urgent need for a new standard or specification, CGSB may be requested to develop and publish a provisional CGSB standard to use while a formal consensus standard is being developed. Provisional standards must be withdrawn from use as soon as the formal standard becomes available.

6B.114 (1999-12-13) 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.

Canadian General Standards Board

6B.118 (2002-05-24) Canadian General Standards Board (CGSB) is accredited by the Standards Council of Canada (SCC) as a standards-development, certification and quality and environmental management systems registration organization. It is PWGSC's independent, third party qualifying authority.

There are other accredited standards organizations in Canada, and contracting officers should contact CGSB for further information.

6B.119 (2002-05-24) CGSB administers the development 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, liaison 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 listing programs for products and services.

The CGSB Catalogue contains a listing of approximately 1,500 standards and specifications for products and services; listing programs for a selected number of these products and services; and other services offered by CGSB.

6B.120 (1998-06-15) Government organizations, suppliers and the general public can obtain CGSB publications, information on the listing program or documentation required to apply for a listing by contacting:

Canadian General Standards Board
Portage III, 6B1
11 Laurier Street
Gatineau, Quebec K1A 0S5

Phone:(819) 956-0425 or 1-800-665-2472

Department of National Defence

6B.124 (1999-12-13) The Department of National Defence (DND) acts as a qualifying authority for certain commodity groups and items having direct military application. The Technical Authority is the qualifying agent and may request assistance through the Directorate of Quality Assurance, who is the recognized military quality assurance authority.

6B.125 (1999-12-13) PWGSC and suppliers may obtain information on the DND Qualified Products or application forms from the applicable Technical Authority at:

National Defence Headquarters
MGen George R. Pearkes Building
101 Colonel By Drive
Ottawa, Ontario
K1A 0K2

Attention: _______________ [Insert Name of Technical Authority]

Technical Data

6B.130 (2002-12-13) If technical data are to be sent to potential bidders from a source other than PWGSC, the contracting officer must ensure that PWGSC has the right to use the data.

For DND requirements, form PWGSC-TPSGC 1065, Request for Distribution of Technical Data, is used. The contracting officer must send the form to National Defence headquarters, attention DTICS 5, in sufficient time to ensure that the data will be available when the bid solicitation is issued.

PWGSC will not provide data available to potential bidders through normal business channels.

Examples of such material are specifications of Canadian Standards Association (CSA), Society of Automotive Engineers (SAE), National Electrical Maintenance Association (NEMA), Underwriters' Laboratories of Canada (ULC) Standards and the Canadian General Standards Board (CGSB).

Canada/United States Joint Certification Program

6B.136 (2003-12-12) 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.

The Joint Certification Program consists of a Joint Certification Office, jointly staffed by the U.S. Department of Defense and PWGSC, which manages and administers the certification process. The necessary facilities and administrative support are provided by the U.S. Defense Logistics Information Service. The address is as follows:

United States - Canada Joint Certification Office
Defense Logistics Information Service
Federal Center
74 Washington Avenue N, STE 7
Battle Creek, Michigan 49017-3084

Phone: (616) 961-7431
Fax: (616) 961-5303

Bid Evaluation Criteria

6B.142 (1994-06-23) Criteria to evaluate and differentiate between proposals must be developed, in order to ensure the complete and fair consideration of bids. The contracting officer and the client must establish the criteria before issuing the bid solicitation.

6B.143 (1994-06-23) The number of criteria must be adequate for comparative judgement. They should measure both the competence of the bidder and the worth of the bidder's particular technical approach.

Competence measures include such factors as managerial structure, key personnel, prior industrial experience, facilities and financial strength. Technical factors include the proposed work breakdown structure, identification of key technical problems and outlines of solutions, proposed schedule of milestones, and quality and time control systems to be employed.

6B.144 (2005-12-16) Where there is no alternative to specifying a product with no substitute, the solicitation should whenever possible include provision for equivalent products, and the criteria that will be used to determine equivalency.

For procurements subject to NAFTA, WTO-AGP or AIT, provision for equivalent products must be made.

6B.145 (1994-06-23) A team may be established to evaluate proposals. The team should include the client and may involve third parties, as appropriate (e.g., when the technical authority is not provided by the client).

The evaluation team may develop the evaluation criteria and plan.

6B.146 (1994-06-23) The basis upon which a contractor will be selected from the firms that submit responsive proposals should be indicated in the Request for Proposal (RFP). If the intent is to award the contract on the basis of best value, the criteria and the methods that will be used to determine the best value must be developed.

If a service contract is to be awarded based on best value, in addition to assessing the technical aspects of a bid, a supplier's qualifications, over and above the mandatory qualifications, must be a factor in the bid evaluation and specified in the RFP.

Supplier qualification factors may include skills, capabilities, knowledge or previous experience.

6B.147 (2006-06-16) Where education, knowledge or previous experience are essential conditions in selecting a contractor (either as mandatory requirements or as criteria to be point-rated for evaluation purposes) include clause A3010T from the Standard Acquisition Clauses and Conditions (SACC) Manual, in the RFP.

6B.148 (1994-06-23) The relative importance of the criteria must be clearly identified. When assigning weights to each criterion, the contracting officer should ensure that a high aggregate of points for minor criteria does not overcompensate for a low aggregate of points for major criteria.

6B.149 (1995-07-01) Socio-economic factors may not be included in the evaluation criteria unless recommended by the Procurement Review Committee (PRC) or specifically required by government decisions and obligations (e.g. aboriginal land claim agreements). (See 5.090.)

6B.150 (1998-06-15) Several Comprehensive Land Claims Agreements (CLCAs) contain socio-economic evaluation criteria that must be included in the solicitation document, whenever it is practical and consistent with sound procurement management, to provide claimant groups with a fair opportunity for any spin-offs associated with socio-economic development.

The procurement requirements/obligations of the CLCAs must be included in sole source negotiations in order to maximize socio-economic opportunities for claimant group members.

These evaluation criteria can be used as part of the assessment along with price, best value, delivery etc. Several agreements include:

1. Increase level of participation by claimant groups for business opportunities within the economy of their Comprehensive Land Claims Settlement Area;
2. Increase employment opportunities for claimant group members;
3. Increase economic development opportunities through federal contracting processes.

In order to comply with the requirements of the Nunavut Land Claims Agreement (NLCA), contracting officers are to employ the following bid evaluation criteria whenever it is practicable and consistent with sound procurement management. Should contracting officers decide not to use the following criteria, they should be prepared to document the supporting factors leading to their decision.

In order to comply with the requirements of the NLCA, tenderers shall provide proof of effort and/or commitments made to:

1. having head offices, administrative offices or other facilities in the Nunavut Settlement Area;
2. employing Inuit labour, engagement of Inuit professional services, or use of suppliers that are Inuit or Inuit firms in carrying out the contracts; or
3. undertaking commitments, under the contract, with respect to on-the-job training or skills development for Inuit.

Proof of efforts and/or commitments made by tenderers shall include, but not be limited to, the names of persons or companies contacted and the nature of the undertakings as at the time of the tender submission and as applicable.

For those CLCAs that do not provide for mandatory inclusion of socio-economic evaluation criteria, it is recommended that these criteria be considered.

6B.151 (1996-01-01) For guidance in the development of socio-economic evaluation criteria, contracting officers should consult their manager in conjunction with their appropriate subject matter expert.

To ensure consistency in the departmental application of socio-economic evaluation criteria, contracting officers are requested to give a copy of the final release of their evaluation criteria to their subject matter expert so that a data bank of reference information may be established.

Life Cycle Costing

6B.153 (1994-06-23) The application of Total Life Cycle Costing means the sum of the Product, Resource, Operating, and Contingent (PROC) costs relating to a procurement. This can be a useful element in the evaluation of proposals. The PROC technique should be used for major Crown projects (MCPs) and in procurement in which operating costs are a major part of the total cost of the product, e.g. major construction projects or motor vehicle purchases.

Royalty Payments and License Agreements

6B.159 (1994-06-23) In order to carry out certain contracts, primarily for defence, contractors may have to obtain technical assistance and/or manufacturing licenses from third parties.

6B.160 (1994-06-23) 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 the Crown, in its own name, to enter into the license agreement with respect to inventions, patents, copyrights, trade secrets, trademarks, technical data, know-how and industrial designs.

6B.161 (1994-06-23) In order to avoid paying for rights that the government already has, contracting officers should check that no license agreement in the name of the Crown exists which could remove the need for royalty payments.

6B.162 (2000-12-01) 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.

These Acts provide that:

Patent Act:

'19.1:

(4) Whereas the use of the patented invention is authorized, the authorized user shall pay to the patentee such amount as the Commissioner considers to be adequate remuneration in the circumstances, taking into account the economic value of the authorization.

19.2 Any decision made by the Commissioner under section 19 or 19.1 is subject to appeal to the Federal Court.

' Defence Production Act, section 22:

(1) The Minister may, on behalf of Her Majesty, contract with any person that Her Majesty will relieve that person from any claims, actions or proceedings for the payment of royalties for the use or infringement of any patent, registered industrial design or registered topography by that person in, or for the furnishing of any engineering or technical assistance or services to that person for, the performance of a defence contract.

(2) A person with whom the Minister has contracted under subsection (1) is not liable to pay royalties under any contract, statute or otherwise by reason of the use or infringement of a patent, registered industrial design or registered topography in, or in respect of engineering or technical assistance or services furnished for, the performance of a defence contract and to which the contract under subsection (1) applies.

(3) A person who, but for subsection (2), would be entitled to a royalty from another person for the infringement or use or a patent, registered industrial design or registered topography or in respect of engineering or technical assistance or services is entitled to reasonable compensation from Her Majesty for the infringement, use or services and, if the Minister and that person cannot agree as to the amount of the compensation, it shall be fixed by the Commissioner of Patents.

(4) Any decision of the Commissioner of Patents under subsection (3) is subject to appeal to the Federal Court under the Patent Act.'

6B.163 (1994-06-23) Royalty payments of 5 percent or less of the selling price of the patented item require director approval. A royalty that exceeds 5 percent requires Deputy Minister approval prior to 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 is to 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.

6B.164 (1994-06-23) In consultation with Legal Services, the contracting officer shall consider the advantages and disadvantages before deciding that a license should be obtained in the name of the Crown or contractor.

These advantages and disadvantages are to be considered in relation to the nature of the supplies to be manufactured, the expenditure by the Crown, potential Crown purchases and the relationship of the perspective contractor to the licensor (e.g. the contractor may be a subsidiary of the licensor).

Advantages - if the license agreement is in the name of the Crown, the Crown 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. have unfettered choice of contractors; and
3. control the manner in which required technical assistance is to be furnished and used.

Disadvantages - if the license agreement is in the name of the Crown, the Crown 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.

6B.165 (1994-06-23) 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 and the amounts being charged are acceptable to the Crown.

6B.166 (1994-06-23) Where the license agreement is to be in the name of the contractor, approval to enter such an agreement may be obtained as part of the authority obtained for the purchase of the materiel and/or service.

6B.167 (1994-06-23) Where the license is to be in the name of the Crown, 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 the Crown;
   3. travelling and living expenses of the licensor's representatives;
3. obtaining for the Crown 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.

6B.168 (1994-06-23) Approval of the Deputy Minister is required before entry into any contractual agreement that exercises the rights of the Crown under section 22 of the Defence Production Act or section 19 of the Patent Act. Exercising the rights granted the Crown under these Acts shall only be carried out in exceptional circumstances as warranted by consideration of the public interest, and after market-based processes have been exhausted.

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 unconscionably high prices upon the Crown. It would be very unusual to find these rights exercised for other than defence supplies.

Intellectual Property

Policy - Objectives and Underlying Principles

6B.174 (2003-05-30)

10. 'Like the 1991 policy, the revised policy aims to increase commercialization of IP. It recognizes that commercial exploitation of IP can contribute to economic growth and job creation by having contractors own the IP they create in the course of their work under Crown procurement contracts, and it also recognizes that there will be instances where the Crown will need to retain the IP in order to act in the broader public interest.
11. 'It further recognizes that the objective of commercializing IP from government contracts takes place within the framework of the government's Contracting Policy and its provisions with respect to socio-economic objectives.'
12. 'Most importantly, the revised policy recognizes that the primary objective of Crown procurement contracts is for the Crown to receive the deliverables contracted for, and to be able to use those deliverables and any arising IP for Government of Canada activities.'

Excerpt from TBS Contracting Policy Notice 2000-2

Intellectual property (IP) is anything resulting from a contract which can be copyrighted, trademarked, patented, licensed, etc. Potentially, IP can result from any contract. 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.

The government policy of allowing the contractor to retain the rights to IP generated under a Crown contract is designed to promote the development of new ideas, under the belief that the private sector has a greater capacity to commercialize and benefit from the IP. The Crown will not arbitrarily refuse to allow a contractor to retain the rights to IP.

The client department must decide to what extent IP rights are to be retained by the Crown, and PWGSC plays no part in this determination. However, the contracting officer must consult with the client department in the case of research and development or software development procurements, to determine the client department's position. Contracting officers may wish to discuss their needs with client departments to ensure that client departments are aware of the extent to which we can obtain for them the rights they need to use the IP created under their contract whether the Crown or Contractor owns the IP. Subject to market conditions (which will also affect the ownership terms that may be achieved) PWGSC contract terms 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, with the exception of commercialization of the IP by the Crown.

Client department may deal with IP rights in several ways:

Research and Development (R&D) contracts

• Contractor to retain ownership of IP
• Crown to retain ownership of IP

Goods contract with associated R&D

• Contractor to retain ownership of IP
• Crown to retain ownership of IP

Goods contract with no R&D expected

• Crown to retain copyright
• Contractor to retain all IP, including copyright

Services contract with no R&D expected

• Crown to retain copyright
• Contractor to retain all IP, including copyright.

Electrical Equipment

6B.180 (1994-06-23) 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.

6B.181 (2002-05-24) 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.

Special Production Tooling, Special Test Equipment and DND Materiel

6B.187 (2003-05-30) In order to carry out certain contracts, unique Special Production Tooling (SPT) and Special Test Equipment (STE) and/or Department of National Defence (DND) materiel are required by contractors in the manufacturing or in the repair and overhaul of defence supplies or other equipment. This does not apply when SPT/STE is the end product ordered under a contract, and is not for use by the contractor.

SPT/STE is normally acquired at the time of the initial manufacturing or the establishment of a repair and overhaul line or, occasionally, during the manufacturing or repair and overhaul process. SPT/STE is available for use in the manufacturing of additional units or parts or in their repair and overhaul.

6B.188 (2003-05-30) The management and control of all production assets, including SPT/STE generated under defence contracts, and DND-loaned materiel, is the responsibility of DND/Director Disposal, Sales, Artifacts and Loans (DDSAL). DND/DDSAL may be contacted at (819) 994-8692. DND/DDSAL responsibilities include the return and disposition of these production assets. (See 11.240 and 11.241.)

The management and control of production assets generated under contracts with the Canadian Commercial Corporation are the responsibility of PWGSC/Production and Assets Management Services (PAMS). PWGSC/PAMS may be reached at (819) 956-0057.

When there is a requirement for SPT/STE, contracting officers must first check with DND/DDSAL to determine if it is available from current inventories. When available, DND/DDSAL shall arrange for the loan of the SPT/STE to the contractor. When the SPT/STE is not available from the DND inventories, the PWGSC contracting officer shall ensure sufficient funding is available and shall authorize the purchase or manufacture of the required SPT/STE.

Since the cost of SPT/STE represents part of the cost of the end product being acquired by the client, payment is made out of the client's funds appropriated for the purchase of the end product. The cost of SPT/STE is to be included in the contract price for approval purposes.

6B.190 (1994-06-23) When planning for the use of SPT/STE, contracting officers should consider the degree of mobility of the equipment.

Contracting officers should also consider whether a separate contract should be entered into for such tooling.

Controlled Goods

6B.192 (2004-12-10) Controlled goods are listed in the Schedule to the Defence Production Act and are identified in the following groups on the Control Goods Program Website. The completeExport Control List is published on the International Trade Canada (ITCan) Website.

• Group 2: goods listed in item 2001 that are prohibited firearms, as defined in paragraph (c) of the definition of "prohibited firearms" in subsection 84(1) of the Criminal Code;
• Group 2: goods listed in item 2003 that are ammunition with a calibre greater than 12.7mm;
• Group 2: goods listed in items 2002, 2004 to 2022;
• Group 5: goods listed in item 5504; and
• Group 6: all goods listed.

It is the client department's responsibility to identify within any requisition that there are controlled goods aspects. For example, requisitions coming to Public Works and Government Services Canada from the Department of National Defence shall identify on the first line "this requisition involves controlled goods" or "this requisition does not involve controlled goods". In case of doubt, the ultimate authority for making this determination is the Export Controls Division of ITCan (613-996-2387).

U.S. Defense Priorities and Allocations System

6B.195 (1994-12-16) The United States (U.S.) Department of Defense allows Canadian inclusions to its Master Urgency List (MUL) which is a listing of programs designated as extremely important by the U.S. Armed Forces, the U.S. Joint Chiefs of Staff and the U.S. President. This ranking establishes where limited resources ought to be allocated. It is important that Canadian defence programs be included in the MUL to allow our NORAD (North American Air Defence) and NATO (North Atlantic Treaty Organization) commitments to be honoured, should any portion of the contract work require imports from the United States.

6B.196 (2004-05-14) The acquisition of defence material in the United States is controlled by the U.S. Defense Priorities and Allocations System (DPAS). In relation to Canadian defence requirements and also to U.S. defence requirements resulting in contracts placed with Canadian suppliers, Canada is given access to the system, equal to any other U.S. participant.

The Central Allocations and Defence Priorities Section Officer, Business Management Directorate (BMD), is responsible for coordinating Canada's participation in the U.S. DPAS. This includes coordinating the allocation of priority ratings, coordinating Public Works and Government Services Canada action regarding modifications to the U.S. Defense MUL, and notifying U.S. and Canadian suppliers of the priority rating.

The U.S. DPAS may be used whenever one of the following types of contracts is placed: (See 7A.140)

1. Canadian defence contracts placed by PWGSC with U.S. suppliers;
2. Canadian defence contracts placed by PWGSC with Canadian suppliers who may obtain material from U.S. suppliers;
3. U.S. defence contracts placed with Canadian suppliers through the Canadian Commercial Corporation (CCC);
4. U.S. defence contracts or subcontracts awarded to Canadian suppliers, who, in turn, are subcontracting for material to U.S. suppliers;
5. Canadian contracts with Canadian or U.S. suppliers for atomic energy needs; or,
6. Canadian contracts involving the acquisition of outer space requirements from U.S. sources, in joint Canada/U.S. undertakings.

Priority ratings received by a Canadian firm may not be extended to other firms in Canada unless authorization is sought and obtained from the U.S. Government, through the Central Allocations and Defence Priorities Section, BMD.

Minimum rated order dollar amount: The U.S. conducts their acquisitions under Federal Acquisition Regulations, including a Simplified Acquisition Threshold, which is currently set at US$50,000. If the dollar value of the contract is for less than one half of this threshold, use of a priority rating is optional, provided that delivery of the needed items can be obtained in a timely fashion without the use of a priority rating. In the case of these low dollar value purchases, the procurement officer should ensure that there is an important reason to request the priority rating clause.

The contracting officer should ensure that there is at least ninety (90) days between the contract date and the delivery date to provide sufficient time to have the rating in place.

The DPAS is not to be used to support procurement of end item(s):

• commonly available in commercial markets for general consumption;
• not requiring major modification when purchased for approved program use;
• readily available in sufficient quantity so as to cause no delay in meeting approved program requirements.

The following forms, which are available from the Central Allocations and Defence Priorities Section Officer, BMD, are to be used in making application for U.S. priority ratings:

PWGSC-TPSGC 1451-1, 'Application for U.S. Priority Rating Covering Importation of Quarterly Requirements of Materials from the United States' (english only) - Used by manufacturers to obtain, on a calendar quarterly basis, components to be incorporated in defence assemblies from U.S. suppliers for Canadian and U.S. defence purposes.

PWGSC-TPSGC 1451-2, 'Application for U.S. Priority Rating Covering Special Materials' (english only) - Used by all distributors and some manufacturers to obtain specific items for Canadian and U.S. Defence purposes.

PWGSC-TPSGC 1451-4, 'Application for Special Priorities Assistance for Purchase Order Placed on a U.S. Supplier' (english only). Used when the normal Priorities and Allocations System is insufficient to obtain required delivery promises.

Section 6C: Risk Management

Protection of Government Property, Employees and Interests

6C.215 (2002-12-13) The objective of Treasury Board (TB) Risk Management Policy is to safeguard the government's property and interests, and the interests of its employees as they do government work, by effectively managing the risks to government property, interests and employees. (See TB Risk Management Policy.) Public Works and Government Services Canada (PWGSC) manages the risks to government interests arising from the procurement process by identifying and analyzing these risks, and structuring contracts to reduce or eliminate the costs and consequences of harmful or damaging incidents resulting from them. The Crown self-underwrites only those risks to which the government alone is exposed and over which we and our clients generally have control. PWGSC does not indemnify other entities for risks not under government control, ensuring instead that our contractors make prudent use of risk management and insurance policies.

6C.216 (1994-06-23) There are four basic elements of a risk:

1. Threats: they are the sources of risk that may have an adverse result, e.g. acts of God, acts or omissions by a person.
2. Resources: these are the government's property or personnel which could be adversely affected by the threats.
3. Modifying factors: these are either internal or external to the above resources and tend to increase or decrease the probability or severity of any adverse and accidental events; e.g. installing sprinklers at government warehouses, storage of chemicals on premises.
4. Consequences: these are the adverse results of situations when the above three factors are combined.

6C.217 (2004-12-10) In order to effectively manage risks, the risk management process outlined in Annex 6.6 should be applied. Risk control and risk financing alternatives form the skeleton of risk management.

Advice from the PWGSC Advisor, Acquisition Program Integrity Secretariat, telephone number (819) 956-0912, should be sought concerning exceptional and unusual risks which may require modifications, amendments and changes to risk management requirements, including insurance.

Contractor's Risks

6C.221 (1994-06-23) For risks under the control of the contractor, e.g. the contractor's own risks or government property under the care, custody or control of the contractor, it is government policy to be indemnified by the contractor, and to not indemnify the contractor against the risks to which the contractor is exposed.

The contractor must provide the contracting officer with evidence of insurance that is determined to be required by the contracting officer, after consideration of the risks in a contract.

Contractors may carry, at their cost, any additional insurance protection they consider necessary.

Insurance

6C.225 (1994-06-23) Risk financing alternatives, especially insurance, should be considered after implementing all necessary risk control alternatives. Insurance is the most commonly used risk financing technique. Annex 6.7 identifies which insurance clauses are applicable to the identified risks (government risks or risks arising from the contractor's performance of the contract).

6C.226 (1994-06-23) The government normally self-underwrites those risks to which it alone is exposed and over which it generally has control, and, when relevant, establishes the appropriate method of underwriting these risks.

Where the self-underwriting option is to be applied, clients are responsible for obtaining Treasury Board (TB) approval if they decide to purchase commercial insurance. Clients are required to explain why the purchase of commercial insurance is necessary (e.g. cost-effective or practical reasons).

Commercial insurance may be purchased by any government department, as an alternative to the self-underwriting option, if there is an indistinguishable commingling among the liability risks of the contractor and the government.

6C.227 (1994-06-23) There are two main options available to the department or contractor when buying insurance:

1. in normal contracting situations, the contractor is responsible for the arrangement and control of the insurance. The role of the PWGSC contracting officer is to obtain, review and approve a certified copy of the insurance policy or certificate to ensure that the appropriate clauses are incorporated in the contractor's existing policies;
2. where risks involved are of a special or extra-hazardous nature, the types of insurance coverage required are to be specified by clients.

Government Property

6C.231 (1994-06-23) The contracting officer must determine the extent of government property under the contractor's care, custody or control, relating to a specific contract. The contractor is to be held responsible for any loss or damage resulting from the contractor's failure to take reasonable and proper care of such property, excluding loss or damage resulting from ordinary wear and tear.

The contractor is responsible for monitoring, investigating and documenting any losses of or damage to government property, to ensure that claims are properly made and paid to the government.

6C.232 (1994-06-23) TB Risk Management Policy concerning insurance of government owned or leased vehicles and equipment is summarized in annexes 6.8 and 6.9.

6C.233 (1994-06-23) Insurance requirements for ship building and repair generally follow the requirements below:

1. PWGSC requires the contractor, whenever feasible, to be responsible for managing the risks arising from the performance of the contract, including providing the contracting officer with a reasonably comprehensive and updated risk management program, including insurance.
2. An insurance program should be tailor-made to the specific risks of the ship building and repair contract, and should permit a cost-effective trade-off of the risks arising from the contractor's performance versus the potential insurance costs.

6C.234 (1994-06-23) To minimize risks to the government, all the risks associated with the delivery of goods (including the risk of loss or damage to the goods supplied, and any material supplied by the government, or to third parties) should rest with the contractor until the supplies are delivered to the point specified in the contract.

Claims

6C.238 (2002-12-13) Government departments are responsible for adequate and timely compensation, restoration, and recovery of losses in the event of harmful or damaging incidents arising from the risks involved in their departments.

Government departments must comply with the following Treasury Board policies: Policy on the Indemnification of and Legal Assistance for Crown Servants; and Policy on Claims and Ex Gratia Payments.

Government Quality Assurance

6C.244 (1994-06-23) Clients are responsible for stating their requirement for Government Quality Assurance (GQA), which includes quality assurance, quality control and quality inspection, 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 supplier performance history.

6C.245 (1994-06-23) The GQA requirement may be specified in terms of:

1. the degree of quality assurance expected and the quality standard against which verification will be conducted;
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/Qualification Program List (QPL)/Certification Program List (CPL) process;
   2. is manufactured under the same conditions as the product qualified during the QPL/CPL process;
10. the details of acceptance inspection, tests and trials.

As an alternative to items (g) through (j) above, and where available, the supplier may be required to be listed in an acceptable qualifying program which provides for adequate audit and controls.

Contracting officers should inform clients of the availability of Canadian General Standards Board (CGSB) or other listing programs which, if used for a procurement, would reduce the need for GQA. For example, CGSB listing programs are operated on a cost recovery basis with no direct expense or use of resources to the client.

6C.246 (1994-06-23) 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. Contracting officers should also advise the client of the financial and operational implications of appropriate GQA, for the client, the supplier and PWGSC.

6C.247 (1994-06-23) 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, e.g., 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 suppliers 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.

This is required to provide adequate protection for both the client and PWGSC.

Contracting officers 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.

Government Quality Assurance at Source

6C.251 (1994-06-23) 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 supplier has a record of marginal performance or unsatisfactory quality history and conditions preclude procurement from other sources.

6C.252 (1994-06-23) 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.

6C.253 (1994-06-23) PWGSC has the authority to provide additional quality tasking for civilian marine services, e.g. inspection and arranging for technical support.

This authority is provided through TB Document No. 749386, May 5, 1977, Section VI, Recommendation 2.

Facility and Systems Evaluations

6C.257 (1994-06-23) Facility and Systems Evaluations are conducted primarily to determine the suitability of sources of supply (facility evaluations) and the extent to which a supplier has established adequate product quality control (systems evaluations).

These evaluations may be carried out for any of the following reasons:

1. when assessing a new supplier;
2. when a supplier's compliance with a quality system standard or specification is considered a prerequisite to contract award;
3. when reliance on a supplier's quality system is used as a basis for determining what GQA is to be performed;
4. as a method of periodic GQA during a contract (sometimes referred to as quality audit or quality survey);
5. when it is impossible or uneconomical to verify or test the product (e.g. when internal components are inaccessible, inspection would be destructive or the cost of duplicating inspection would be prohibitive);
6. where the supplier's history or past performance indicates the need to determine if problems have been corrected;
7. when investigating the cause of recurrent product quality complaints, in order to determine the required corrective action;
8. to verify a supplier's quality control of a product qualified prior to and independent of contracting.

6C.258 (1994-06-23) Facility evaluations usually include an on-site investigation and a summary report of a supplier's suitability and potential to provide goods and services. They may involve a complete evaluation of a supplier's organization, management, production scope, facilities and capacity, and performance record, or a partial evaluation limited to the specific area of interest.

6C.259 (1994-06-23) Evaluations may also be performed by a review of:

1. a response to a questionnaire;
2. supplier quality history;
3. a report resulting from a plant visit;
4. a previous evaluation report.

6C.260 (1994-06-23) Contracting officers may conduct these evaluations, or request that they be carried out by CGSB on a cost-recovery basis. When it may be advantageous in terms of client service or expense to the Crown, contracting officers should consider requesting qualified personnel from other sectors/regions to conduct facility evaluations or other surveys on their behalf.

6C.261 (1994-06-23) Pre-award surveys/meetings are used to assist the contracting officer to confirm the capability of suppliers submitting bids and to determine whether the suppliers' systems will be suitable for the contractual requirements.

6C.262 (1994-06-23) Post-award surveys/meetings ensure that successful contractors clearly understand all contractual requirements and that their facilities and operating procedures are adequate to provide the specified goods and/or services.

6C.263 (1994-06-23) Special investigations may be conducted to address any problems which arise before, during or after production and which fall outside the scope of routine contract administration and production monitoring.

6C.264 (2004-12-10) A copy of all evaluations or surveys (form PWGSC-TPSGC 9041 - Facility Evaluation Survey Report) must be forwarded to the Acquisition Program Integrity Secretariat (APIS), for circulation and reference. Any other reports prepared, including a record of the action taken as a result of the evaluation, or a note indicating where such information can be obtained, must also be forwarded to APIS.

Industrial Security Requirements (Personnel or Organization)

6C.270 (2004-12-10) When a requisition/amendment contains a requirement for security measures, planning of the procurement must take into account that the organization screening and personnel security screening process may take a considerable length of time.

The approximate time frames for completing 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);
5. NATO Clearance: 100 - 200 days (non-Canadian citizen)

For international contracts, the contracting officer must verify with Canadian and International Industrial Security Directorate (CIISD), telephone number (819) 948-1661, that there is an Industrial Security Memorandum of Understanding (MOU) in place with the relevant foreign country.

The contracting officer must provide as much lead time as possible to CIISD to process organization and/or personnel security screenings, and to the prospective supplier(s) to implement security recommendations prior to contract award.

6C.271 (2004-12-10) Protected/Classified information or assets for transmittal outside of Canada must only be forwarded to the Document Control Section (DCS) of CIISD. Onward transmission and receipt through approved security channels will be undertaken by the DCS.

6C.272 (2005-06-10) Upon receipt of the Security Requirements Check List (SRCL) form TBS/SCT 350-103. (see 3.009 for step-by-step procedures on handling SRCLs), CIISD will:

1. review the SRCL and attachments for completeness and clarity;
2. obtain clarification from the client's Departmental security Officer, project officer or the Public Works and Government Services Canada (PWGSC) contracting officer, as applicable;
3. ensure that the participating countries have the appropriate Industrial Security MOU's/Arrangements/Agreements with Canada;
4. sign the SRCL form as the Contracting Security Authority and select the appropriate security requirements clause, with modifications as required, from the Standard Acquisition Clauses and Conditions (SACC) Manual;
5. provide information to the contracting officer on the organization's security status of identified potential suppliers;
6. provide information to Canadian suppliers on the preparation and transmission of Protected or Classified information/assets. Classified information/assets must be forwarded to DCS.

6C.273 (2004-12-10) Provided that it would not discriminate unfairly between potential suppliers, a solicitation may include an appropriate organization's security screening/clearance level as a mandatory technical requirement prior to bid evaluation. Alternatively, the required organization's security screening/clearance level may be obtained after selection of the potential contractor, provided the solicitation does not contain Protected/Classified information.

6C.274 (2004-12-10) Managing the risks associated with the destruction of Protected/Classified government waste requires additional measures. The Corporate Security Technical Standard (Annex 6.14) defines PWGSC Corporate policy and procedures relating to Classified waste destruction. Contracting officers should follow the Interim Standard and refer to Annex 6.15 regarding Classification Levels of Shredders, and to Annex 6.16 regarding Request for Non-Accessioned Disposal.

The Departmental threshold may be exceeded when administering destruction contracts on behalf of other government clients, based on the client's threat risk assessment. If such is the case, a Security Guide may be developed by the client as amplifying instructions, which are to be attached to the SRCL. (See SACC Manual clause F2037D.)

For foreign Classified information, consult with CIISD prior to undertaking destruction.

Foreign Ownership, Control or Influence (FOCI)

6C.275 (2003-05-30) Foreign Ownership, Control or Influence (FOCI) involves a situation whereby a third party individual, firm or government is assumed to possess dominance of, or authority over, a Canadian facility to such a degree that a third party individual, firm or government may gain unauthorized access to extremely sensitive INFOSEC information. A FOCI evaluation is an administrative determination of the nature and extent of foreign dominance over the contractor's management and/or operations.

6C.276 (2004-05-14) Procurement requirements involving the potential release of extremely sensitive INFOSEC, a special category of CLASSIFIED Communications Electronic Security (COMSEC) information, are subject to a FOCI review by the Policy Division, Canadian and International Industrial Security Directorate (CIISD). Recommendations regarding the use of FOCI will then be submitted to the procurement directorate, and if appropriate, to the Procurement Review Committee Secretariat of the Acquisitions Branch.

6C.277 (2003-05-30) Suppliers must be informed of the requirement for a FOCI evaluation in the bid solicitation; however, completed packages should only be requested after the bid evaluation process has determined which bidder(s) will receive a contract award.

6C.278 (2003-05-30) Contracting officers are to provide two (2) copies of the FOCI Submission for the successful bidder(s) to the Policy Division, CIISD. Verification of the FOCI and the required Facility Security Clearance of the potential Canadian or U.S. supplier must be obtained from CIISD prior to contract award.

Any irregularity known to PWGSC employees regarding compliance with the INFOSEC access approval of the firm under contract involving extremely sensitive INFOSEC must be immediately reported to the Director of CIISD.

Bid/Contract Security (Financial)

6C.279 (1997-09-15) Financial security can be required from a bidder/contractor to:

1. protect the Crown against loss should a winning bidder fail to enter into a contract (bid security);
2. ensure that a contractor's obligations under a contract are carried out (contract security); or
3. protect subcontractors and materiel suppliers (payment bond).

The financial security may be a security deposit (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit) or a surety bond. The bidder or contractor has the choice of which form of financial security will be used.

The decision to obtain financial security for competitive solicitations must be taken prior to issuing the bid solicitation.

Bidders and contractors have the right to determine which form of financial security they will provide. See SACC Manual clauses E0001T, E0004T and E0007T.

6C.280 (1994-06-23) Government bonds will be valued at face value.

6C.281 (2003-05-30) Treasury Board has an updated list of insurance companies whose bonds may be accepted as security by the government.

Bid Security

6C.285 (1994-06-23) The decision to obtain bid security should take into account the following:

1. the extent of bidder prequalification possible;
2. the type of work and custom of the trade;
3. the likelihood of attempts to withdraw;
4. the consequences of the failure or inability of the bidder to enter into a contract.

6C.286 (1994-06-23) The amount of bid security is to be the minimum required to ensure that the bidder enters into the contract. See SACC Manual clauses E0001T and E0004T.

If the estimated contract value is $250,000 or under, the security should normally not exceed 10 percent of the bid price. In the case of larger acquisition values, the percentage will be determined by the contracting officer.

6C.287 (2003-05-30) Any letter of credit received by Canada must have an appropriate expiry date. The letter of credit should not have its expiry date coincide with the projected cessation of the risk which it covers: for instance, the expiry date stated in the letter of credit should not be the same date as that which is projected for the award of the contract. The expiry date should allow for a comfortable turn-around time from the estimated date of award of contract, to ensure that the contracting officer is satisfied that the bidder has discharged its obligations for which the letter of credit was provided. If the bidder has not met its obligations, the contracting officer must have sufficient time to prepare and present the required demand for payment under the letter of credit.

Contract Security

6C.290 (1997-09-15) For real property, goods and services contracts which have an anticipated value of over $100,000, the decision to obtain contract security, and the amount of security required, should take into account the following:

1. the type of work and custom of the trade;
2. the consequences of the failure or inability of the supplier base to fulfil contractual obligations;
3. costs associated with the provision of security, compared with the degree of risk involved;

For real property, goods and services contracts which have an anticipated value of $100,000 or less, contract security is to be sought on an exceptions basis and only in cases where there is readily identifiable or demonstrable risk to Canada. A justification should be prepared for each case where security is required.

Decisions as to whether and how much financial security will be required should be based on the circumstances of the individual procurement. Some businesses may encounter difficulty in obtaining certain kinds of security, therefore, contracting officers should be sensitive to this and not require unreasonable contract security. In certain cases, perhaps an advance form of security may not be needed; holdbacks in contract payment may suffice. Treasury Board recommends that financial security not be considered until the anticipated cost of the contract exceeds $100,000. However, issues relating to the nature of the requirement are usually more important than the dollar value.

6C.291 (1997-09-15) When the decision to obtain contract financial security has been taken, contracting officers must stipulate in the bid solicitation documents that the provision of contract security will be required. SACC Manual clause E0007T shall be included.

6C.292 (2003-05-307) Any letter of credit received by the Crown must have an appropriate expiry date. The letter of credit should not have its expiry date coincide with the projected cessation of the risk which it covers: for instance, the expiry date stated in the letter of credit should not be the same date as that which is projected for the completion of the work. The expiry date should allow for a comfortable turn-around time from the estimated date of completion of work, to ensure that the contracting officer is satisfied that the contractor has discharged its obligations for which the letter of credit was provided. If the contractor has not met its obligations, the contracting officer must have sufficient time to prepare and present the required demand for payment under the letter of credit.

Controlled Goods

6C.295 (2002-05-24) As of April 30, 2001, no new controlled goods can be provided unless persons are registered, exempt or excluded under the Controlled Goods Program.

Economic Price Adjustments in Firm Price Contracts

6C.297 (2004-12-10) Under unstable market conditions, one or more elements of the cost of a good or service may be subject to significant fluctuations in price so that neither the buyer nor the seller would have confidence in accepting a fixed or firm price over an extended period of time. Contracting officers should seek to reduce the risk of uncertainty.

Economic price adjustments should not normally be included in contracts with delivery schedules of less than twelve (12) months, or contracts valued under $100,000.

There are a number of possible actions:

• postponing the procurement;
• using available substitute materiel;
• providing advance information on requirements to potential contractors so as to benefit from their improved ability to control costs by forward planning and to make full use of the commodity futures market in appropriate circumstances;
• reducing the period of term contracts or the quantities ordered on production contracts;
• increasing production rates to compress the duration of contracts;
• reducing administrative time allowances in the procurement process (solicitation, award decision, issuance of contract and authority to commence work) - but taking into account required time frames under the North American Free Trade Agreement, the World Trade Organization Agreement on Government Procurement and the Canada-Korea Telecommunications Equipment Agreement;
• procuring the unstable element separately (in the construction industry, this technique is known as pretendering);
• isolating the unstable element in pricing the work and providing for price adjustment, both upward and downward, on it alone, in accordance with a reliable predetermined formula such as an established economic index.

6C.298 (1994-06-23) When a competitive bidding process is used, the proposed price adjustment provisions must be included in the evaluation of the bid. In all other situations, economic price adjustment provisions must be agreed upon during negotiation of the initial or base year contract price.

6C.299 (1994-06-23) When a provision for future wage or price adjustments, on one or more elements of the cost of a good or service, is necessary to protect the contractor and the government against significant economic fluctuations, economic price adjustment provisions may be used in firm price type contracts and in contracts which contain firm price elements within the basis of payment.

Adjustments to firm prices in a contract will be allowed only if provided for in the contract.

Types of Price Adjustment

6C.303 (1994-06-23) The price adjustment formula must provide for both upward and downward revision of the firm base price, and include a ceiling or limitation of expenditure. It must identify, if applicable, the economic wage or price index to be used, the firm base price element, and the base period for which adjustments are to be made.

6C.304 (1994-06-23) The calculation of any adjustment formula should remain consistent with the cost/price accounting treatment used to arrive at the firm base price. This will ensure accuracy in measuring the amount of variation from the firm base price.

6C.305 (1994-06-23) The various economic price adjustment clauses are in the SACC Manual, subsection 5-C. The price adjustment method selected should be the simplest, most suitable adjustment formula to provide the protection necessary to both parties with the least administrative effort. The requirements of materiality and practicality must be met.

The advice of a cost analyst is appropriate in the development of any significant or major economic price adjustment provisions or for the implementation of an economic price adjustment provision through the use of an accounting type formula.

6C.306 (1994-06-23) Adjustment provisions to prices for commercial goods and services should be based on increases or decreases from an agreed on posted, reference or firm base price. If the original contract or firm base price includes a discount factor, from the initial or then current established catalogue price, the same discount factor should be applied to the adjusted price, unless otherwise stated in the contract.

Statistics Canada publishes a variety of reports providing changes in price indices, material and labour costs. The Department of Labor performs this function in the United States. Private sector surveys may also be used.

6C.307 (1994-06-23) Adjustments based on actual rates for labour or actual costs for material are based on increases or decreases in firm base price elements experienced by the contractor.

The use of this adjustment method is limited to contingencies beyond the contractor's control and where the contractor's accounting system permits timely compilation of all necessary cost data relative to the economic price adjustment during contract performance.

A company's union agreement with its employees may be considered an acceptable economic labour rate index for that company provided that it reflects comparable labour rate movements within that industrial sector.

Exchange Rate Fluctuations

6C.313 (1994-06-23) The exchange rate risk on the purchase of materials, components or products from outside Canada is generally considered a normal business risk. However, PWGSC will not oblige suppliers to assume this risk when currency fluctuations are expected to be an issue. In such situations, the cost analyst should be consulted to determine which party should assume the currency risk in the contract.

An example of an extreme risk posed by an exchange rate fluctuation, as opposed to a normal business risk, would be a situation where the exchange rate fluctuates by five percent over a two-month period, in an unpredictable manner.

Factors to be considered include:

• duration of the contract or delivery lead times;
• experience and knowledge of similar buys; and
• value and type of commodity.

Exchange rate adjustment provisions may be applied to all procurements, except for:

1. those in the European and Washington regions;
2. Canadian Commercial Corporation contracts;
3. telephone buys; and
4. cost reimbursable contracts and cost reimbursable portions of a contract.

Subcontracting

6C.320 (1994-06-23) Prior to contract award, a bidder may propose any subcontracting arrangements. The contracting officer will determine whether or not to accept these proposed arrangements. The provisions in the General Terms and Conditions do not restrict the contracting officer from considering the subcontracting options proposed.

6C.321 (2002-12-13) No subcontract containing security requirements may be approved or let without the prior approval of the Canadian and International Industrial Security Directorate, PWGSC.

Warranty

6C.327 (2002-12-13) In a contract for the sale of goods, any affirmation of fact or any promise by the seller relating to the goods is an express warranty. The Warranty provisions in the General Conditions do not negate or limit in any way the operation of other relevant warranties that are, as a general rule, implied or imposed by law.

Examples of relevant warranties that are implied by law are:

1. the fitness of the goods for the purpose intended, or
2. the merchantable quality of the goods.

These warranties are implied in most contracts for the sale of goods through the Sale of Goods Act, a version of which exists in all Canadian provinces and territories except Quebec. In Quebec, the warranty under the Civil Code is a warranty of ownership and of quality, which includes latent defects.

6C.328 (1994-06-23) The contracting officer may negotiate an increase to the warranty time period in a contract, subject to client agreement to the proposed time period and related cost. This change in warranty time period should be addressed in the submission requesting approval.

6C.329 (1994-06-23) Any requests for lessening the Crown's full rights at law, a disclaimer, limitation of the contractor's liability, or decrease of the warranty time period, must be reviewed by Legal Services, be acceptable to the client, and form part of the submission requesting approval.

6C.330 (1994-06-23) It may be necessary to consider obtaining a broader warranty than that contemplated by the warranty provision appearing in the General Conditions to cover 'symptomatic defects' or 'epidemic failures.'

These are cases where the same or similar defects have developed in several identical items of finished work, or components, and it is reasonable to assume that the same defects will be found in the total quantity of such items which have already been delivered, or remain to be delivered.

Where this type of warranty is requested by the client, or considered desirable by PWGSC, the contracting officer, in consultation with the client, must determine the extent and nature of the warranty required, and request Legal Services to prepare a suitable provision to cover the requirement. In the case of negotiated firm price contracts, the contracting officer must obtain the client's agreement to the estimated cost of this warranty.

6C.331 (2004-05-14) The general conditions provide that contractors must carry out warranty work at their own expense. The following interpretations apply:

1. In the case of firm price contracts awarded as a result of a competitive bid solicitation, where the procurement process precludes any adjustment to the price quoted, costs incurred as a consequence of warranty consideration shall be the responsibility of the contractor.
2. In the case of negotiated firm price contracts where contingency for warranty work becomes a factor for consideration during the price negotiations, the amount included in the firm price is to be kept to reasonable levels, and must be specifically approved. Supporting details are to be part of the cost summary presented in the contract approval document.
   
   In the case of negotiated firm price contracts governed by the Defence Production Act, the contractor must certify that the price is based on costs computed in accordance with Contract Cost Principles 1031-2 which do not permit any increase in reserves for guaranteed work. Therefore, costs for work and/or expenses to provide for product correction/adjustment/replacement under warranty requirements are not to be included in the contract price since provision for these expenses has already been included in the certified price.
   
   
3. In cost reimbursable contracts, the contractor is not allowed to charge any contingency for warranty as an element of cost. If the contractor is required to make good under the warranty provisions, the contracting officer may allow recovery of the reasonable cost incurred for direct labour and direct material only. There is to be no allowance for overhead or profit.
   
   If the contracting officer is of the opinion that reasonable warranty costs may be allowed, then an appropriate clause approved by Legal Services must be inserted in the contract to authorize such costs. The contract should contain a line item providing for the allowance of costs, with or without a maximum estimated expenditure.

Audit

6C.337 (1994-06-23) There are a number of circumstances where specific provision for audits must be made in contracts. This requirement is an integral part of the procurement planning process.

Cost Reimbursable Contracts

6C.341 (1994-06-23) Under Section 34 of the Financial Administration Act (FAA), no payment (other than a progress payment) may be made under a contract unless the deputy of the appropriate Minister, or other person authorized by that Minister certifies that the work has been performed, the goods supplied or the service rendered, as the case may be, and that the price charged is according to the contract, or if not specified in the contract, is reasonable.

In the case of cost reimbursable contracts, a price is not specified in the contract but is left to be ascertained after completion of the work. Therefore, in accordance with the above section of the FAA, it is necessary for the appropriate authority to certify that the price, based on actual costs incurred when these are known on completion of the work, is reasonable. The purpose of the reference, in all cost reimbursable contracts of more than $50,000, to the costs incurred being determined by audit of the Minister, is to provide a basis for such certification of the reasonableness of the price.

Firm Price Contracts

6C.345 (1994-06-23) All non-competitive firm price contracts valued over $50,000, whether for the acquisition of commercial or non-commercial products and services, require the submission of a price certification by the contractor. All such contracts shall also have a discretionary audit clause included in the contract.

This applies to all such contracts issued by PWGSC and those issued by CCC on behalf of the United States Department of Defense (DoD) and National Aeronautics and Space Administration (NASA), except for contracts for which the price is based on tariffs fixed by public regulatory bodies and not subject to negotiation by PWGSC.

Fixed Time Rate Contracts

6C.349 (1999-12-13) Time charged and the accuracy of the Contractor's time recording system may be verified by Canada's representatives before or after payment is made to the Contractor under the terms and conditions of the contract, whether competitive or non-competitive and regardless of value. The extent of the verification carried out should, however, reflect the value of the contract. (see C0701D)

This applies to all such contracts except those for provision of temporary help services and rental of equipment.

Refunds of Excess Profits

6C.353 (1994-06-23) As the result of an audit, or for various other reasons, it may be determined that a contractor has realized unreasonably high profits from a contract. On occasion, a contractor may desire to return excess profits to the department. The special procedures for dealing with these situations are in Annex 11.2.

Differences of Opinion/Interpretation

6C.357 (2005-06-10) On occasion, there may arise differences of opinion and interpretation between the contracting officer and the auditor regarding the legitimacy of audit findings. These differences of opinion/interpretation must be resolved by the Director of Procurement, in concurrence with the Director of Acquisition Program Integrity Secretariat, before close out action will be taken by Contract Audit Group.

Section 6D: Rules and Constraints

Official Languages Act and Regulations

6D.378 (1997-03-31) 'Contractors and prospective contractors must be dealt with in the official language of their choice as required by the Act and Regulations. From the beginning of the contracting process, contractors should have access to the information related to this process in the official language of their choice.'

Official Languages Obligations

6D.379 (1997-03-31) 'When bid solicitations are national in scope or originate from an office having the obligation to serve the public in both official languages pursuant to the Act and Regulations, all regular or standardized documents must be provided in both official languages (whether through the media or by electronic communications systems). This requirement also applies to public notices, statements of terms and conditions, basic forms, bid solicitations, standards, purchase descriptions and contracts.

Note: In this policy, standards are those produced by a federal institution, or by a private or public standards-writing organization, if they are available in both official languages at the time the contracting process begins.'

While Treasury Board Secretariat requires that contracts be available in the two official languages, our legal services advise that only one version should be signed, i.e. that selected by the Contractor.

6D.380 (1997-03-31) 'Where non-standardized documents, such as specifications, are used, it is up to the federal institution, i.e. the contracting authority (or the client department responsible for the preparation of the specifications when a common service organization handles the contracting process only) to determine if these documents must be available in both official languages to provide information to contractors in the language of their choice, in conformity with the Official Languages Act and Regulations. Thus, the non-standardized or specific documents may be provided in only one official language when the federal institution determines and can substantiate, based on relevant information regarding their public and the marketplace, that they will be requested in that language only. If it is determined later that a significant demand exists for such documents in the other official language, the federal institution must take the necessary measures to make the documents available in the other official language. In some cases, where the specifications do not originate in Canada, they are not translated.'

6D.381 (1997-03-31) 'When the bidding is not national in scope or when an office of a federal institution does not have obligations under the Act and Regulations, the contracting documents may be prepared only in the official language of the majority of the population concerned. This also applies to subsequent operations.'

Responsibilities

6D.382 (1997-03-31) 'The contracting authority (or the client department responsible for the preparation of the specifications when a common service organization handles the contracting process only) is responsible for setting out the requirements, including those on official languages, and for the quality of the language of their statements of terms and conditions, and specifications. The institution is also responsible for actively offering the related services to the public in Canada in the official language of its choice, as required by the Act and Regulations.'

6D.383 (1997-03-31) 'The federal institution must include the appropriate conditions in its bid solicitation documents and its contracts to ensure that, when the public comprises members of both official language communities, its contractors observe the requirements of the Act and Regulations on service to the public and, where applicable, of Treasury Board policies. For example:

• Any contractor who carries out work on behalf of a federal institution (see section 25 of the Act) in a location where the federal institution would have to provide services or communications to the public, including supplemental background documentation such as brochures, operation and maintenance instructions, parts lists in both official languages, must also do so in both official languages.
• When the site of a project is in a location where a significant demand exists for services in English and French under the Act and Regulations, the signs must be erected in both official languages.'

6D.384 (2002-12-13) 'When a common service organization carries out procurement for goods or services, the client federal institution must submit, where necessary, contractual documents, including its requisition, specifications, standards and purchase descriptions in both official languages. If it does not do so, the federal institution must be prepared to show that its approach is consistent with the Act and Regulations.'

TB Contracting Policy
Appendix F - Official Languages

International Sanctions

6D.390 (2004-12-10) The International Trade Canada Website lists the current Canadian Economic Sanctions. PART A deals with Canadian Legislative Instruments: 1) the United Nations Act; 2) the Special Economic Measures Act; 3) some provisions of the Export and Import Permits Act. PART B deals with Countries or Groups Subject to Canadian Economic Sanctions. PART C deals with Procedures for Seeking Exemption Certificates and Permits.

To comply with the Canadian Economic Sanctions, Standard Acquisitions Clauses and Conditions (SACC) Manual clause K2105D or M2100D must be included in all contracts. Canada cannot procure any goods or services that originate, either directly or indirectly, from the countries or persons subject to economic sanctions.

6D.391 (1996-06-03) When, in order to meet a client's operational requirements, it appears necessary to deviate from these sanctions, legal services must be consulted to determine the appropriate course of action, if any, for the particular situation.

The ability to deviate from sanctions is determined by the governing regulations. Clearly, however, Public Works and Government Services Canada (PWGSC) does not have the explicit authority to so decide.

Excise Taxes, Duties and GST/HST

6D.397 (2005-06-10) Federal government contract enquiries regarding excise taxes and duties, including those relating to rates, exemptions, refunds, other methods of valuation, prohibited items, and other applications of legislation concerning excise taxes and duties, must be referred to the nearest Canada Border Services Agency (CBSA) office.

The CBSA Business Enquiry and Registration toll free number is 1-800-461-9999.

Federal government contract enquiries related to the Goods and Services Tax (GST), Harmonized Sales Tax (HST), Defence Supplies Remission of Customs Duty and Federal/Provincial Reciprocal Tax Agreements must be referred to the Acquisition Policy and Process Directorate at (819) 956-5024.

Customs Duty

6D.401 (2004-05-14) Imported goods are charged with duties from the time of importation. The rates of duties on imported goods will be the rates applicable to the goods at the time when the documentation is presented to obtain release of the goods from CBSA.

6D.402 (2004-05-14) The primary basis for determining the value of duty on imported goods is the Transaction Value System of Valuation, which is generally the invoice price.

To determine whether an importation can be valued under this method, the following questions must be addressed:

1. Were the goods sold for export to Canada and can the price be established?
2. If there is a relationship between the purchaser and the vendor, can it be demonstrated that the price paid or payable for the goods was not influenced by that relationship?
3. Are there any limitations on the sale? These include: restrictions respecting disposition or use of the goods; conditions affecting the sale; or when a portion of the proceeds of a subsequent resale accrues to the vendor.
4. If the answer to questions (a) and (b) is "yes" and there are no limitations as outlined in (c), the transaction value method must be used, and is calculated in the following manner:
   1. Price paid or payable for the goods including all direct and indirect payments to the vendor or for the vendor's benefit.
   2. Additions, if applicable (if not already included in (a) above):
      • selling commissions incurred by the purchaser;
      • packing costs (domestic and export packing);
      • the value of assist: i.e. goods or services supplied to the vendor free or at a reduced cost by the purchaser;
      • royalties and license fees directly related to the sale of the goods;
      • proceeds of any subsequent resale to be remitted to the vendor;
      • transportation, insurance and associated costs up to and at the point of direct shipment.
   3. Deductions, if applicable (if included in (i) above):
      • transportation, insurance and associated costs from the point of direct shipment;
      • construction, erection, assembly, maintenance and technical assistance costs, after importation;
      • import duties and taxes.
5. If this method cannot be used, refer to the nearest CBSA office.

Drawbacks and Duties Relief

6D.406 (2003-12-12) Drawbacks and duties relief programs are intended to help exporters become and remain more competitive in foreign markets, by granting them relief from the duties and taxes paid in respect of:

1. goods imported and then exported before any use is made of those goods;
2. goods imported and used in the manufacture in Canada of goods that are exported; or
3. materials imported and consumed or expended in the manufacture in Canada of goods that are exported.

The Duties Relief Program grants relief from duties on imported goods that are exported either in the same condition or after having been manufactured. Those goods qualify for relief from the customs duties, anti-dumping and countervailing duties, and excise duties and taxes other than the GST. Relief is granted at the time the goods are imported.

The Drawback Program has similar characteristics and advantages as the Duties Relief Program, with the exception that duties and taxes must be paid at the time of importation and are refunded after the goods have been exported.

Defence Supplies Remission of Customs Duty

6D.410 (2003-12-12) Remission of customs duty payable is granted under the Tariff Item No. 9982.00.00 when:

1. the total contract value of the defence supplies is $250,000 or more. This reflects the import value of the goods plus the duty that would be applicable in the absence of the customs tariff; and
2. the goods are certified by Public Works and Government Services Canada (PWGSC) to be defence supplies.

6D.411 (1998-06-15) Since duty rates vary, depending on the type of product, country of origin and mix of imported components, it may be difficult to decide whether the defence supply is subject to the tariff. Where there is uncertainty as to whether the total estimated expenditure will exceed the $250,000 threshold, contracting officers should request prices with customs duty identified as a separate item.

6D.412 (2004-05-14) When the party responsible for importation is other than the Department of National Defence (DND), a copy of the following certification must be attached to the contract.

'CERTIFICATE FOR DEFENCE SUPPLIES

I certify that the items purchased under contract number ____________ are 'defence supplies' as defined in the Defence Production Act, pursuant to Tariff Item No. 9982.00.00.'

Approved by Authorized Officer:

__________________________
Signature

__________________________
Title

__________________________
Date

The only proof acceptable to the Canada Border Services Agency (CBSA) from the contractor that the import is a defence supply is a copy of the certification.

6D.413 (2005-12-16) A copy of the certification may be requested by the DND ManagementDirector Supply Chain Operations / Customs, or by the investigating Regional Compliance Verification Division of the CBSA. These parties investigate claims for remission and may contact the contracting officer to verify the claim.

6D.414 (2004-05-14) When DND is the party responsible for importation, a copy of the contract for defence supplies is accepted by the CBSA as sufficient proof for remission. A copy of the certification for defence supplies does NOT need to be attached to the award document.

6D.416 (2003-12-12) When the total estimated value of a Standing Offer exceeds $250,000, each call-up is subject to the Tariff Item No. 9982.00.00.

Duty and the GST/HST on Tools, Equipment or Spare Parts in Contracts for Services by Non-residents

6D.420 (2004-05-14) Customs duty and the Goods and Services Tax or the Harmonized Sales Tax (GST/HST), as applicable, may be imposed on any tools, equipment or spare parts that are brought into Canada by non-resident personnel performing certain services under a PWGSC contract. When assessed, such duties and the GST/HST are payable to the CBSA.

The following interpretation of applicable regulations is intended as background information only. If necessary, specific questions relating to actual cases should be directed to the nearest regional CBSA Office. The application or relief of customs duty and the GST/HST is stated in each item below in italics.

1. 'A non-resident worker entering Canada with personal tools or other equipment to erect, install or repair machinery or other plant equipment, the said worker being sent here by the foreign manufacturer of the machinery or plant equipment, may import the tools or other equipment under authority of the Temporary Importation (Tariff Item no.9993.00.00) Regulations. See the CBSA Memorandum D8-1-1, Appendix C, for more information.
   (Full relief of customs duty. The GST/HST is payable on 1/60^th of the value of the tools and/or equipment for each month the goods remain in Canada.)
2. A non-resident worker entering Canada with tools or other equipment supplied by the manufacturer of the machine to be erected, installed or repaired may bring the tools or other equipment into Canada on a 1/60^th basis under the Temporary Importation (Tariff Item No. 9993.00.00) Regulations. See the CBSA Memorandum D8-1-1, Appendix C, for more information.
   (Full relief of customs duty. The GST/HST is payable on 1/60^th of the value of the tools and/or equipment for each month the goods remain in Canada.)
3. A non-resident worker entering Canada with tools or other equipment to repair, erect or install machinery or other equipment, when the contract is with a foreign firm which is not the manufacturer of the machinery or other equipment.
   (Full customs duty will apply. The GST/HST is also payable on full value where there is no relief available under any other provision (e.g. Canadian Goods Returned.)
4. Duty and the GST/HST are levied on all spare parts at the time of entry. Following the export from Canada of the balance of the unused spare parts under CBSA supervision, a drawback claim may be filed for return of the customs duty applicable to the unused spare parts under authority of the Goods Imported and Exported Drawback Regulations.
   (The GST is not refundable.)'

Duty and GST/HST on the Repair and Overhaul of Crown Property Abroad

6D.424 (2004-05-14) The treatment of Crown property (i.e. goods) returning to Canada having been repaired or overhauled abroad varies depending on the country where the repair or overhaul is done. Where the country is a free trade partner country, the goods return to Canada under the provisions of Tariff Item No. 9992.00.00 or in the case of vessels, Tariff Item No. 9971.00.00. The policy and procedures relating to the administration of these tariff items are outlined in CBSA D8-2-26 and D8-2-25 respectively. Where the country is not a free trade partner country, the goods may be entitled to the provisions of the Canadian Goods Abroad Program contained in sections 101-105 of the Customs Tariff. Under certain conditions, subsection 101(1) of the Customs Tariff provides full customs duties and GST/HST relief on the Canadian export value of goods when the goods are returned to Canada. The policy and procedures relating to the administration of this program are outlined in CBSA D8-2-1.

Goods imported under Tariff Item Nos. 9992.00.00 and 9971.00.00 are customs duty free. Under the Canadian Goods Abroad Program customs duties are owed on the value of the repair or overhaul. Whichever provision is used to account for the customs duties, GST is owed on the value of the repair or overhaul unless it is done under a warranty arrangement.

The goods qualify for Tariff Item Nos. 9992.00.00 and 9971.00.00 if the following conditions are met:

1. The required documents are submitted according to the Tariff Item Nos. 9992.00.00 and 9971.00.00 Accounting Regulations (see CBSA memoranda D8-2-25 and D8-2-26), including an invoice and proof of export.
2. The invoice or written statement from the foreign processor must include the value of the repair or alteration.
3. Proof of export can be a customs or transportation document, an exporter declaration, or other documents set out in the Regulations that describe the goods sufficiently to establish that the re-imported goods are the same goods that were exported. Records of the make, model, and serial numbers help identify the goods.

The goods qualify under the Canadian Goods Abroad Program where:

1. the goods are documented in a manner acceptable to the CBSA;
2. the CBSA is satisfied that the repair or overhaul could not have done in Canada, and
3. the goods are returned to Canada within twelve (12) months from the day on which they are exported.

Contracting officers should verify:

1. that no claim for drawback has been paid in respect of the goods temporarily exported, and
2. in the case of the Canadian Goods Abroad Program, that repair facilities are not available within a reasonable distance in Canada.

6D.425 (2004-05-14) The CBSA imposes different requirements depending upon the type of work carried out abroad, and may accept a verbal declaration from the consignee, or PWGSC, that proper facilities are not available to do the repairs or overhaul within a reasonable distance in Canada.

In addition, Canadian and U.S. government agencies establish lists of approved repair firms for certain articles for use at defence establishments that are manufactured to rigid specifications. In such cases, if no Canadian firm is approved to perform the repairs, this will be accepted as satisfactory evidence that the repairs could not be made in Canada.

6D.426 (2003-12-12) When calculating duty and the GST/HST on the service performed abroad, the pricing factors to be taken into consideration are: the cost of the material used; the cost of labour; factory overhead; and a normal profit markup. The value for duty remains the same, even where the repair is done under a warranty arrangement and there is no charge made for the repair or overhaul.

6D.427 (2003-12-12) Where it is not possible to repair the goods and they are replaced under a warranty arrangement, the replacement goods are subject to full customs duties but under Section 5 of Schedule VII to the Excise Tax Act are non-taxable for GST purposes.

6D.428 (2003-12-12) There is no GST/HST payable on goods imported after having been exported for warranty repair work. This is provided for under paragraph 3.(j) of the Non-Taxable Imported Goods (GST/HST) Regulations.

Duty and GST/HST on Canadian Goods Returned

6D.429 (2004-05-14) The following paragraphs discuss the application of duty and GST/HST for goods that are re-imported into Canada after having been exported for reasons other than for repairs, equipment additions, or work done abroad.

1. Customs duty does not apply to Crown property returned from abroad without having been advanced in value or improved in condition by any process of manufacture or other means, or combined with any other article abroad. Refer to the CBSA Memorandum D10-14-11 for more information.
   
   For the application of the GST/HST, refer to CBSA Customs Notice N-118 for more information.
2. Articles to be tested only and not adjusted, altered or enhanced in value in any way in conjunction with, or as a result of, a test regardless of whether a charge is made for the test; and
3. Customs duty and the GST/HST do not apply to Canadian government-owned munitions and supplies of war, on their return from abroad to a department or agency of the government. This is not intended for the remission of the duty and the GST/HST on goods which have been purchased by government departments and agencies specifically for import into Canada. It applies only to munitions and military stores being shipped to departments or agencies of the government from a Canadian Armed Forces establishment abroad, refer to Section 27 of the CBSA Memorandum D10-14-11 for more information.

Withholding of 15 percent on Service Contracts with Non-residents

6D.430 (2005-06-10) The Income Tax Act and the Income Tax Regulations require clients, on whose behalf a contract for services rendered in Canada has been awarded by PWGSC to a non-resident contractor, to withhold 15 percent from the payment of fees, commissions or other amounts paid to non-resident individuals, partnerships or corporations other than in the course of regular and continuous employment. (See 7A.103 and 11.022.)

Withholding of the 15 percent of the payment does not represent a definite tax, but rather a payment on account of the non-resident contractor's overall tax liability to Canada.

6D.431 (1994-06-23) Payments for continuous employment in Canada, made to non-resident individuals, are not subject to the 15 percent withholding, but are subject to tax deductions on a basis similar to that applicable to residents.

Goods and Services Tax/Harmonized Sales Tax

6D.435 (2004-05-14) The GST/HST applies to supplies made in Canada of real property, tangible personal propery (i.e. goods), intangible personal property (such as intellectual property) and services. Supply means provision of property or service in any manner.

A grant, contribution or subsidy is not a supply. However, it may be payment for a supply and subject to GST/HST if the property or service provided is taxable. It is only when a grant, contribution or subsidy is strictly a transfer of money for which no property or service is provided to either the government or a specified third party that it will not be payment for a supply and therefore not subject to GST/HST.

The GST/HST on a supply made in Canada is payable by the recipient of the supply to a supplier who is registered for GST/HST. It is the supplier who is responsible to remit the tax to CRA.

A supply is deemed to be made in Canada if:

1. for a supply of goods, the goods are made available or delivered in Canada to the recipient of the supply. This means the goods are in Canada when they are sold and transferred from the vendor to the purchaser or they are imported into Canada for the delivery to the purchaser;
2. for a supply of intangible personal property, the property may be used in Canada or relates to real property situated in Canada, to tangible personal property situated in Canada or to a service to be performed in Canada;
3. for a supply of real property or a service in respect of real property when the property is situated in Canada;
4. for a supply of other services, the service is performed in whole, or in part, in Canada;
5. for a supply of a telecommunications service consisting of making available telecommunication facilities, when the facilities, or any part thereof, are located in Canada.

6D.436 (2004-05-14) The GST/HST applies also to goods imported into Canada. The GST/HST on the importation of goods is payable on the duty paid value of the goods (determined under the Customs Act) and is payable by the importer of the goods directly to Canada Border Services Agency. It is payable at the time of importation or when the goods are taken out of bond for use.

Goods imported into Canada for supply are subject to GST at the time of importation and are subject to GST/HST when supplied in Canada by a supplier who is registered for GST/HST.

6D.437 (2004-05-14) The GST/HST also applies to supplies of services and intangible personal properties made outside Canada (generally by a non-resident supplier) to a person who is resident in Canada, if the person acquires the supply for use in Canada, but not exclusively in the course of commercial activities. These supplies are referred to as "imported taxable supplies". The GST/HST on imported taxable supplies is determined by the Canadian recipient of the supply (self-assessment) and remitted directly to Canada Revenue Agency.

6D.438 (2003-12-12) Lease payments on tangible goods under a lease entered into before August 8, 1989, are not subject to GST. If a lease for tangible goods is amended to alter its term, or the property is leased on or after August 8, 1989, then the payments become subject to GST/HST, as applicable.

6D.439 (2003-12-12) The trade-in of a used good on the purchase of a new good constitutes two separate transactions for the purposes of the GST/HST. The GST/HST applies to the full sale price of the new good, regardless of the allowance for the trade-in. Each party must collect GST/HST on the fair market value of the supply to the other, and both pay the GST/HST. This treatment applies where the person trading in the used goods on the purchase of new goods is a GST/HST registrant.

If the person trading in the used goods is not required to charge tax on the supply (e.g. non-registrant supplier, or goods not used in commercial activities), then the supplier of the new goods deducts the value of the old goods accepted as a trade-in from the value of the new goods when determining the GST/HST on the supply.

6D.440 (2004-05-14) The GST/HST does not apply to: exempt supplies; zero-rated supplies; or certain imports. Also it generally does not apply to Indians, Indian Bands and Band-empowered Entities (BEEs). These areas are covered in Annex 6.10.

The GST/HST does not apply to transactions between parts of the same organization. As the federal government has registered its departments (those entities listed in Schedule I, I.I and II of the Financial Administration Act), as a single person, the GST/HST does not apply to transactions between departments. However, the GST/HST will apply to taxable transactions between departments and Crown corporations.

Government-Supplied Materiel (GSM) is not subject to additional GST/HST charges as the owner/end-user has already paid it. Contractors should not charge GST/HST against the value of GSM used in the performance of a contract. Foreign contractors shall identify the GST separately on Canada Border Services Agency form CI1, Canada Customs Invoice, by describing them as Canadian Goods Returned and providing a value. Should GSM be provided from one foreign contractor directly to another, this value should be included in the value of the item for customs clearance purposes as this GSM would not have had GST paid yet.

Application of GST/HST to the federal government

6D.441 (2003-12-12) The federal government does not pay GST/HST on imported taxable supplies, as the federal government is not required to self-assess tax. Imported taxable supplies include services performed wholly outside Canada for use in Canada or services performed in Canada and supplied by a non-resident supplier who is not registered for GST/HST purposes. They also include intangible personal property supplied by a non-resident supplier who is not registered for GST/HST purposes.

6D.442 (2003-12-12) The federal government is required to pay tax on importation of goods if it is the importer of record, unless the goods qualify as non-taxable importations.

Excise Taxes

6D.444 (2003-12-12) Excise taxes are payable on certain goods (see Annex 6.11).

When goods are manufactured or produced and sold in Canada, the excise tax is payable by the manufacturer or producer, at the time of delivery of such goods.

When goods are imported, the excise tax is payable by the importer or transferee, who takes the goods out of bond, at the time of importation or when taken out of bond for consumption.

Reciprocal Taxation Agreements and Comprehensive Integrated Tax Coordination Agreements

6D.448 (2005-12-16) The federal government has agreed to pay, directly or indirectly, most provincial and territorial taxes on the goods and services it purchases as set out in the standard instructions and conditions 9403, 9403-5 and 9403-6 and in general conditions 2010 and 2029 of the Standard Acquisition Clauses and Conditions (SACC) Manual. The federal government does not pay the general Provincial Sales Tax (PST).

In addition, when the department or agency is a vendor, it must collect and remit PST to the province.

6D.449 (2003-05-30) The Policy on the Collection and Remittance of Provincial Sales Taxes includes all the information that may be required by contracting officers to comply with the Reciprocal Taxation Agreements (RTAs) and Comprehensive Integrated Tax Coordination Agreements (CITCAs). Appendix C, of the same policy, also provides details of the RTA and CITCA by province and territory. Contracting officers should also refer to the Policy on the Application of the Goods and Services Tax and Harmonized Sales Tax in the Departments and Agencies of the Government of Canada.

Provinces and territories are grouped as follows:

1. The provinces that have not entered into a RTA are considered "non-partaking" and at the present time, the only non-partaking provinces are Alberta and New Brunswick.
2. A non-participating province is a province that did not enter into a CITCA and at the present time, the non-participating provinces include all provinces and territories except New Brunswick, Nova Scotia and Newfoundland and Labrador (the participating provinces).
3. The PST is paid in non-participating provinces by Crown corporations, except in Alberta, Northwest Territories, Yukon and Nunavut, where there is no PST.
4. Federal departments pay the Harmonized Sales Tax (HST), ancillary taxes and reimburse tax on third party purchases in the participating provinces.
5. When federal departments and Crown corporations are vendors, they shall charge, collect and remit HST when the goods or services are delivered or rendered in a participating province.

6D.450 (2003-05-30) Crown corporations are not covered by the RTAs, and are required to pay PST on their purchases, for delivery to or consumption in the partaking provinces, on the same basis as companies in the private sector. Crown corporations may not use the licence numbers or certificates in the RTAs. HST is paid in the participating provinces.

Some Crown corporations hold their own special PST licences, which enable them to purchase goods and services, for their own use, free of PST at the time of purchase.

6D.451 (2002-05-24) Persons selling to federal departments may not quote the federal government's licence numbers to their own suppliers.

6D.452 (2003-05-30) Contracting officers should take special care when dealing with the following:

1. ancillary taxes: the federal government has agreed to pay certain ancillary provincial taxes. These taxes apply to specific goods and services, and their applicability varies from province to province.
   
   In addition, departments will reimburse third parties for PST paid for goods or services purchased on behalf of a department or during work-related travel (see Annex 6.12 - Application of Provincial Taxes to the Government of Canada).
2. fuel taxes: liquid fuels may be taxed in certain provinces under the provincial fuel tax or under provincial retail sales tax depending on the end use. Under certain circumstances, liquid fuel may be exempt from provincial tax.
3. construction contracts: in all contracts for the construction or repair of a building or structure, the contractor is deemed to be the consumer of any materials used. The contractor usually is not registered as a vendor, and must pay tax on purchases of materials. PST is an element of cost to the contractor, and as such is included in the price to PWGSC. No further PST is imposed on the transaction between the contractor and PWGSC.
   
   Construction contracts should not contain a mix of "real property" and "tangible personal property." If unavoidable, the use of the licence numbers applies only to the acquisition of the "tangible personal property" component of the requirement.
   
   In contracts for the supply and installation of equipment that remains free standing and is affixed to a building or structure for purposes other than providing a direct service to such building or structure, the PST is not to be included in the contract price and the licence number or certificate is to be quoted in the contract. In New Brunswick such contracts are treated as real property contracts and, therefore, are subject to the procedure outlined in the preceding paragraph.

State Sales, Use and Personal Property Taxes (United States)

6D.456 (1994-06-23) Items exported from the United States of America (U.S.A.) by the purchaser, are entitled to exemption from state Sales and Use Taxes. Care must be taken to ensure that such procurements are not taxed in error. (See 7E.617.)

6D.457 (1994-06-23) Particular care is required in dealing with the State of California, which has Sales, Use and Personal Property taxes that may affect PWGSC procurement. (See 7E.621.)

In these procedures, the State of California is highlighted because of its stringent tax requirements. Similar precautions should be taken to deal with requirements in the other states.

6D.458 (1994-06-23) California Sales and Use taxes (Cal Tax) are collected by the seller from the purchaser and, if applicable, will require the contract to provide for payment of the tax. The Use tax is not payable on items for which Sales tax is payable.

6D.459 (2003-12-12) Items exported outside the State by the purchaser are exempt from Cal Tax but, as California law is very precise about what constitutes an export, contracting officers should ensure that a procurement in California is considered an export by the state.

For example, goods may not be subject to Cal Tax if:

1. they are delivered California FCA Free Carrier (...named place)with title passing upon such delivery, and are shipped to a point outside California; or
2. title passes at time of delivery and the goods are delivered by the seller to a conveyance furnished by the purchaser (e.g. where they are picked up by the Canadian Armed Forces) and are shipped to a point outside the U.S.A.

6D.460 (1994-06-23) California Personal Property tax is assessed against work-in-process, finished work and baled items, title to which is vested in either PWGSC or the contractor, which are located in California at 12:00 o'clock noon on the first Monday in March each year. It is immaterial whether such items relate to a fixed price or cost reimbursable type of contract.

6D.461 (1994-06-23) Contracting officers shall confirm the manner in which California contractors charge the Personal Property Tax on PWGSC contracts. If the tax is charged as a direct charge to the PWGSC contract, there must not also be an indirect charge, and overhead must not be applied to the direct charge.

6D.462 (1994-06-23) Another area for particular attention is the use of advance or progress payments. California taxes may be payable when title transfers to the purchaser - and this title transfer may be deemed by the State to take place when the advance or progress payment is made. Contracts should provide, therefore, that title will not transfer until the goods are delivered.

Employer-Employee Relationships

6D.468 (2003-12-12) When contracting for the services of individuals, including temporary help, contracting officers should carefully review the circumstances in order to avoid establishing an employer-employee relationship which would be contrary to or in conflict with the Public Service Employment Act and common law principles dealing with master-servant relationships.

Contracting for the services of former public servants and for temporary help services is subject to special procedures. Refer to procedure 6D.477 for former public servants and Section 9H for temporary help.

6D.469 (2003-12-12) Contracting officers must ensure that service contracts and contracts with a service component will not result in the establishment of an employer-employee relationship between the contractor's personnel and the Crown. The conduct of the parties during contract performance must also be considered.

6D.470 (2004-05-14) Criteria for assessing an employer-employee relationship have been established by the Canada Revenue Agency (CRA) and pertinent court rulings. For guidance, either seek legal advice or consult the CRA publication RC 4110 Employee or Self-Employed?. Should there be any uncertainty, the contract should be signed at a level more senior than the individual who would normally approve the initial entry into the contract.

Legal advice should be sought where it is not feasible for contracting officers to determine whether a contract is a contract for services or a contract of employment (i.e. employment status is not easily identifiable). It is ultimately the responsibility of the contracting authority to ensure that contracts do not create employer-employee relationships.

Former Public Servants

6D.477 (1996-01-01) Care must be taken to ensure that contracts with former public servants in receipt of a pension are able to bear the closest public scrutiny, and reflect fairness in the spending of public funds. (See 6D.482 and 7A.095.)

Former Public Servants is defined as:

• an individual;
• an individual who has incorporated;
• a partnership made of Former Public Servants; or
• a sole proprietorship or entity where the affected individual has a major interested in the entity.

Retirement Waiting Period

6D.478 (1996-01-01) When the provisions of the Conflict of Interest and Post Employment Code for Public Office Holders and/or the Conflict of Interest and Post Employment Code for the Public Service apply, there is normally a retirement waiting period of one year following the date of retirement before the services of a former public office holder can be used on a government contract.

The exception is former ministers, for whom the prescribed waiting period is two years.

The retirement waiting period does not apply to former members of the Canadian Forces or Royal Canadian Mounted Police (RCMP).

Treasury Board Approval

6D.479 (1996-06-03) TB approval is required if the total value of a contract with a former public servant in receipt of a pension (including amendments) exceeds:

1. $100,000 if the contract is competitive; and
2. $25,000 if the contract is non-competitive.

Amendments to former public servant contracts where the total cumulative value of the contract (including all amendments) exceeds $100,000 (competitive) or $25,000 (non-competitive) are to be approved by Treasury Board.

6D.481 (1999-12-13) For non-competitive contracts with former public servants in receipt of a pension pursuant to the Public Service Superannuation Act who have been retired for less than one year, the following fee abatement formula shall be used in negotiations to determine the maximum fee payable, for the remaining days within the one year period.

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' service = $42,000 ($60,000 x 0.7);

per diem = (60,000 + 18,000)/260 - 42,000/260 = $138.46

No exceptions to the application of the formula or to the maximum rate allowed shall be permitted without prior TB approval.

Workforce Reduction Programs

6D.482 (1996-06-03) In addition to the requirements of the contract fee abatement policy for former public servants in receipt of a pension (see 6D.481), the amount payable for professional fees when contracting with 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, has been limited during the period for which the lump sum payment applies.

This restriction on the amount payable for professional fees applies to service contracts awarded to former public servants in receipt of a lump sum payment for employment termination under a workforce reduction program, either competitively or non-competitively. It does not apply if the contract is not specifically for the services of the former public servant.

For the purpose of the policy relating to Workforce Reduction Programs, the definition of former public servants included in 6D.477 includes former members of the Canadian Forces and former members of the RCMP.

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 for public servants whose employment has been terminated because of the down-sizing 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.

SACC Manual clauses A9103T or A9104T, and A9105C and A9106T must be included in all bid solicitations and contracts for services, which may involve Former Public Servants, to ensure compliance with the various public service workforce reduction programs (see 6D.482). These clauses require the contractor to make available to the Crown, any details of the status of a particular individual with respect to cash out amounts and time equivalents, pension payment details, and status of ownership, so that the contract fee abatement policies (see 6D.481 and 6D.483) may be applied, if applicable. In other words, individual contractors or employees of firms bidding on contracts with the Crown must be prepared to sign a waiver of privacy with respect to this information.

6D.483 (1998-02-16) For contracts with former public servants in receipt of a lump sum payment, whether contracts are awarded competitively or non-competitively, the contractor cannot receive, in total, fees in excess of $5,000 (including GST/HST), whether applicable to one or more contracts, during the period of the lump sum payment. The contract fee otherwise payable for any contract awarded to an affected former public servant must be abated in total, once the $5,000 limit has been reached, during the contractor's lump sum payment period. Reasonable overhead expenses such as travel costs are excluded from the $5,000 limit but, because of the sensitivity of these contracts, these costs should be strictly controlled. Departments and agencies must obtain Treasury Board approval for all contract situations where affected former public servants might receive fees totalling more than $5,000 during their lump sum payment period.

6D.484 (1996-01-01) The abatement of the contract fee during the lump sum payment period applies to all contracts with former public servants who have received a lump sum departure or retirement incentive payment, including former members of the Armed Forces and the Royal Canadian Mounted Police.

6D.485 (1996-01-01) For contracts awarded non-competitively, the application of the current requirement for the one year contract fee abatement policy is postponed to have it begin at the conclusion of the lump sum payment period. (See 6D.481) This requirement applies only to former public servants in receipt of a pension payable pursuant to the Public Service Superannuation Act as indexed by the Supplementary Retirement Benefits Act. The exemption to the current contract fee abatement policy for former members of the Armed Forces and the RCMP is continued. (See 6D.478)

6D.486 (1996-01-01) Where a Former Public Servant works as an employee of, or is a subcontractor to, an established firm contracting with the Government, the contract fee restrictions do not apply. (See 6D.482)

Section 6E: Process

Legal Services

6E.506 (1994-06-23) Contracting officers must be aware that solicitor/client privilege exists for the legal opinions given by Legal Services, and that such opinions should not be disclosed without knowledge and recommendation of legal counsel.

6E.507 (2005-06-10) Contracting officers must seek advice from Legal Services in the following circumstances:

1. where Director General, Assistant Deputy Minister, Deputy Minister, Minister or Treasury Board approval is required to enter into or modify a contract (see Annex 6.1(c));
2. all contracts containing special terms or deviations from Public Works and Government Services Canada (PWGSC) or Canadian Commercial Corporation (CCC) general and supplemental general terms and conditions;
3. if a supplier proposes to prepare the contract or significantly amend a proposed contract;
4. all situations in which work has been completed pursuant to a verbal request from a representative of a client and a confirming order is being sought (see 7F.692);
5. all agency, licence and loan agreements (except standard Department of National Defense loan agreements PWGSC-TPSGC 7118, Loan Agreement - DND Equipment), and contracts where royalties are to be paid to a contractor or where licences are to be obtained from third parties (such as third party software licences);
6. all contracts under which payment is secured by means of a letter of credit;
7. all letters of intent, and go-ahead letters;
8. all letters of comfort;
9. all contracts with foreign corporations where the contract value exceeds $1 million;
10. all CCC domestic purchase contracts over $1 million and all CCC representative agreements;
11. all contracts where questions may arise regarding "conflict of interest" issues or the post-employment code for former public servants;
12. 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;
13. any proposed assignment of a contract to a third party;
14. all Terminations for Default, Terminations by Mutual Consent, and confirming Notices of Terminations for Convenience.
    
    Note: The initial Notices of Termination for Convenience, (see Standard Acquisition Clauses and Conditions Manual clauses J0200C and J0205C), do not require a legal opinion and may be issued by the contracting officer in accordance with 11.140.
15. every case of receivership or impending or actual bankruptcy of a contractor;
16. every situation where security is to be taken to ensure repayment of a debt or satisfaction of an obligation to the Crown;
17. all memoranda of understanding;
18. all formal agreements;
19. when there is a request for information or documentation from, or contact is required with, outside lawyers.

Legal Services must be involved before any binding action that is included in these mandatory items (such as the entry into, the termination of, or a modification to, a contract) is taken by the contracting officer. Normally, consultation is most appropriate before issuing a bid solicitation.

6E.508 (1994-06-23) Contracting officers should also seek advice from Legal Services with respect to:

1. any proposed contract for services, where there is a question regarding the possible development of an employer-employee relationship;
2. any proposed contract, where a clause providing for liquidated damages is to be included to cover the late receipt of deliverables;
3. any proposed contract containing previously-approved deviations from standard terms and conditions, where such approval had been given by Legal Services more than two years before;
4. any proposed contract in which questions about liability or insurance are raised;
5. any arrangement to supply goods or services being entered into with a Special Operating Agency, when there are questions about the appropriate provisions or form of the documentation;
6. meetings in which the supplier or contractor was accompanied by a lawyer, or for which the supplier or contractor may or will be accompanied by one;
7. contracts requiring security for performance;
8. contracts to be placed with a supplier with whom disagreements are likely to be encountered or a supplier with marginal financial resources;
9. contracts placed in the United States where state taxes may be an issue;
10. disputes arising after the contract has been awarded.

6E.509 (1994-06-23) Legal services relating to contracting must only be sought from PWGSC Legal Services or from a regional office of Justice Canada, when the latter has agreed with PWGSC Legal Services to provide counsel to a region.

External Communications

6E.515 (2005-06-10) For media enquiries, the Minister and the Deputy Minister (DM) are the official spokespersons for PWGSC. Other PWGSC personnel may be authorized by the DM to perform this role.

The Corporate Services, Human Resources and Communications Branch, which has the operational responsibility for PWGSC's media relations, maintains a list of authorized spokespersons.

The Branch also has functional responsibility for coordinating relations between PWGSC and Members of Parliament, including correspondence, verbal communications, and Question Period.

Bases of Payment

6E.521 (1994-06-23) There are seven bases of payment which may be used. In descending order of preference, these are:

• Firm Price;
• Firm Base Price subject to Economic Price Adjustment;
• Fixed Time Rate;
• Cost Reimbursable with Incentive Fee;
• Cost Reimbursable with Fixed Fee;
• Cost Reimbursable with Fee Based on Actual Costs;
• Cost Reimbursable with No Fee.

The Basis of Payment should reflect the commodity, the duration of the contract, and how well the requirement was able to be defined. Multiple bases of payment may be used in one contract.

Firm Price

6E.525 (1994-06-23) This provides for a price, which is not subject to adjustment, to reflect actual costs incurred by the contractor in performance of the contract or part thereof. It gives maximum profit incentive to the contractor for cost control, in that the contractor assumes full responsibility for all costs under or over the firm price. In addition, it places a minimum administrative burden on both contracting parties.

6E.526 (1994-06-23) Use this basis of payment when:

1. the contractor has previously manufactured the particular product or provided the particular service, or similar products or services, and has sufficient experience to permit a realistic statement of work based on firm specifications; and
2. the statement of work can be costed in terms of quantities of material and labour time required; and
3. a realistic estimate of the material prices and labour and overhead rates applicable during the contract period can be made.

6E.527 (1994-06-23) Subsequent to the negotiation of a firm price basis of payment, the contractor must resubmit the price proposal based on the agreement reached and include a price certification in accordance with clause C0003T of the Standard Acquisition Clauses and Conditions (SACC) Manual.

6E.528 (1994-06-23) Discretionary audit clauses may be included in the contract as appropriate.

Firm Base Price Subject to Economic Price Adjustment

6E.532 (1994-06-23) It may not be possible to obtain a realistic estimate of the material prices and/or labour and overhead rates required for the use of a firm price basis of payment and it may be necessary to negotiate provisions for price adjustments. These provisions provide for revisions to the firm base price upon the occurrence of certain contingencies.

6E.533 (1994-06-23) The economic price adjustments are determined as described in 6C.297.

Fixed Time Rate

6E.537 (1994-06-23) A fixed time rate provides for the payment to the contractor for the actual amount of time spent in performance of the work, as confirmed by government audit, on the basis of a predetermined fixed time rate. The fixed time rate usually includes a direct labour rate, overhead rate(s) and profit.

6E.538 (1994-06-23) Use this basis of payment when:

1. it is not possible to estimate in advance the extent or duration of the work, but it is possible to determine within reasonable limits the applicable direct labour and overhead rates during the contract period; and
2. there is provision for adequate controls to ensure that inefficient or wasteful methods are not being used by the contractor.

6E.539 (1994-06-23) Contracts or parts of contracts with a fixed time rate basis of payment may also provide for a ceiling price, by which the contractor is bound to complete the prescribed work without additional payment whether or not the actual costs exceed the ceiling price. If a ceiling price is to be used, there must be full agreement between the parties as to what constitutes the prescribed work.

Before agreeing to the incorporation of a ceiling price in a fixed time rate contract, the contracting officer should consider whether a firm price contract would be more appropriate.

6E.540 (1999-12-13) When contracts, or parts of contracts, with a fixed time rate basis of payment do not include a ceiling price, a limitation of the Crown's liability must be made a term of the contract, unless an exception is specifically authorized by the Minister, by including in the contract SACC Manual clause C6000C or C6001C.

6E.541 (1994-06-23) Following the negotiation of fixed time rates, the contractor must resubmit the price proposal based on the agreement reached and include a rate certification.

6E.542 (1994-06-23) Time Verifications, Rate Certifications and Discretionary Audits must be provided for in contracts.

Cost Reimbursable with Incentive Fee

6E.546 (1994-06-23) A cost reimbursable with incentive fee basis of payment reimburses the contractor for costs incurred in performance of the work, as determined by government audit, and adds a fee which is adjusted by formula in accordance with the relationship which total allowable actual costs bear to a predetermined target.

6E.547 (1994-06-23) Use this basis of payment when the criteria required for a firm price basis of payment are lacking, and the products and services being acquired are of a nature that the assumption by the contractor of a degree of cost responsibility is likely to provide a positive incentive for effective cost control and contract performance.

6E.548 (2004-05-14) When a cost reimbursable with incentive fee basis of payment is used, it is necessary to negotiate in advance a target, a target fee, a maximum fee and a formula for fee adjustment.

The target should be the estimated costs of performing the work, computed in accordance with Contract Cost Principles 1031-2, assuming the contractor's current efficiency trend is maintained.

The target fee, based on the target costs, and the maximum fee should be an amount no greater than that calculated in accordance with the procedures for profit determination.

The formula provides for both an increase in fee above the target fee, up to the maximum fee, based on a sharing between the contractor and Canada of any decrease in actual acceptable costs below the target, and a decrease in the fee below the target fee based on a sharing between the Contractor and Canada of any increase in actual acceptable costs above target.

6E.549 (1999-12-13) Contracts or parts of contracts with a cost reimbursable or incentive fee basis of payment should not include a ceiling price, which requires agreement between the parties as to what constitutes the prescribed work, since this conflicts with the reason why this basis of payment is being used in the first place, i.e. the fact that a realistic statement of work cannot be submitted by the contractor.

In contracts or parts of contracts with this basis of payment, which do not include a ceiling price, it is mandatory that a limitation of the Crown's liability be made a term of the contract, unless an exception is specifically authorized by the Minister, by including in the contract SACC Manual clause C6000C or C6001C.

Cost Reimbursable with Fixed Fee

6E.553 (1994-06-23) This provides for the reimbursement to the contractor of the actual cost incurred in performance of the work, as determined by government audit, together with a predetermined fixed fee. Although the fixed fee does not vary with actual costs incurred, it may be renegotiated under certain circumstances.

6E.554 (1994-06-23) Use this basis of payment when circumstances do not permit the use of a firm price or fixed time rate, and the possible savings from the use of an incentive fee are likely to be more than offset by the complexities of contract administration resulting from its use.

6E.555 (1994-06-23) The amount of the fixed fee, based on an estimate of the costs to be incurred, should be no greater than the appropriate amount of profit. If it is not possible for both parties to reach agreement on an estimate of the costs to be incurred, as a basis for calculating the fixed fee, swing points are used. Swing points are the amounts of estimated costs, one higher and one lower than the amount used for the calculation of the fixed fee, at which the fixed fee will be renegotiated.

6E.556 (1999-12-13) Contracts or parts of contracts with this basis of payment may also include a ceiling price, through which the contractor is bound to complete the prescribed work without additional payment whether or not actual costs exceed the ceiling.

If it is possible to determine the prescribed work and for the parties to agree on an estimated amount to complete it as a basis for the ceiling price, it may be appropriate to use another basis of payment - i.e. one which provides for a more equitable sharing of responsibilities and risks between the contractor and the Crown.

In contracts or parts of contracts with this basis of payment, which do not include a ceiling price, it is mandatory that a limitation of the Crown's liability be made a term of the contract, unless an exception is specifically authorized by the Minister, by including in the contract SACC Manual clause C6000C or C6001C.

Cost Reimbursable with Fee Based on Actual Costs (Cost Plus)

6E.560 (1994-06-23) This basis of payment provides for the reimbursement to the contractor of costs incurred in performance of the work, as determined by government audit, together with a fee based on the actual costs incurred.

6E.561 (1994-06-23) Use this basis of payment only when circumstances permit the use of no other basis of payment.

6E.562 (1994-06-23) The amount of fee, based on the actual costs incurred, as determined by government audit, will be no greater than the appropriate level of profit.

6E.563 (1994-06-23) Ceiling prices are not applicable when this basis of payment is used.

6E.564 (1999-12-13) In contracts or parts of contracts with this basis of payment, which do not include a ceiling price, it is mandatory that a limitation of the Crown's liability be made a term of the contract, unless an exception is specifically authorized by the Minister, by including in the contract SACC Manual clause C6000C or C6001C.

Cost Reimbursable with No Fee

6E.568 (1994-06-23) A cost reimbursable with no fee basis of payment provides only for the reimbursement to the contractor of actual costs incurred, as determined by government audit.

6E.569 (1994-06-23) Except for contracts covering the provision of assistance to a contractor, this basis of payment is rarely used. Contractors cannot normally be expected to accept a contract which provides for no profit for the manufacture of products or the provision of services.

6E.570 (1999-12-13) A ceiling amount to be paid by the Crown for completion of the prescribed work may be included if appropriate.

In contracts or parts of contracts with this basis of payment, which do not include a ceiling price, it is mandatory that a limitation of the Crown's liability be made a term of the contract, unless an exception is specifically authorized by the Minister, by including in the contract SACC Manual clause C6000C or C6001C.

Cost Reimbursable Contracts - Audit

6E.576 (1994-06-23) Cost reimbursable contracts or contracts with cost reimbursable elements, require special attention because the price is not specified in the contract, but rather is determined after the completion of the work. All cost reimbursable contracts are to contain a reference that the costs being incurred must be determined by a PWGSC audit. (See 7A.045.)

This audit provides the basis for certification that the price is reasonable.

6E.577 (1994-06-23) For all cost reimbursable contracts valued over $50,000 placed with Canadian suppliers, the contracting officer must, on completion of the work, place on file a certification that the final amount paid represents a reasonable price.

This certification may be based on the findings of a formal or an informal audit.

6E.578 (1994-06-23) All bid solicitation and contract documents containing cost reimbursable elements must incorporate an appropriate basis of payment clause (see SACC Manual, clauses C0200D to C0205D).

6E.579 (1999-12-13) All cost reimbursable contracts must also include SACC Manual clause C0300D or C0301D as appropriate, which call upon the contractor to provide a cost submission to the contracting officer upon completion of the contract, and annually for multi-year contracts.

The requirement for a cost submission will be listed as a mandatory deliverable item within the contract. However, for repair and overhaul (R&O) service contracts, the contracting officer or audit agency may determine whether a cost submission is needed as a deliverable item. The standard clause pertaining to R&O service contracts must be used.

Progress Payments and Advance Payments

6E.585 (1996-12-02) Progress payments or advance payments may be considered only if all of the following conditions are met:

1. adequate security for the payment is ensured;
2. the Crown receives value commensurate with the amount of the payment during the fiscal year in which the payment is made;
3. the client has adequate funds to provide the financing; and
4. one of the following:
   1. there is economic advantage to the Crown that clearly outweighs the financing cost associated with the progress or advance payment (see 6E.587(b));
   2. the contractor could suffer hardship or provide financing only with difficulty or at rates considered to be uneconomical in relation to prevailing chartered bank prime lending rates;
   3. the value of the contract is considered to be beyond the assessed financial capabilities of the contractor;
   4. there is to be a long duration for contract performance; or
   5. there is an entrenched tradition or practice of receiving advance or progress payments from the purchaser in a particular industry or segment of industry. However, payments can only be made for goods or services received in the same fiscal year. Funds must be spent in the fiscal year for which they are appropriated and cannot be carried forward by means of advance payments.

Notes:

1. TB guidelines specify that advance payments should be considered only in extraordinary circumstances. Even if the above conditions are met, advance payments are rarely justified. Progress payments are more frequent.
2. In the case of subscriptions or insurance premiums, which are often for a term of one full year and which may not start exactly on April 1, payments must be restricted to goods or services provided in no more than the current and next fiscal years. For instance, a publication subscription paid in February 2005 cannot cover a period beyond March 2006.
3. In the case of multi-year contracts requiring continuing advances, contracting authorities should negotiate the payment of a series of separate advances covering each fiscal year. Thus, a payment can be made for a maintenance contract, for the period of a contract, from February to March 2005 and then another payment covering the period April 2005 to March 2006.
4. In exceptional situations, such as armament purchases or extended warranty service, where up-front payments covering more than one fiscal year must be made to the supplier, contracting authorities must decide on a case by case basis if an advance payment is unavoidable and can be substantiated. This type of case should be extremely rare.
5. In all cases, a payment cannot be made in the current fiscal year for a contract which will not start until the next fiscal year.
6. The requirement that payment be made only for goods or services received in the same fiscal year may require modification of the Method of Payment for requirements whose period of delivery or service spans fiscal years. Specifically, it may be necessary to provide for multiple payments, at the appropriate point in the contract period.

6E.586 (1996-12-02) Special considerations apply to foreign purchases.

1. In the case of United States purchases, progress or other payments on account have an effect on the application of taxes, relating to the time and place of title passing to the Crown. (See 6D.462.) Legal Services should be consulted to ensure that appropriate terms in the contract protect against unnecessary taxes.
2. For other foreign purchases, where progress or other payments on account are granted, a check should be made to determine if the application of sales, use, or some other form of tax is related to the time and place of title passing to the Crown. If this is the case, contracting officers must consult Legal Services.
3. In the case of purchases from the United States Government, through the Foreign Military Sales (FMS) program, advance payments are required in accordance with United States law prior to commencement of delivery for any goods and services to a foreign customer. In this case, the standard terms and conditions for FMS sales from the U.S. Government have been approved by Treasury Board. Any change in the standard terms and conditions will require a submission for Treasury Board approval.

6E.587 (2005-06-10) The following factors must be evaluated to determine the method of payment (advance or progress payment) most appropriate to a particular procurement:

1. risk exposure for the Crown, if situations such as insolvency, work cancellation or work default occur;
   
   Pertinent factors include:
   1. Can an advance payment be protected by securing unconditional guarantees or performance bonds from financial institutions or from associated or parent companies with good financial credentials?
   2. What is the likely marketability and resale value of work-in-process to which the Crown acquires title by virtue of making progress payments? The disparity between the amount of progress payments and the resale value of inventory is a measure of the risk exposure for the Crown.
      
      
2. financing cost estimates;
   
   Since provision for progress or advance payments involves a real or imputed cost to the Crown, this cost should be calculated for each of the available options. Apply the chartered bank prime lending rate, as advised periodically by the Director, Cost and Forensic Accounting Directorate, to the cumulative net financing (i.e. cumulative cash payout by the Crown minus cumulative value of deliveries under the contract), using reasonable assumptions regarding work progress and item deliveries.
   
   
3. the potential reduction in contract price resulting from the various methods of payment;
   
   Since progress or advance payments reduce the need for borrowing by the contractor, or reduce the size of equity capital on which a return must be realized, lower prices should flow through to the Crown. The price reduction will vary with the different methods of payment and their relative attractiveness to the contractor.
   
   
4. financial circumstances which may affect the client's ability to finance the various options.

Progress Payments

6E.591 (1994-06-23) In the case of a progress payment, the general conditions provide that title to the materials or work-in-process will vest in the Crown upon making such payment.

6E.592 (1994-06-23) When a progress payment is to be used, milestones, when possible, should be specified to relate payments to measurable progress on the contract. Technical or other contractual achievement yardsticks may be used as milestones. The value of each milestone should be negotiated before contract award.

6E.593 (1994-06-23) When progress payments against milestones are not possible because of the nature of the contract, progress payments may be made at set periods of time on a calendar basis (time payment method), or based upon the actual costs incurred for material purchases and the partial completion of work as certified by company and government inspectors.

6E.594 (1994-06-23) A combination of milestone and cost incurred progress payments is also possible for different phases of the contract.

The combination method can be used, for example, to pay incurred costs in the early stages of a major procurement when it would be difficult to define milestones, with payments for later and more definable stages of the production process made against specified milestone achievements.

6E.595 (1994-06-23) If milestone or cost incurred progress payments are not possible, the time payment method of making progress payments is to be used with caution. The overriding requirement for use of this method is the existence of a project progress monitoring and control system to provide the contracting officer with reliable indicators of the actual value of work accomplished when a payment is due. With the exception of rental and service contracts, the time payment method must be supported at the director level or above.

Holdbacks

6E.599 (1998-02-16) For all contracts where progress payments are provided, holdbacks must be used to avoid overpayment and to act as an incentive for the contractor to complete the job. However, for contracts using milestone payments, a requirement for a holdback may be included at the discretion of the contracting officer.

The following limits on payments, for contracts involving progress payments, apply:

1. Firm Price, with Milestone Payments:
   
   Total Allowable Costs: up to 100% of negotiated milestones
   Purchased Accountable Advance Materials: nil
   Goods and Services Tax/Harmonized Sales Tax: nil
   Profit: nil
   
   
2. Firm Price, with Progress Payment on basis of Negotiated Cost ¹:
   
   Total Allowable Costs: up to 90%
   Purchased Accountable Advance Materials: 100%
   Goods and Services Tax/Harmonized Sales Tax: if payable
   Profit: pro rata
   
   
3. Cost Reimbursable ¹:
   
   Total Allowable Costs: up to 90%
   Purchased Accountable Advance Materials: 100%
   Goods and Services Tax/Harmonized Sales tax: if payable
   Profit: pro rata
   
   
4. Fixed Time Rate ¹:
   
   Total Allowable Costs: up to 90%
   Purchased Accountable Advance Materials: 100%
   Goods and Services Tax/Harmonized Sales Tax: if payable
   Profit: pro rata
   
   
5. Price to be Negotiated
   1. Last year's negotiated rates/prices serve as interim rates for new year ²:
      
      Total Allowable Costs: up to 100%
      Purchased Accountable Advance Materials: 100%
      Goods and Services Tax/Harmonized Sales Tax: if payable
      Profit: pro rata
   2. All Other Contracts ¹:
      
      Total Allowable Costs: up to 75%
      Purchased Accountable Advance Materials: 100%
      Goods and Services Tax/Harmonized Sales Tax: if payable
      Profit: pro rata

6E.600 (1997-09-15) Exceptions to these payment ceilings may be considered:

1. where recognized trade practices supporting such exceptions can be demonstrated; or
2. in the case of organizations that do not receive a profit or fee; or
3. where alternative methods of financial protection are employed, e.g. security deposits (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit) or surety bonds.

6E.601 (1999-12-13) The timing for making decisions relating to the method of payment to be used varies with the solicitation method employed.

1. For an Invitation to Tender (ITT), the method of payment must be selected prior to issuing, and included in, the tender documents. (Use SACC Manual clause H1003D.) Financing costs will not constitute an evaluation factor.
2. For competitive Requests for Proposal (RFPs), the RFP will clearly specify that any requirement on the part of the bidder for receipt of progress or advance payments will constitute an evaluation criterion (this may require SACC Manual clause H1003D). When evaluating proposals, the cost to the Crown of providing the progress or advance payments will be taken into account, as will the risk of exposure from the method of payment, and the availability of funds.
   
   This cost determination may be waived when all responsive bidders have requested the identical method and pattern of payment (e.g. progress payments on a cost-incurred basis with virtually identical payout schedules).

Advance Payments

6E.605 (1994-06-23) For contracts for services greater than $25,000, any advance payment should be protected by some form of guarantee given by a financially strong third party. The guarantee usually takes the form of a surety bond from an associated or parent company or a financial institution, or an irrevocable Letter of Credit from a Canadian bank. It should provide for return to the Crown of the unliquidated balance of the advance, plus interest, in the event of work cancellation or other contract termination for the Crown's convenience. Other types of guarantees may be discussed with a cost analyst.

A decision to not insist on guarantees requires a strong business case.

For contracts for services of less than $25,000, security may be dispensed with where the contracting officer certifies that the contractor has been actively engaged in the particular industry and enjoys a good reputation in that industry, and that PWGSC has no record of significant financial or performance problems encountered in past dealings, if any, with the firm.

Bidders' Conferences and Site Visits

Bidders' Conferences

6E.611 (2001-05-25) A Bidders' Conference is used to provide information to potential bidders, and to ensure that all potential bidders receive the same information. A conference is to be held only when such a meeting is required for potential bidders to fully understand the proposed procurement. Bidder attendance is optional. (See 7A.029 and 7C.260.)

Site Visits

6E.615 (2001-05-25) Bidder attendance at site visits may be optional or mandatory. Mandatory site visits apply to all potential bidders - even those who contend they are already familiar with the site in question. (See 7A.029 and 7C.261.)

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 potential bidders not in the immediate vicinity of the site when deciding if a site visit will be mandatory.

Transportation Information

6E.621 (2005-12-16) All goods requirements with an estimated expenditure of $25,000 (including GST/HST) or more, and with transportation charges exceeding $1,500 are subject to a detailed analysis of such charges by the Traffic Management Directorate, with the following exceptions:

1. contracts for repair and overhaul, development, engineering services, technical studies and tooling;
2. capital assistance;
3. construction of complete ships or complete aircraft;
4. contracts in which clients retain control of all or part of delivery;
5. contracts for perishable foods;
6. purchases from Canadian suppliers on behalf of a foreign government or agency, unless assistance is requested by that government or agency;
7. standing offers, where order quantities and destination are unknown;
8. food and bulk fertilizer purchases under an external aid program;
9. requirements for multiple items which may result in more than one contract and for which identification of individual transportation costs is not practicable;
10. contracts for complete systems where multiple components may be shipped from multiple sources and locations and for which establishment of an FOB Origin cost is impractical;
11. service contracts; and
12. procurements covered by the North American Free Trade Agreement (NAFTA), the World Trade Organization Agreement on Government Procurement (WTO-AGP), unless a non-competitive process under one of the Limited Tendering reasons in the Agreement is used.

6E.622 (2005-12-16) FCA Free Carrier (...named place) Incoterms 2000 is to be used for all Department of National Defence (DND) sole source contracts, and all Repair and Overhaul (R&O) contracts where transportation is not part of the competitive bid. DND will manage the inbound logistics (coordinate, arrange and pay for all inbound transportation) for these contracts. For United States (U.S.) Foreign Military Sales contracts only (not all U.S. contracts) FOB Plant will continue to be used and DND will manage the inbound logistic on those contracts as well. If the contractor is not located in Canada, include Standard Acquisitions Clauses and Conditions (SACC) Manual clause C2608D and when applicable, C2610D.

The contractor is to deliver these goods FCA. For these contracts, the named place shall always be the contractor's facility, unless otherwise directed by DND. The contracting officer shall include in the solicitation document and the contract one of the following SACC Manual transportation clauses: D0035D, D0037D or D0038D. These clauses direct the contractor to obtain shipping instructions from DND and how to do so. Contractors may also contact DND Headquarters (Director Supply Chain Operations [2-5], Materiel Distribution Operations) at (819) 994-9288 or Inbound Logistics Headquarters at 1-877-447-7701, ext. 6101 should they have any transportation queries.

6E.623 (2004-12-10) To assist contracting officers in determining which shipping clause is applicable for use in their procurement, the following list of clauses and their application is provided for consideration:

1. DND contracts:
   1. for delivery at origin for international contracts - use clause D0035D (clauses C2608D and C2610D may apply);
   2. for delivery at origin for Canadian contracts - use clause D0037D;
   3. for U.S. Foreign Military Sales contracts - use clause D0038D (clauses C2608D and C2610D may apply);
   4. for delivery at destination - use clause D4001C (clauses C2600T and C2600C may apply).
2. All other government departments:
   1. for delivery at origin - use clause D4000C (use clauses C5200T and C5200C or C5201C in procurement documents);
   2. for delivery at destination - use clause D4001C (use clauses C5200T and C5200C in procurement documents).

Design Change/Deviation Procedures

6E.627 (1994-06-23) If design changes or deviations are needed during the life of a contract, the interested parties must understand the extent and nature of the changes and the procedure to be followed.

6E.628 (1994-06-23) The Design Change/Deviation procedure applies when requested by the client, stipulated in the requisition, agreed to by PWGSC and incorporated into the contract. If not stipulated initially, the procedure may be introduced later through a contract amendment.

6E.629 (1994-06-23) When requesting authority to enter into a contract, the contracting officer should also request authority for an estimated amount to be set aside and designated for design change or deviations. This amount will not appear in the initial contract, but will be held in reserve as an authorized fund to incorporate approved design changes or deviations into the contract by amendment. These amendments will be subject to the non-competitive contract approval levels.

The requirement to do this will depend on the nature of the contract.

6E.630 (1994-06-23) For DND requirements, the contracting officer is to use National Defence Standard D-02-006-008/SG-001, Design Change/Design Deviation and Waiver Procedure.

6E.631 (1994-06-23) In the case of high value or complex defence procurements, other procedures such as CFTO C-05-002-001/AG-000, Aerospace Engineering Change Proposal, may be used, or special procedures written to suit particular contracts.

Procurement Time Frames

6E.640 (1994-06-23) Sufficient time must be allowed for precontract analysis, recommendation, approval and carrying out the procurement. When establishing the timetable, in consultation with the client, the following factors should be taken into consideration:

1. the nature of the procurement;
2. the level of approval required, including the Deputy Minister (DM), the Minister or Treasury Board (TB);
3. translation requirements;
4. the period for the receipt of bids;
5. the evaluation process; and
6. the requirement for negotiation.

6E.641 (2001-05-25) Approximately five weeks are required for review by the Audit and Review Branch (ARB), the DM and the Minister. This includes the time required by sectors/regions to respond to any modifications recommended by ARB, as well as the time required for the presentation of submissions to the DM and the Minister.

In the normal course of events, submissions must be received by the TB Secretariat three weeks before being scheduled on a TB agenda. Consequently, TB submissions must be submitted to ARB at least eight weeks prior to the required decision date.

When it is reasonable to expect that TB approval will be required, the bid validity period must be sufficient to ensure that bids are still valid when the TB approval is received.

Departmental Plain Language Standard Procurement Documents

6E.643 (2006-06-16) Public Works and Government Services Canada (PWGSC) has implemented Departmental Plain Language Standard Procurement documents which include templates for Bid Solicitation and Resulting Contract for Low Dollar Value (LDV) and Medium Complexity requirements, new standard instructions and general conditions for use by its contracting officers for the procurement of goods, services or both (excluding Construction and Architectural and Engineering contracting requirements).

PWGSC contracting officers must use the Departmental Plain Language Standard Procurement documents for LDV and Medium Complexity competitive or non-competitive requirements for goods or services (refer to the Departmental Plain Language Standard Procurement Documents Website or to 2T-LDV1 and 2T-MED1 of the Standard Acquisition Clauses and Conditions [SACC] Manual.

Contracting officers are invited to consult the procedures 2T-PROC1 for the use of the LDV and Medium Complexity templates available on the Website identified above and in the SACC Manual.

In order to maintain a "common look and feel" for PWGSC's procurement documents, contracting officers must not modify or change the order and content of these standard templates except where indicated.

For more information, contact Gaëtane Dagenais or Ginette Plante, Procurement Process Tools Division.

Contract Approval

6E.647 (1994-06-23) All requirements over $50,000 require approval through either the Contract Planning and Advance Approval (CPAA) or the formal Procurement Plan processes.

Requirements for less than $50,000 are approved according to sector/region procedures.

The CPAA or formal Procurement Plan must be approved before the Notice of Proposed Procurement, Advance Contract Award Notice or bid solicitation document is released.

Contract Request Forms

6E.651 (2002-05-24) Submissions are prepared using the Contract Request forms PWGSC-TPSGC 1151-1 and PWGSC-TPSGC 1151-2.

Contract Planning and Advance Approval Process

6E.655 (1994-06-23) The CPAA process allows contracting officers to award contracts without further reference to the approval authority when there are no significant changes from an approved CPAA form.

The CPAA is to be used for procurements valued at $50,000 or more which fall within approval levels up to and including directors general, except for procurements which require a formal Procurement Plan (see 6E.662).

6E.656 (1994-06-23) Contracting officers must complete the CPAA form and submit it to the appropriate approval authority. Copies of the form are to be sent to all line management officers between the contracting officer and the approval authority, sector/region resources such as legal counsel, contract quality control and cost analysts, as required, and commodity teams, if applicable.

6E.657 (1994-06-23) On receipt of the submission, the approval authority will, within two working days, review it and either grant full approval to proceed or identify concerns and direct changes to the proposed strategy.

6E.658 (1994-06-23) If the procurement action results in a significant change from the originally approved plan, this change must be approved in accordance with sector/region procedures. If there is no significant change, the contracting officer will prepare the contract for the appropriate signing authority.

Once the contract is prepared, it is subject to a mandatory independent review, in accordance with sector/region procedures, prior to award and signing.

Formal Procurement Plan Process

6E.662 (1996-12-02) A formal Procurement Plan is normally prepared for:

1. all procurements estimated to exceed the approval levels of directors general;
2. all procurements for the services of former public servants in receipt of a pension where the fee component is estimated to exceed $25,000 for non-competitive contracts or $100,000 for competitive;
3. all procurements which are considered to be sensitive or have significant socio-economic impact (i.e. which will or may require the Minister's involvement at some stage).

The exclusions are the supply of edible agricultural and fishery products purchased for foreign aid programs, and CCC contracts.

6E.663 (2005-12-16) The Procurement Plan must include the following elements:

DESCRIPTION

Give a brief description of the requirement.

ESTIMATED COST AND NAME OF CLIENT

ANTICIPATED CONTRACT APPROVAL AUTHORITY REQUIRED

SOURCING

Identify applicable trade agreements (NAFTA, WTO-AGP, AIT and CLCAs) and any significant policies governing sourcing decisions (Set-aside Program for Aboriginal Business; Canadian Content; Shipbuilding, Repair, Refit and Modernization, etc.)

Explain the sourcing strategy i.e. GETS, GBO, other public advertising, source lists (one time, ongoing).

Substantiate any decision to go sole source.

POLICY ISSUES

Attach relevant Procurement Review Committee documents (see 5.090). Identify any other relevant socio-economic considerations.

Outline any special or unusual aspects of the procurement.

Recommend a course of action to resolve or handle any problems involving potential major risks or deviations from sourcing policy or other PWGSC policy. Where there are major risks inherent in the proposed approach, they must be examined in consultation with PWGSC financial and legal officers.

EVALUATION CRITERIA

Identify the evaluation criteria and the selection method to be used with any bid solicitation, including pricing basis, point rating or mandatory/desirable criteria for the technical evaluation.

MILESTONES

Give target dates for important milestones (e.g. bid solicitation, contract award, delivery schedule).

ADDITIONAL COMMENTS

Include any information that should be brought to the approval authority's attention.

CONTRACTING OFFICER

State the name, sector/region, division and telephone number of the officer responsible for the project.

COMMENTS

Leave two or three lines for comments by the approval authority.

Approvals

6E.667 (1994-06-23) The director general will forward the completed Procurement Plan to the next level of management for approval.

6E.668 (2001-12-10) If events during the procurement process result in a significant change in procurement strategy, a revised Procurement Plan must be approved before implementation.

Section 6F: Solicitation Checklist

6F.690 (2001-12-10) Before preparing a bid solicitation, the contracting officer should ensure that the following items have been considered. Relevant information is then to be included in the bid solicitation.

1. Statement of work: define the work to be done or the products to be acquired in clear and concise terms. If a requirement cannot be clearly defined, indicate the objectives and performance criteria to be met, and the evaluation criteria to be used.
2. Technical requirements: ensure that adequate technical/performance specifications (or purchase description) are included, and that mandatory requirements are clearly defined.
3. Trade references: "brand name or equal" type of purchase description should not be used, unless no other specification is available.
4. Appropriate action: determine whether a requirement can be fulfilled from an existing Standing Offer. Ensure that the most efficient and effective procurement strategy is being followed.
5. Evaluation criteria: evaluation criteria, and their relative weighing/importance, must be clear, and the evaluation process and team, if applicable, defined. Indicate whether, and under what conditions, alternatives will be considered.
6. Contractor selection: determine the basis on which a contractor will be selected. If the intent is to award the contract on the basis of best value, the criteria and the methods that will be used to determine the best value should be stated.
7. Sourcing: ensure that the application of trade agreements has been verified, and that government sourcing procedures and departmental policies have been reviewed.
8. Industrial Security requirements (Personnel or organization): ensure that industrial security requirements have been defined adequately and reviewed by Canadian and International Industrial Security Division.
9. Employment equity: for procurements valued at more than $200,000, contracting officers must remind bidders of the potential application of the Federal Contractors Program for Employment Equity.
10. Pricing factors: determine all factors which will affect price (e.g. duties, taxes, transportation and installation costs). Identify potential currency issues.
11. Terms and conditions: include applicable General Conditions and Supplemental General Conditions. Consult Legal Services for any deviations from General or Supplemental General Conditions.
12. Standard/special clauses: use, whenever possible, standard clauses as detailed in the Standard Acquisition Clauses and Conditions (SACC) Manual. If a situation arises for which a standard clause does not exist or an existing clause requires changes, ensure that the Crown's interests are protected. Consult Legal Services when necessary.
13. Intellectual property: ensure that ownership of intellectual property has been dealt with.
14. Employer-employee relationship: ensure that potential employer-employee relationships are dealt with.
15. Basis of payment: determine the most appropriate basis of payment.
16. Funding level: consider, when issuing a request for proposal, whether or not to include an estimated or maximum funding level (e.g. when a requirement involves an investigation or a study, the depth of the investigation or study will often depend upon the funds available).
17. Financial security: specify, when applicable, the type, combination and amount of financial security required.
18. Delivery: define delivery requirements. Avoid statements such as "as soon as possible" which could cause unjust rejection of bids for unsatisfactory proposed delivery.
19. FOB point: specify the FOB (free on board) or FAS (free alongside ship) or FAF (free alongside flight) point, as applicable.
20. Quality assurance: include the government quality assurance required, such as inspection, process control, acceptance criteria, etc.
21. Multi-item requirements: when appropriate, emphasize the prerogative to award the contract on either an aggregate or partial basis.
22. Preparation instructions: determine the desired format and any special instructions for the presentation of bids. The evaluation process will be simplified if proposals are presented using the same format.
23. Bidding period: allow sufficient time for the preparation and return of bids, taking into account mandatory requirements under international agreements, the complexity and urgency of the requirement, the necessity for suppliers to contact subcontractors, and the geographical location of suppliers.
24. Bid validity period: ensure that the proposed bid validity period allows sufficient time for the bid evaluation process and the contract approval process.
25. Bidders' conference or site visit: the need for, and requirement for potential bidders to attend, a bidders' conference or site visit must be established.
26. Closing date and time: indicate the closing date and time clearly. The normal closing time is 2 p.m. local time at the place of closing on the established date.
27. Form of bids: contracting officers must ensure that instructions for the submission of bids are not open to misinterpretation.
28. Receipt of bids: all tenders and competitive proposals and quotations for requirements estimated to exceed $5,000 are to be directed to a designated bid receiving area.
29. Public opening: only Invitations to Tender are opened publicly. State the time, date and place where tenders will be opened. The public tender opening time is the specified bid closing time.
30. Approvals: ensure that all required approvals have been obtained.
31. Controlled Goods: ensure that any "controlled goods" have been identified and adequate security precautions are in place for their safeguard and transfer.

Annex 6.1: Conditions Imposed on the Approval Authority Limits for Departmental Personnel
(2003-12-12)

The approval authority limits for departmental personnel are subject to the following conditions:

1. that the Assistant Deputy Minister/Directors General/Senior Directors/Regional Directors/Directors, European and Washington Directorates, ensure that, for contracts and contract amendments requiring their approval, the terms and conditions of the contract are in all respects consistent with the representations made to them as to the substantive nature of the transaction;
2. that the Assistant Deputy Minister/Directors General/Senior Directors ensure that for contracts and contract amendments requiring their approval, the contract quality assurance officers in place have been duly consulted and have had an opportunity to review the contractual documents and the substance of the business case;
3. that the Assistant Deputy Minister/Directors General/Senior Directors ensure that for contracts and contract amendments requiring their approval, the cost analysts and legal officers assigned to the sector/region have been given the opportunity to review the contractual documents and provide such comment, as may be necessary, to ensure that the nature of the business case can be clearly understood and that the other conditions of the delegation have been duly complied with;
4. that the Assistant Deputy Minister/Directors General/Senior Directors/Regional Directors/Directors, European and Washington Directorates, ensure that, for contracts and contract amendments requiring their approval, reports are maintained regarding turnaround times;
5. 1. that the Directors General immediately post to senior management, procurement plans for procurement with an estimated value of $1 million or more; and
   2. that the Director General post, to senior management, a summary of the Contract Request, 48 hours before contract approval.

NOTE: The Minister's approval authority is required for specific submissions as described in sections 1.1, 1.2 and 1.14 of Annex 6.1.1.

Annex 6.1.1: Contract Approval and Signing Authorities in Support of Clients' Programs Only - Other than for Canadian Commercial Corporation

(2004-05-14)

Approval Authorities

1.1 Submissions (Contract Requests) granting approval to enter into and amend contracts, excluding those described in section 1.3 to 1.13 below, as follows:

1. in accordance with
   1. Annex 6.1.2 for goods and/or services,
   2. Annex 6.1.4 for defence construction, or
2. when the award is not being made to the bidder offering the best value, based on the published evaluation criteria and selection method, non-competitive approval in accordance with Annex 6.1.2.
   
   Note: Recommendations to bypass the bidder offering the best value, based on the published evaluation criteria and selection method, should be a rare occurrence. All recommended awards of this nature must uphold the principles of fairness and openness and must be compliant with the applicable trade agreements. Officers should take note that trade agreements and bid challenge mechanisms have reinforced the need to adhere to these principles.
   
   Minister

1.2 Submissions (Contract Requests) granting approval to utilize either a standing offer or a supply arrangement method of supply when individual call-ups will not exceed the limits prescribed by Treasury Board, as follows:

1. in accordance with Annex 6.1.2 for goods and/or services, or
2. if the planned limit on the total expenditure against the standing offer exceeds the delegated contract approval authorities:
   
   Minister

Note: See section 1.13 below with respect to bulk fuels.

1.3 Submissions (Contract Requests) granting approval to enter into contracts for the services of former public servants in receipt of a pension (see 6D.477 and 6D.481), as follows:

1. when the contract does not exceed $25,000 (non-competitive) or $100,000 (competitive):
   
   in accordance with Annex 6.1.2 for goods and/or services, and Annex 6.1.4 for defence construction, or
   
   
2. if the contract value exceeds $25,000 (non-competitive) or $100,000 (competitive):
   
   Treasury Board
   
   
3. all amendments to contracts, where the total contract value including amendments exceeds $25,000 (non-competitive) or $100,000 (competitive):
   
   Treasury Board

Note: The fee component in any non-competitive contract must be abated if the individual has been retired for less than one year and is in receipt of a pension (see 6D.481).

1.4 Submissions granting approval to enter into or amend a contract with a former public servant, when the former public servant is in receipt of a lump sum payment pursuant to a workforce reduction program and the fee component will exceed $5,000 of either the individual contract or a combination of contracts, during the period covered by the lump sum payment (see 6D.483).

Treasury Board

1.5 Confirming Orders

Submissions (Contract Requests) granting approval to issue a Confirming Order are to be approved at the Director level or higher authority based on non-competitive contract approval authority limits. (See 7F.691)

1.6 Submission (Contract Requests) granting approval to enter into or amend an agreement for the supply of any edible agricultural product purchased for foreign aid programs, as follows:

1. in accordance with Annex 6.1.2, or
2. if the total amount payable under the agreement, inclusive of any amendments, exceeds the limits in Annex 6.1.2 but does not exceed $5 million: all positions in Level 1.

1.7 Submissions (Contract Requests) granting approval to enter into or amend an agreement to transport by ocean-going vessel any goods shipped for the Canadian International Development Agency, as follows:

1. in accordance with Annex 6.1.2, or
2. if the aggregate payable under the agreement, including any amendments thereto, exceeds the limits in Annex 6.1.2 but does not exceed $2.5 million: all positions in Level 1.

1.8 Submissions (Contract Requests) granting approval to enter into or amend contracts to repair and overhaul of military equipment, as follows:

1. in accordance with Annex 6.1.2, or
2. if the contract, including any amendments thereto, exceeds the limits in Annex 6.1.2 but does not exceed $25 million: all positions in Level 1.

1.9 Submissions (Contract Requests) granting approval to enter into or amend a service contract for transportation services from common carriers, if the rates charged do not exceed the normal rates for such services, as follows:

1. in accordance with Annex 6.1.2, or
2. if the estimated value of the contracts or contract amendments exceeds the limits in Annex 6.1.2:
   
   Directors General, Supply Operations and Regional Directors General/Directors.

1.10 Submissions (Contract Requests) granting approval to enter into or amend a service contract for electricity, gas, water, sewage disposal, heat and telecommunication services, if the rates do not exceed the normal rates and the contract does not involve negotiated installation or capital charges in excess of $200,000, as follows:

1. in accordance with Annex 6.1.2, or
2. if the estimated value of the contract or contract amendment exceeds the limits in Annex 6.1.2:
   
   Directors General, Supply Operations and Regional Directors General/Directors.

1.11 Submissions (Contract Requests) granting approval to enter into and amend contracts for the procurement of ammunition under the Munitions Supply Program, as follows:

1. in accordance with Annex 6.1.2, or
2. if the total payable under the contract, inclusive of any amendments, exceeds the limits of Annex 6.1.2 but does not exceed $25 million: all positions in Level 1.

1.12 Submissions (Contract Requests) granting approval to enter into and amend contracts for the procurement of goods under the U.S. Foreign Military Sales Program and the CNDS program (from U.S. DoD - National Security Agency) as follows:

1. in accordance with Annex 6.1.2, or
2. if the total amount payable under the contract, inclusive of any amendments, exceeds the limits in Annex 6.1.2 but does not exceed $12.5 million: all positions in Level 1.

1.13 Submissions (Contract Requests) granting approval to utilize a standing offer method of supply for the procurement of bulk fuels, when individual call-ups will not exceed $10 million, as follows:

1. in accordance with Annex 6.1.2, or
2. if the planned limit on the total expenditure against the standing offer exceeds the limits in Annex 6.1.2:
   
   Directors General, Supply Operations and Regional Directors General/Directors
   Director, European Directorate

1.14 Submissions (Contract Requests) granting approval to enter into and amend contracts for advertising services, as follows:

1. in accordance with Annex 6.1.2, or
2. if the total amount payable under the contract, inclusive of any amendments, exceeds the limits in Annex 6.1.2 but does not exceed $10 million: all positions in Level 1.

Signing Authorities

1.15 Purchase orders, contracts, standing offers, supply arrangements, formal agreements and arrangements, Stores and Supply Transfer Orders, written direction to the Agency of Record, assignments, go-ahead letters and messages, letters of intent, consents to subcontract, termination notices, and amendments to any of the above, as follows:

1. in accordance with Annex 6.1.2 for goods and/or services, or
2. in accordance with Annex 6.1.4 for defence construction;
   
   and if under departmental seal, together with the Corporate Secretary.

1.16 Advance, Milestone and Progress Payments:

Certificates on claim forms for advance, milestone and/or progress payments as prerequisite for certification pursuant to section 34 of the 'Financial Administration Act:'

1. Incumbents of positions listed in Annex 6.1.2, with the exception of Senior Purchasing Assistants and Buying Clerks/Regional offices:
   
   Unlimited
   
   
2. Science Procurement Senior Purchasing Assistants:
   
   Contracts beyond approval authority: Claims without holdbacks or final claims to a maximum of $40,000
   
   Contracts within approval authority: All claims

1.17 Release and Settlement documents:

• Assistant Deputy Minister, Government Operational Services Branch
  Chairman, Contracts Claims Resolution.

1.18 Instructions for shipment, transportation, storage and warehousing of machine tools, special production tooling and test equipment;

• Directors, Group Managers and Section Chiefs of Supply Operations and Regions, Project Managers, Major Crown Projects.

1.19 Instructions to contractors concerning Industrial Security requirements:

• Director, Canadian and International Industrial Security Directorate

1.20 Certifications required by the Canada Revenue Agency from PWGSC that items imported by the Department of National Defence are "defence supplies", as defined in the Defence Production Act, pursuant to Order-in-Council P.C. 1966-2184, as amended P.C. 1967-969, and section 17 of the Financial Administration Act:

• Directors General, Supply Operations and Regions; Senior Directors and Directors, headquarter; and Regional Directors.

1.21 Certificates under departmental seal that documents are true copies:

• Corporate Secretary.

1.22 Conditional Emergency Contracting Authority

An increase in approval authority from Treasury Board for Emergency Contracting to $15M has been approved. This authority rests with the Minister.

This emergency contracting authority can be used only if all of the following criteria are met:

• the action is in response to pressing emergencies where there will be significant human and/or financial risks;
• the Minister invokes the National Security or Extreme Urgency provisions of the applicable trade agreements;
• the requirement cannot be satisfied by normal contracting procedures due to the urgency of the situation;
• the applicable departmental Minister approves the use of these special authorities; and
• the new exceptional contracting authorities remain subject to the reporting requirements for the use of emergency contracting as set out in the TB Contracting Policy.

Annex 6.1.2: Approval Authority Limits for Goods, Services, Construction, Telecommunications and A&E Services

(2005-06-10)

Notes:

Position Titles: Position titles shown above are examples only - all equivalent positions (as shown in the List of Equivalent Positions following the approval authority charts) have the same authorities as indicated above.

Ratifications: Authorities for approving agreements which involve: pre-contractual work, ratification of contractual commitments, confirming orders, or contracts/amendments which include Pre-contractual Work clauses, or any other retroactive elements are limited to 50 percent of the non-competitive dollar thresholds specified above. The minimum approval authority is the Director level. This 50 percent reduction for ratifications applies to all dollar thresholds below the Assistant Deputy Minister level.

Notes:

Position Titles: Position titles shown above are examples only - all equivalent positions (as shown in the List of Position Equivalents following the approval authority charts) have the same authorities as indicated above.

Ratifications: Authorities for approving agreements which involve: pre-contractual work, ratification of contractual commitments, confirming orders, or contracts/amendments which include Pre-contractual Work clauses, or any other retroactive elements are limited to 50 percent of the non-competitive dollar thresholds specified above. The minimum approval authority is the Director level. This 50 percent reduction for ratifications applies to all dollar thresholds below the Assistant Deputy Minister level.

Notes:

Position Titles: Position titles shown above are examples only - all equivalent positions (as shown in the List of Position Equivalents following the approval authority charts) have the same maximum authorities as indicated above. Authorities shown may be restricted within individual sectors and regions. Please contact your quality assurance representative to confirm the authorities for your position title.

Ratifications: Authorities for approving agreements which involve: pre-contractual work, ratification of contractual commitments, confirming orders, or contracts/amendments which include Pre-contractual Work clauses, or any other retroactive elements are limited to 50 percent of the non-competitive dollar thresholds specified above. The minimum approval authority is the Director level. This 50 percent reduction for ratifications applies to all dollar thresholds below the Assistant Deputy Minister level.

Defence Construction: Construction contracting authorities for procurements carried out on behalf of Department of National Defence (DND) are limited by an agreement between PWGSC and Defence Construction Canada (DCC) that PWGSC will procure construction services on behalf of DND, only if the value of the procurement does not exceed $60,000. If the value of such a procurement on behalf of DND exceeds $60,000 approval to proceed must be obtained from DCC.

Notes:

Position Titles: Position titles shown above are examples only - all equivalent positions (as shown in the List of Position Equivalents following the approval authority charts) have the same authorities as indicated above.

Ratifications: Authorities for approving agreements which involve: pre-contractual work, ratification of contractual commitments, confirming orders, or contracts/amendments which include Pre-contractual Work clauses, or any other retroactive elements are limited to 50 percent of the non-competitive dollar thresholds specified above. The minimum approval authority is the Director level. This 50 percent reduction for ratifications applies to all dollar thresholds below the Assistant Deputy Minister level.

Notes:

Position Titles: Position titles shown above are examples only - all equivalent positions (as shown in the List of Position Equivalents following the approval authority charts) have the same authorities as indicated above. Authorities shown may be restricted within individual sectors and regions. Please contact your quality assurance representative to confirm the authorities for your position title.

Ratifications: Authorities for approving agreements which involve: pre-contractual work, ratification of contractual commitments, confirming orders, or contracts/amendments which include Pre-contractual Work clauses, or any other retroactive elements are limited to 50 percent of the non-competitive dollar thresholds specified above. The minimum approval authority is the Director level. This 50 percent reduction for ratifications applies to all dollar thresholds below the Assistant Deputy Minister level.

List of Equivalent Positions

(2003-12-12)

Level 1

ADM Supply Operations
Executive Director, CCSB
Director General, Supply Operations
Director General, CCSB
Regional Director General
Regional Director, Supply
Director, Crown Assets Disposal
Director, Seized Property Management
Director, European Region
Director, Washington Region
Senior Director, Procurement Directorate

Level 2

Director, Supply Operations
Director CCSB
Deputy Director
Project Manager
Procurement Manager, Washington
Manager
Project/Commodity Manager
Executive Producer, CCSB
Supply Planner
Composition Analyst
Senior Account Advisor
Senior Contracts Officer, Washington

Level 3

Chiefs Chief, Crown Assets Distribution
Associate Producer, CCSB
Client Services and Commodity Manager, Industrial and Commercial Products
Supervisor
Senior Procurement Officer
Senior Engineering Procurement Officer
Senior Contract Management Officer
Supply Team Leader
Supply Specialist
Team Leader
Senior Case Officer
Engineering Project Officer
Procurement Officer
Contract Management Officers
Contract Management Officer, MCP
Marine Technical Inspectors (when performing purchasing functions)
Contracts Officer, Washington
Representative, Seized Real Property
Senior Contracting Officer
Case Officer
Recycling Specialist

Level 4

Producer, CCSB
Contract Officer
Contracting Officer
Transportation Officer
Service Officer
Purchasing Agent
Purchasing Officer
Printing Product Officer
Printing Supervisor
Transportation Clerk
Supply Officer
Buyer
Senior Purchasing Assistant
Production Assistant, CCSB
Purchasing Assistant
Sales Representative, Crown Assets Distribution
Representative, Seized Moveable Property
Project Clerk
Contract Clerk
Contracting Clerk
Buying Clerk

Annex 6.1.4: Approval and Signing Authority Limits for Defence Construction

Superseded by Annex 6.1.2.

Annex 6.1.5: Contract Amendment Approval Instructions

(2004-05-14)

When the correct approval authority level for a proposed amendment is being determined, consideration must be given not only to the cost of the amendment but also to the cumulative cost (or aggregate) of amendments. The amendment approval authority level is based on the aggregate amendment value excluding negative and pre-approved amendments.

1. Determining the Amendment Approval Authority for Competitive Contracts - Routine

Following is an example of how to determine the appropriate authority for an amendment to a contract awarded on a competitive basis.

Amendment No. 1 to a goods contract is valued at $250,000. This amendment was not pre-approved. The original contract submission or procurement value was approved at $3 million - this amount included the original contract value of $1,500,000, and an additional $1,500,000 approved for options to be exercised in the following two year period. To determine the appropriate amendment approval authority proceed as follows:

1. Determine which position title(s) have a maximum aggregate amendment approval authority of $250,000 or more. (Director level or above).
2. Determine the greater of Director's authority of $200,000 and 10% of the originally approved contract submission (i.e. 10 % of $3,000,000, or $300,000). Based on this comparison, the Director can approve an aggregate amendment value up to $300,000, and is the appropriate approval authority for amendment No. 1.

Amendment No. 2 is valued at $110,000. This amendment was not pre-approved. To determine the appropriate amendment approval authority proceed as follows:

1. Determine which position title(s) have a maximum aggregate amendment approval authority of $360,000 ($250,000 + $110,000). In this case the Director level or above has this authority.
2. Determine the greater of the Director's authority of $200,000 and 10% of the originally approved contract submission (i.e. 10% of $3,000,000, or $300,000). Based on this comparison, the delegated aggregate amendment approval authority is limited to $300,000. Only the Minister can approve amendments that exceed both the TB limit for amendments and 10% of the originally approved value.

Amendment No. 3 is valued at $2,000. This amendment was not pre-approved. Once the Minister has approved an amendment, all subsequent positive amendments that were non pre-approved require the Minister's approval; therefore, Ministerial approval is required.

Note: All amendments valued in excess of $1,000,000 must be approved by the Minister ³, unless they were part of a previously approved submission.

2. Determining the Amendment Approval Authority for Competitive Goods Contract - Complex

A CPAA was approved at the DG level for a total original procurement value estimated at $11,000,000. The CPAA included a quantity option equaling $1,000,000 to be exercised at anytime prior to the expiry date of the contract. The CPAA also included a set aside for design changes equaling $500,000. The electronic bidding process was utilized. The original contract was awarded at $8,500,000 and signed by the Manager, the applicable signing authority level.

The option quantity was not funded at the time of contract award and was not included in the contract value. The set aside for design change was also unfunded at time of award.

Amendments 1 to 10 are determined as follows:

A. Amendment number one, not pre-approved, is needed to add some items equaling $28,400.

The Amendment Approval Authority is the Senior Contract Mgt Officer.
The Signing Authority is the Contracting Officer.
There is no PIF required because the aggregate amendment value is >$25K but less than 10% of the total original procurement value.

Revised contract value is now: $8,528,400;

B. Amendment number two, not pre-approved, is for a mutually agreeable change in the first shipment, initial delivery is delayed by a month. A NIL amendment.

Amendment aggregate for amendments not pre-approved is $28,400.

NIL value amendments where no further risk or liability accrue to the Crown are administrative in nature and require no approvals.
The Signing Authority is the Contracting Officer.
PIFs are not required for negative or nil value amendments.

Revised contract value is now: $8,528,400 (no change);

C. Amendment number three, a pre-approved option quantity, exercises half of the option quantity amount equaling $500,000.

Aggregate amendment values of amendments not pre-approved are separate from the aggregate amendment values of either options or set asides. If required, options or set asides can be exercised to the maximum value in one amendment.

Cumulative Amendments to exercise a pre-approved option is $500,000.

The amendment to exercise an option has already been pre-approved at the CPAA stage.
The Signing Authority is the Chief.
There is no PIF required because the aggregate amendment value is >$25K but less than 10% of the original procurement value.

Revised contract value is now: $9,028,400;

D. Amendment number four, not pre-approved, is for unscheduled work/something unforeseen equaling $76,400.

Amendment aggregate/for amendments not pre-approved: $104,800.00.

The Amendment Approval Authority is the Manager.
The Signing Authority is the Contract Management Officer.
There is no PIF required because the aggregate amendment value is >$25K but less than 10% of the original procurement value.

Revised contract value is now: $9,104,800;

E. Amendment number five, pre-approved option quantity exercises the second half of the option quantity for a value of $500,000.00.

The cumulative value for the pre-approved option is: $1,000,000. The option is now fully exercised.

The amendment to exercise an option has already been pre-approved at the CPAA stage.
The Signing Authority is the appropriate contract signing authority.
There is no PIF required because the aggregate amendment value is >$25K but less than 10% of the original procurement value.

Revised contract value is now: $9,604,800.

F. Amendment number six, not previously approved, a nil amendment is required to add a SACC clause, inadvertently omitted from the original document.

Amendment aggregate/for amendments not pre-approved is: $104,800.00.

NIL value amendments where no further risk or liability accrue to the Crown are administrative in nature and require no approvals.
The Signing Authority is the Contract Management Officer (PG3).
PIFs are not required for negative or nil value amendments.

Revised contract value is now: $9,604,800. No change;

G. Amendment number seven, pre-approved set aside, is raised to exercise a portion of the pre-approved set aside for design changes equaling $280,000.

The cumulative value for amendments to exercise the pre- approved set aside is $280,000.

The Amendment Approval Authority is the Manager.
The Signing Authority is the Senior Contract Management Officer.
There is no PIF required because the aggregate amendment value is >$25K but less than 10% of the original procurement value.

Amendments issued to use an amount set aside for unscheduled work, work arising, or design changes shall be approved by the appropriate non-competitive contract entry approval authority, not to exceed the lower of the Director level or the original approval.

Aggregate amendment values of set asides, previously approved, are separate from the aggregate amendment values of either options or normal amendments. If required, options or set asides can be exercised to the maximum value in one amendment.

Revised contract value is now: $9,884,800;

H. Amendment number eight, pre-approved set aside, is raised to exercise a portion of the pre-approved set aside for design changes equaling $100,000.

The cumulative value for amendments to exercise the pre-approved set aside is $380,000. Balance remaining is $120,000.

The set aside amendment value stands alone, non-competitive contract entry approval authority is sought for $100,000.

The Amendment Approval Authority is the Contract Management Officer.
The Signing Authority is the Contracting Officer.
There is no PIF required because the aggregate amendment value is >$25K but less than 10% of the original procurement value.

Revised contract value is now: $9,984,800;

I. Amendment number nine, not previously approved, is for unscheduled work/something unforeseen equaling $210,000.

Amendment aggregate for "not pre-approved "amendments is now $314,800

As per the Electronic Bidding Aggregate Amendment levels, the Director can approve amendments the greater of $200,000 or 10% of the total procurement value, to a maximum of $500,000.

The Amendment Approval Authority is the Director.
The Signing Authority is the Chief.
There is no PIF required because the aggregate amendment value is >$25K but less than 10% of the original procurement value.

Revised contract value is now: $10,194,800;

J. Amendment number ten, not pre-approved, the client decides, due to cut backs amendment no. 9 is no longer required. The supplier agrees to forego this work at no additional cost to the Crown, (having just recently ordered materials and was able to negotiate no cancellation fees, etc. from his suppliers) for a negative value amendment of $210,000.00

Amendment aggregate for "not pre-approved" amendments is $104,800.

The Amendment Approval Authority is the Manager.
The Signing Authority is the Contract Management Officer.
PIFs are not required for negative or nil value amendments.

Revised contract value is now: $9,984,800.

3. Reductions in Contract Value

1. Situation: The client reduces the quantity required and the supplier/contractor agrees to the reduced quantity with no increase in the unit price.

   Approval Level: Any contracting authority responsible for managing the contract may approve the amendment that reduces the value of the contract.

2. Situation: The client reduces the quantity required but the supplier/contractor wants to increase the price because of the reduced quantity. Renegotiation is necessary.

   Approval Level: The approval level for the contract amendment is that required for the revised unit price multiplied by the new quantity.

3. Situation: The client wishes to disencumber funds allocated to a repair and overhaul contract, say, in the last quarter of the fiscal year, because no more work arising will be forthcoming during that period.

   Approval Level: Any contracting authority responsible for managing the contract may approve an amendment to reduce the value of the contract.

4. Situation: The client requires a work package to be removed from a research and development contract. There is no clear relationship between the reduced cost and the reduced work package.

   Approval Level: The amendment will be approved at a level equal to the value of the proposed cost reduction.

4. Substitute Item (or work package)

If a client requests the contracting authority to amend a contract by deleting an item (or work package) and substituting a different item (or work package), the value of the substitute item (or work package) will determine the contract amendment approval level. If the contract amendment approval level, based on the value of the substitute item (or work package) exceeds the Director General's approval authority, the standard method of determining the amendment approval authority, based on cumulative value of amendments, shall be used to determine whether the Deputy Minister, the Minister, or Treasury Board approval is required.

5. Additional Risks

Contract amendments that propose changes to either the basis of payment, the method of payment or the contract terms and conditions, so that ADDITIONAL risk or liability is transferred to the Crown, shall be authorized at or above the original approval level for that contract only if corresponding compensatory benefits accrue to the Crown. In the absence of corresponding benefits, such changes would constitute extra payments for which ONLY TREASURY BOARD has approval authority.

The following are examples of changes that would constitute additional risk to the Crown:

1. liberalizing the progress payments;
2. eliminating the requirement for a performance bond;
3. slippage, by the contractor, of firm delivery dates.

6. Advance Approval for Amount Set Aside

1. If the original authority to enter into a contract also included advance approval for an amount to be set aside for unscheduled work, design changes or work arisings, then on each occasion when any of the amount set aside is used, it shall be approved by the appropriate non-competitive contract entry approval authority, not to exceed the lower of the Director level or the original approval.
2. If an amendment to use the remainder of the amount set aside for a specific purpose exceeds that amount, the approval level for the excess amount will revert back to the appropriate aggregate amendment level in accordance with Annex 6.1.2.
3. If a condition of the original approval requires other levels of approval for encumbering amounts set aside, the levels established in the original contract approval will take precedence.
4. The amount of the set aside/option should be based on sound front-end planning and preparation. The better the planning and preparation the better the ability to predict additional quantities or unforeseen work arisings, and the more accurate the assigned dollars values. A procurement plan that is thoroughly justified as to the purpose of each planned expenditure is more likely to be approved.

7. Advance Approval for Options

Once approval has been obtained to exercise an option, the contract amendment to exercise the option requires only the contract amendment signing authority as per Annex 6.1.2. Funds and approval received for an option can only be used for the specific purpose stated in the approval document. Any change to the scope or period of the option must be approved by the original approval authority.

Approval and funding for unexpected changes in the scope of the work, that were not specifically provided for in the approval document as an Advance Approval for Amount Set Aside (see section 6 above), cannot be drawn from the approval for an option. For example, if approval is obtained for a 1 year services contract valued at $200,000, with an option year also valued at $200,000, the contracting officer cannot use the approval and funding related to the option year to cover an increase in the services required during the first year. Any change in the scope of work that was not approved as part of the original submission is a change in the requirement and must be approved on its own merits.

8. Contract Code for Pre-Approved Amendments

Document Type number 22, Contract Code for Pre-Approved Amendments, has been activated for ABE and SELECT systems, and shall be used to identify all pre-approved amendments.

Amendments that were pre-approved and will be coded as Document Type 22 include, but are not limited to:

1. amendments issued to exercise an option for additional quantities or years that were included in the original solicitation and approved as part of the original contract approval submission; and,
2. amendments which use amounts set-aside for anticipated, but not yet clearly defined, changes (e.g. work arising, design changes, unscheduled work), which were approved as part of the original contract approval submission.

Amendments that do not fit within the description of the original approval or go beyond the scope or value of the approval will be coded as Normal Amendments and shall be approved at the appropriate level as determined by the Minister's delegation of amendment authorities.

9. Rates (or Prices-to-be-negotiated) / Interim Rates (or Prices)

If the basis of payment in a contract includes interim rates (or prices) and it is proposed to amend the contract to provide for firm rates (or prices) in lieu, then the amendment approval authority level will be as follows (unless otherwise instructed by the contract approval authority):

1. one level above that required for signing the contract, only if the firm rates (or prices) are equal to or less than the interim rates (or prices); or
2. at the original contract approval authority level, when the firm rates (or prices) exceed the interim rates (or prices); or
3. Director General, if the contract was approved by the Assistant Deputy Minister, the Minister or Treasury Board.

10. Combining Several Types of Contract Changes in One Amendment

When a contract amendment is raised to incorporate several types of changes enumerated in paragraphs 1 to 8 above (i.e. firming up price-to-be-negotiated items, using a portion of an amount set aside, addition of items/quantities, etc.), the highest approval level for any one type of these changes or combinations thereof being incorporated into the contract by that amendment shall apply.

11. Amendments to Contracts with Former Public Servants

All amendments to contracts with former public servants, where the total contract value including amendments exceeds $25,000 (non-competitive) or $100,000 (competitive), must be approved by Treasury Board. Amendments to contracts with former public servants in receipt of a lump sum payment pursuant to a workforce reduction program which result in a fee component exceeding $5,000 on either the individual contract or a combination of contracts, during the period covered by the lump sum payment, must be approved by Treasury Board.

12. Interpretation of Aggregate Amendment Value

All amendment approval authorities (for amendments not pre-approved) are to be determined on the basis of the aggregate amendment value.

The interpretation that aggregate amendment value means the SUM TOTAL of the amendments to a contract including positive and negative amendments applies only to amendments requiring Treasury Board approval. For internal purposes and to ensure adequate control measures are in place, the aggregate amount for amendments not pre-approved will be calculated using only positive amendments.

The aggregate amendment value for approval purposes is the total of all executed positive amendments including the proposed amendment. For approval purposes, the aggregate amendment value does not combine normal amendment totals with pre-approved amendment totals. They are separate calculations.

The aggregate amendment value for the PIF is the total of all executed amendments including positive, negative and the proposed amendment as well as executed options and set asides. This figure informs the Minister the exact dollar amount that has been committed to a project and what has been spent without having to go back to the contract file.

As a general principle, once an approval level has been reached it can never be lowered. As an example, once the ministerial level for approval has been reached every subsequent positive amendment reverts to the minister regardless of dollar value.

Nil value amendments are to be regarded as administrative in nature and require no approvals except those nil value amendments where further risk or liability will be the Crown's responsibility. This type of nil value amendment requires approval authority at or above the original approval authority.

All amendments valued greater than $1M, for which advance approval has not been obtained, require the Minister or Treasury Board approval.

Only the Minister can approve amendments that exceed both the Treasury Board limit for amendments set for other government departments and 10% of the original procurement value.

13. When TB has approved an amendment, PWGSC may further amend the contract without TB approval if the cumulative value of the amendments after each issuance of an amendment pursuant to a TB approval does not exceed the non-competitive amendment level set out below. (See 6A.020.)

Annex 6.1.6: Definition of a Competitive Contract

(2003-05-30)

A competitive contract is one 'where the process used for the solicitation of bids enhances access, competition and fairness and assures that a reasonable and representative number of suppliers are given an opportunity to bid by:'

either

1. 'giving public notice, using electronic bidding methodology, possibly supplemented by traditional bidding procedures, of a call for bids for a proposed contract or of an intention to award a contract to a pre-identified contractor (a directed contract advertised by an Advance Contract Award - ACAN), in accordance with limited tendering reasons set out in the trade agreements, or in accordance with the exceptions to bidding set out in section 6 (of the Government Contracts Regulations (GCRs),

   and where

   1. in the case of a call for bids, the lowest bid or the bid that offered the best value, as set out in the evaluation criteria in the bid solicitation and as determined by the contracting authority, was accepted;
   2. in the case of a call for bids where only one bid, compliant with mandatory criteria set out in the bid solicitation was received, fair value to the Crown, as determined by the contracting authority, was obtained; or
   3. in the case of an ACAN, no valid statement of capabilities is submitted to the proposed award were received within the fifteen calendar day posting period.

   OR

2. giving public notice, using traditional bidding procedures (such as a supplier' list, etc.) and in a manner that is consistent with generally accepted trade practices, of a call for bids for a proposed contract,

   and where

   1. in the case of a call for bids, the lowest bid or the bid that offered best value, as set out in the evaluation criteria in the bid solicitation and determined by the contracting authority, was accepted; or
   2. in the case that only one bid, compliant with the mandatory criteria set out in the bid solicitation was received, fair value to the Crown, as determined by the contracting authority, was obtained.'

Derived from Appendix A
Treasury Board Contracting Policy

Annex 6.1.7: Guidelines for the Determination of a Qualified Firm or Individual

(2003-05-30)

1. As stated in Treasury Board Contracting Policy, Article 4.1.3, 'whenever practical, an equal opportunity must be provided for all firms and individuals to compete, provided that they have, in the judgement of the contracting authority, the technical, financial, and managerial competence to discharge the contract and meet, where appropriate, the objectives established by overall national policies or as required under the North American Free Trade Agreement, the World Trade Organization - Agreement on Government Procurement, and the Agreement on Internal Trade'. Depending on the nature of the proposed contract, competence may include such factors as previous performance record, managerial structure, key personnel, prior related experience, facilities and financial strength.
2. Where it is not feasible or consistent with accepted trade practice to give public notice, bids should be invited from at least three qualified suppliers on a suppliers' list (a list that is maintained by the contracting authority setting out the names and addresses of individuals or firms from whom the contracting authority may solicit bids). At the time of solicitation of bids, there should be reasonable assurance that suppliers who are selected to bid are capable of meeting the requirements of the proposed contract. Otherwise, they may not bid at all or merely submit a token bid. In either case, the purpose of competition is defeated. Also, successful bidders who already have too much work on hand would not be able to start and/or complete the contract on time.

Annex 6.1.8: Procurement Information to the Minister

(2004-05-14)

1. The Procurement Information Form (PIF)

1.1 Key information to the Minister must be provided, on approved procurement plans, revisions to procurement plans, and proposed awards. Regional and Sector Directors General are responsible for providing information on each procurement plan and award valued above the thresholds specified in Annex A.

1.2 The PIF is intended to provide only key information on procurement plans and awards; it is not intended to provide the level of detail that is required in a Contract Planning and Advance Approval (CPAA), a Formal Procurement Plan, or a Contract Request. The PIF is divided into two distinct sections, one for reporting the planning information and the other for reporting the award information. With the exception of the Client Reference Number which refers to a specific identifier that the clients may include on their requisition, the data fields are based on information that is commonly used in the procurement process.

1.3 The data field "Brief Procurement Description" should include a general description of the goods and/or services being purchased and should indicate whether the procurement provides for the approval of options to be exercised at a later date or for the approval of set-aside amounts. Where approval is sought for a set-aside amount to be used for unscheduled work, design changes or work arising, the purpose of these amounts must be indicated.

1.4 The first section of the PIF, entitled Planning Information, is prepared at the same time as the CPAA or formal Procurement Plan and is included with the plan for which approval is being sought. Upon approval of the plan, the PIF shall be transmitted, as an e-mail attachment to the " <PIF" e-mail account, in accordance with the Regional or Sector procedures.

1.5 A PIF is required for each approved revision to a procurement plan for which a PIF was previously submitted. A PIF is also required for any revision to a procurement plan which was originally valued less than the thresholds specified in Annex A, but will, by virtue of the revision in question, exceed these thresholds.

1.6 A PIF is required if ministerial approval of a plan or award is sought via a memorandum to the Minister. The requirement to prepare a PIF is not altered by the type of approval document prepared.

1.7 At the award stage, the Award Information section of the PIF shall be completed and transmitted (along with the Planning Information) as an e-mail attachment to the "<PIF" e-mail account, in accordance with Regional or Sector procedures, 24 hours prior to the actual award. In the event that, due to operational requirements, the award must be made immediately and the PIF cannot be submitted 24 hours prior to award, then it shall be submitted at the same time as the award is made. A PIF is required for all awards which exceed the thresholds specified in Annex A.

1.8 The requirement to report on a specific plan is based on the estimated value for which approval is being sought (including any options or advance approvals). The requirement to report on a specific award is based on the total estimated value of the award. In some circumstances a PIF will be prepared at the planning stage, but subsequent awards which fall below the specified thresholds will not require a PIF. Similarly, a PIF may not be prepared at the planning stage, because the value is less than the thresholds - but a subsequent award valued in excess of the thresholds will require a PIF. In this latter situation, the Planning Information must be completed at the same time as the Award Information.

1.9 A hard copy of the PIF shall be retained on the procurement file. Contracting officers shall also retain electronic files of all PIFs prepared. To assist in identifying electronic files, a naming convention has been developed. The first character will identify whether the PIF reports on a Plan, a Revision to a plan, or an Award. Use the following naming convention for an electronic PIF to allow a file name to be as long as it needs to be when you have more than one contract against a requisition. Each block of information should be separated with a hyphen:

• First block - "P" for Plan
• Second block - the number of the amendment (i.e. 2 or 10 or 25, etc.)
• Third block - sector or regional ID
• Fourth and fifth block - the last 5 characters of the requisition number (or tender ID if the requisition number is unavailable)
• Sixth block - contract serial number (i.e. 1, 2, 3, etc., used to capture multiple contracts on the same file).

  Sample: P-99-AMES-8-BAOK-2

1.10 In light of this new reporting procedure, the requirement for distribution to senior management of procurement plans and contract award summaries valued at $1 million or more, and the procedures for reporting Contract Highlights are under review; however, they are at this time, unchanged.

2. Set-Asides

2.1 The descriptions of set-asides included in the PIF make it clear that there are two distinct types of set-asides; one related to the Land Claims Agreements; and one which is part of the Program for Aboriginal Business (Aboriginal Set-aside). The descriptions reflect terminology that is commonly employed within Acquisitions Branch.

3. Limited Tendering Reasons

3.1 Identify reasons for pursuing a non-competitive or limited competition procurement. This field is used to identify one of the 15 Limited Tendering Reasons detailed in Annex B. Architectural and engineering services (A&ES) requirements that were previously identified as being sourced using SPEC (Selection, Prequalification and Evaluation of Consultants) will now be identified as Limited Tendering Reason # 85, which makes reference to the TB Exception to the requirement to solicit bids for A&ES that do not exceed $100,000 (TB Contracting Policy, Ref. 10.2.1 (b)).

4. Contract Award Process (CAP)

4.1 Field for Type of Award to indicate the CAP Code in accordance with the list provided at Annex C. Where Limited Tendering has been used, this code will be the same as entered in the planning stage as the Limited Tendering Reason.

5. Timing For Submission of PIFs

5.1 All PIFs shall be transmitted to the <PIF e-mail address within the time frames indicated below. The PIF File number shall be included on the subject line of the accompanying e-mail.

1. For procurement plans - PIFs shall be transmitted no later than 24 hours prior to the anticipated solicitation issuance date.
2. For awards - PIFs shall be transmitted no later than 24 hours prior to the anticipated award, with the exception that awards on behalf of Canadian Commercial Corporation (CCC) and Canadian International Development Agency (CIDA) shall be transmitted at the time of the award.

6. PIF Routing Procedure

6.1 The Minister's Office requires 24hours to review PIFs for procurement plans and awards that have not been previously approved.

6.2 Providing PIFs in a timely and accurate manner is a condition of the Delegation Instrument from the Minister and should be respected as such.

6.3 Revised PIF procedure:

1. Managers will review PIFs for completeness and accuracy;
2. E-mail the completely PIFs directly to the PIF Account (NCR-SPMS PIF), with a copy to their Director General (DG). The Manager's and DG's name must appear in the e-mail address. Acquisition Policy and Process Directorate, which maintains the PIF account, will forward the PIF to the Assistant Deputy Minister's Office (ADMO);
3. The ADMO will copy the Manager and the Manager's DG when the PIF is forwarded to the Minister; at this point all will be aware that the 24-hour clock has started ticking;

6.4 Requiring Managers to review and approve PIFs will provide the Managers with an overview of any recurring problems with PIFs which they can feed back to the Contracting Officers within their area. As the PIF forms are designed for less detail (as opposed to more), review by Managers of PIFs should not be unduly time-consuming.

6.5 The 24-hour time frame does not include weekends and statutory holidays. For example, a PIF submitted on a Friday afternoon at 4 p.m. is unlikely to be sent to the Minister's Office until the next business day. The 24-hour clock will not start until the PIF has been sent to the Minister by the ADMO.

6.6 The PIF nomenclature forms part of the subject line of the PIF e-mail sent to the PIF account (see 1.9).

6.7 For awards on behalf of CCC and CIDA, PIFs continue to be required to be submitted at the time the award is issued, using the same revised routing process above, with the exception, of course, that the 24-hour waiting period does not apply.

Annex A Thresholds for Reporting Using the Procurement Information Form

A Procurement Information Form (PIF) must be completed for all procurement plans and awards valued in excess of the commodity-specific contract entry authorities specified below.

For procurements that require either the Minister's or TB approval, a PIF is necessary to inform the Minister that the milestones laid out in the submission are taking place as planned.

A PIF is necessary for procurements that require either the Minister's approval or Treasury Board's approval.

For procurements approved utilizing exceptional authorities such as Repair and Overhaul or Energy Management, a PIF must be completed for all plans and awards that exceed 25% of the exceptional authority.

A PIF is not required for the certification of bids.

A PIF is required for each standing offer or other similar arrangement, regardless of whether it is considered to be a legally binding contract or not. The requirement to prepare a PIF for these procurements is based on the thresholds specified below.

Annex B - Limited Tendering Reasons

* For ABSA and None, only TB Reasons are permissible. (See CAP Codes 71, 81, 85 and 87)

Annex C Contract Award (CAP) Code Processes

Listed below are the permissible Contract Award Process (CAP) Codes and the reason for using a particular CAP Code. (Revised 1996-01-01)

CAP Code: 01
Lowest/lower Bid

CAP Code: 04
Best Overall Proposal

CAP Code: 05
In the absence of tenders in response to a competitive bid solicitation or when bids submitted have been either collusive or assessed as non-responsive or received from non-qualified suppliers.

CAP Code: 06
Only One Response to Bid Solicitation

CAP Code: 10
Rotational Sourcing

CAP Code: 11
Subsequent/Follow-on Contracts

CAP Code: 20
For goods purchased on a commodity market.

CAP Code: 21
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: 22
To be awarded to the winner of a design contest.

CAP Code: 23
For consulting services regarding matters of a confidential nature.

CAP Code: 24
When additional construction services which were not included in the initial contract but which were within the objectives of the original tender documentation.

CAP Code: 25
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.

CAP Code: 71
For reasons connected with protection of exclusive rights, such as patents and copyrights, and no reasonable alternative or substitute existed.

CAP Code: 72
For reasons involving the procurement of prototypes or a first product which is developed under a contract for research, experiment, study or original development.

CAP Code: 74
For logistic reasons (i.e. where additional deliveries by the original supplier are intended either as replacement parts for existing supplies, or installations, or for continuing services, or as the extension of existing supplies, services or installations, where a change of supplier would compel the client to procure equipment or services not meeting requirements of interchangeability with already existing equipment or services).

CAP Code: 81
For reasons connected with extreme urgency, brought about by events unforeseeable by the client, where time did not permit competitive solicitation.

CAP Code: 85
Low Dollar Value

CAP Code: 86
Prices and/or sources fixed by Government regulations

CAP Code: 87
Government objectives representing best interests/value to Government.

CAP Code: 88
National Security Consideration

CAP Code: 89
Exceptional circumstances under AIT Article 508(l)

CAP Code: 90
Protection of human, animal, or plant life or health under AIT Article 506.11 (e)

Annex 6.1.9 Contract Amendment Approval Process (CAAP)

(2003-12-12)

The new Departmental Delegation of Authority framework was implemented on July 17, 1998. A key objective of this new approval framework is to encourage more comprehensive preplanning of all procurements. It is expected that these changes will improve the identification and pre-approval of options and of amounts set aside for anticipated amendments.

Nevertheless, the revised framework will also result in a greater number of amendments requiring ministerial approval. Because of the resource implications of this increased amendment volume, it was necessary to review and update the CAAP in order to strike a better balance between the need for in-depth review and acceptable risk.

The new CAAP is the result of extensive consultations both in headquarters and in the regions. It is comprised of two routine processes to be followed in seeking approvals where time is not of the essence and the Just In time Approval Process (JITAP) to deal with those exceptional, urgent requests that require decisions within 48 hours. The JITAP is explained more fully in Annex 6.1.10.

1. Coverage

1.1 Due to the anticipated increase in the volume of amendments flowing to the Minister for approval via the Audit and Review Branch (ARB), two standard processes were developed to eliminate potential bottlenecks and ensure effective and timely decision making. While one process requires review by the ARB and Senior General Counsel (SGC), the other does not. It is expected that these new procedures will not only reduce the number of contract amendments requiring ratification but will allow as much time as is possible to make new contractual arrangements without detriment to the client/project in the event that a request for amendment is refused.

1.2 The approval process must not be used in a manner that would place the Approval Authority in an untenable position with regard to the amendment request.

1.3 ARB and SGC will continue to provide full review services for formal Procurement Plans and contracts submitted to the ADM/SOSB, or above, for approval.

1.4 ARB and SGC will review contract amendment requests based on the following criteria:

1. contract amendments requiring Treasury Board approval;
2. contract amendments requiring the approval of the ADM, the DM, the Minister; and Treasury Board (only when elements of ratification are included);
3. contract amendments for Goods and Services and Telecommunications with an aggregate value greater than $5M;
4. contract amendments for A&ES and Construction with an aggregate value greater than $1M.

1.5 The ARB and SGC will review other contract amendment submissions upon request.

1.6 The non ARB and SGC process will review all amendment requests not meeting or falling below the $5M and $1M thresholds as laid out above.

1.7 In deciding whether to seek ARB/SGC involvement, DGs/RDG's should (in consultation with CQC managers) consider the following elements of risk or sensitivity:

• deviations from the Procurement Plan or PRC/PSC Record of Review;
• deviations from TB or PWGSC policy;
• changes to General Conditions/Supplemental General Conditions;
• comments made by Legal Counsel;
• concerns raised by the Cost Analyst;
• potential for employer-employee relationship;
• transition costs;
• extra payments;
• CITT or other complaints;
• media attention;
• other areas of risk or sensitivity.

2. Contract Amendment Approval Process (CAAP)

2.1 The new amendment approval process consists of three elements:

• a clear, standardized approval process, with established time frames;
• a streamlined approach to documentation;
• the JITAP to deal with urgent requirements, where a decision is needed more quickly than the standard approval system can ensure. Please refer to Annex 6.1.10 for complete details.

2.2 Judicious selection of the appropriate amendment process will keep any amendment backlogs to a minimum, ensure effective and timely decision making and avoid the potential of retroactivity.

2.3 The maximum suggested time frames are provided with each approval level.

2.4 Requests for amendments that are within the ARB and SGC review process will move:

Director General -> ARB* (2 days simple; 5 days complex);
ARB -> SGC (2 days)
SGC -> ADM (1 day)
ADM -> DM (5 days)
DM -> Minister (5 days).

Note: ARB process includes consultations with the Communications Branch.

2.5 The maximum time frame for amendment requests within the ARB/SGC process is set at three weeks and three days. However, this time frame must be flexible due to the differing degrees of complexity of each amendment, the unforeseen impact of external factors, the timeliness of responses to follow-up inquiries and other delays.

2.6 Requests for amendment that are outside the ARB and SGC process will move:

Director General -> ADM (1 day)
ADM -> DM (5 days)
DM -> Minister (5 days).

2.7 The length of time given to process amendment requests outside the ARB/SGC process is set at two weeks with the same provisos with respect to flexibility set out above.

2.8 It should be emphasized that this process for non-ARB/SGC files will likely result in less independent review of each situation. Sector and Regional staff may wish to compensate for this effect by increasing their emphasis on internal review processes. This may include the institution of mandatory cost analysis and/or sector legal reviews for all amendment requests.

2.9 All requests for amendments reviewed by the ARB will be forwarded to the SGC for a final legal review. For amendments that will require the signature of the SGC, it is imperative that they first be reviewed and signed by the Sector's appropriate legal representative.

3. Documentation

3.1 The CAAP applies to all amendment requests requiring approval levels higher than the Director General.

3.2 Contract amendment requests requiring TB approval must still be prepared in a bilingual format using the form PWGSC-TPSGC 1151-1, Contract Request/Contract Amendment Request.

3.3 The form PWGSC-TPSGC 286, Amendment Approval Form (AAF), may be used for Director General approvals and below at each Sector's discretion. For approval levels higher than Director General, all the signatures requested on the two signature pages must be obtained.

3.4 The AAF is to be placed inside a standard file folder unaccompanied by its supporting documentation. Each folder will also include two signature sheets to capture the necessary signatures.

3.5 The top signature sheet will record approvals from Director General to the Minister (if appropriate).

3.6 The top signature sheet will record approvals from Director General to the Minister (if appropriate).

3.7 The second signature sheet will be used to capture signatures from the Contracting Officer up to (and including) the Director General;

Note: Directors General are only required to sign one sheet or the other.

3.8 For files requiring approval beyond the ADM level, all signatures (including those below the DG level) will remain with the submission.

Annex 6.1.10: Just in Time Approval Process - JITAP

(2001-12-10)

The Just In Time Approval process (JITAP) was developed as a rapid response process to deal with urgent contract amendment requests, on a clearly exceptional basis, where a decision is required in less time than is feasible using the standard amendment approval process. JITAP is designed to make certain that approvals are obtained in a timely manner in order to avoid retroactivity.

1. Required Information

1.1 The success of the JITAP hinges on the ability of the submission documents to permit an informed decision by Senior Management and to not take an inordinate amount of time to prepare or to review.

1.2 The Required Information for all JITAP Submissions:

1. client particulars;
2. project description;
3. contractor particulars;
4. type of procurement process (e.g. competitive);
5. original contract value;
6. number and value of previous amendments;
7. reason(s) for previous amendment(s);
8. current contract value;
9. value of the required amendment;
10. reason for the amendment and why an amendment (vs a new contract) is the recommended way to proceed; and,
11. an explanation of why this is a special situation requiring extraordinary handling.

Questions that must be answered in this section include:

• When did the need for an amendment first become known?
• Why, if any, were there subsequent delays in seeking approval?
• When is a decision required by?
• What are the consequences of a later decision (details of additional costs, delay of work, client impacts, etc.)?

1.3 The key information outlined above is a minimum requirement for any submission to be considered for approval.

1.4 Although a standardized format has been implemented, it is permissible to employ other formats, especially where speed is of the utmost essence. For example, depending on where the needed information is produced, it may be fastest to produce: a fully descriptive e-mail; a transmittal e-mail with attached document (in which case the transmittal e-mail would have to set out the special situation being dealt with); or a memorandum to accompany and expand upon documents received from a client.

1.5 The actual request for JITAP should move via e-mail, with any associated documents delivered by hand or facsimile.

2. Advance Notice and Internal Communications

2.1 The key element in obtaining rapid review is making sure that the people involved in processing the submission know that the request for approval is coming and, that everyone knows of the time constraints that have to be respected.

2.2 Along with the actual JITAP submission, there is a specific internal communications obligation. As soon as a requirement becomes known by a Contracting Officer, it must be communicated by telephone inside that particular Sector/Region offices (through the appropriate channels) to the Director General. The DG will then notify the office of the ADM/SOSB. The ADM is responsible for contacting the Deputy Minister's office and/or Minister's office.

Note: While e-mail can be used, there is always the risk of delay in opening these messages. The telephone ensures the immediate communication of messages.

2.3 Each step in the process brings a responsibility for a two-way sharing of information of when the request will move up to the next step in the chain and, what scheduling issues may be involved in obtaining a review. At the earliest possible moment, firm agreements on the process must be made whenever possible (e.g. the Director will send the package to the DG via e-mail by time X; or the DG and ADM will meet to discuss the requirement at time Y or the ADM will meet with the Minister to present the case at time Z.).

3. JITAP Submission Format

3.1 The format as described below should be used as the standard for submitting requests under the JITAP:

Subject:

• Project Name/Reference;
• Request For An Amendment of $X;
• For Approval of the Minister or the Assistant Deputy Minister (ADM).

Background:

• Project Description;
• Client;
• Original Contract Information:
  • supplier(s) identification;
  • contract award date;
  • current contract value;
  • method of procurement (e.g. Competitive, Sole Source, Spec);
  • list of previous bidders, ranked, with bid price.

Previous Amendments:

• Value and Purpose of Each Previous Amendment;
• Accountability Issues (e.g. Client Request).

Proposed Amendment:

• Value and Purpose;
• Accountability Issues, if any (e.g. is the requirement due to a newly raised client request?; is the Crown accountable due to delay?; is the accountability shared between the contractor and the Crown?);
• If the scope of work is increasing, why amend rather than re-compete? How has fair and reasonable value been assured?

Implications of Not Receiving Immediate Authority to Proceed:

• Impacts on the project, the client, political implications, if any, etc.;
• Give quantitative impacts as well as the qualitative impacts.

Costs and Taxes:

• Costs and funding detail [e.g. original contract amount of $x; previous amendments of $x; proposed amend of $x; anticipated final contract amount of $x (tax included or extra).

Other:

• Any other extenuating circumstances or pertinent facts.

Approval Signature Block for Minister:

• The Deputy Minister (DM), Audit and Review Branch (ARB), and the Director General (DG)/Regional Director General (RDG) who submitted the JITAP are always copied after approval is received;
• Informally, a verbal response is provided by the ADM's office to the point of contact in the sector/region where the submission originated.

4. Verification

4.1 In order to ensure the prompt processing of a JITAP submission, Contracting Officers would be well advised to pay particular attention to the following:

1. Ensure that the information on the initial contract is adequate;
2. Ensure that previous amendments provide sufficient detail;
3. Contract Award dates are clearly identified;
4. The companies to whom the contract was awarded must be clearly identified;
5. Other bidders and their bids must be identified to demonstrate that the contract in question remains the contract with the best value after the amendment history has been taken into account.

5. Monitor

5.1 The Risk Management and Quality Assurance Directorate will be monitoring the effectiveness of this particular JITAP approach. If it proves to be successful in providing all the necessary information grouped in a logical manner, and in further tightening of the JITAP turnaround times, then a new form will be promulgated reflecting these changes.

Annex 6.2: Certification and Signing Authorities - Canadian Commercial Corporation (CCC) Contracting Documents

Annex 6.2.1: Certification Authority for CCC Bids, Proposals or Quotations to Foreign Governments, their Agencies and International Agencies

Abbreviations:

SO  Supply Operations
MCP  Major Crown Projects
PSD  Professional Services Directorate
TMG  Traffic Management Group, ICPSS

Annex 6.2.2: Contract Signing Authority Limits for CCC Contracts, Notices of Award, Formal Agreements and Amendments thereto Between CCC and Foreign Governments, their Agencies and International Agencies and CCC and its Suppliers

Abbreviations:

SO  Supply Operations
MCP  Major Crown Projects
PSD  Professional Services Directorate
TMG  Traffic Management Group, ICPSS

Annex 6.4: Canadian General Standards Board - Lists and Listing Programs

(2002-12-13)

1. Qualification Program List (QPL)

1. paints, pigments and related products;
2. stacking, dedicated task, sled-based metal framed and multi-task rotary chairs
3. stationary storage cabinets
4. vertical and lateral filing cabinets
5. systems furniture
6. free standing work stations
7. commercial carpets
8. residential carpets
9. carpet underlay
10. rejuvenation of laser printer cartridges
11. plastic jugs used for packaging of edible oil (CIDA)
12. bags for transport of food aid (CIDA)
13. bag fillers - marking, packing and packaging specifications (CIDA)
14. training of security personnel
15. suppliers of security services/guards
16. dockside monitoring companies (for Department of Fisheries and Oceans)

2. Certification Program List (CPL)

1. polyethylene vapour barriers
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 9000 Quality Management Systems and ISO 14000 Environmental Management Systems)

List of companies that are in compliance with the ISO 9001, 9002 or 9003 models for quality systems (1994 version) and ISO 9001:2000.

4. Registered Environmental Management Systems List

List of companies that are in compliance with the ISO 14001:1996 standard for environmental management systems.

5. Certified Occupational Health and Safety Management Systems (OHSAS) List

List of companies that are in compliance with the OHSAS 18001:1999 specification for health and safety management systems.

Annex 6.5: Department of National Defence Qualified Products Lists

• 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

Annex 6.6: Management of Risks

1. Risk management process is a prerequisite for the management of risks, and it involves the following five steps:

1. risk assessment;
2. examining the options for managing the risks;
3. selecting the best option(s);
4. implementing the selected option(s); and
5. monitoring.

A. Risk Assessment

Risk assessment involves the identification of any potential losses that may arise from the performance of the contract, and, subsequently, the analysis of the frequency and severity of these losses.

1. Identifying the sources of loss potential or exposures by conducting an examination of areas of the contractor's operations, and the contract work having the potential for loss (e.g., property; legal liability; and personnel exposures, especially loss of key personnel).

   Identification techniques to be used include: reviews of records and loss data; questionnaires; surveys and exploratory testing; and, flow charts. Flow charting is a particularly useful technique whereby a picture can be drawn of the various stages in the process of carrying out the contract and the need for key loss controls along the way can be identified, e.g., pick-up, transportation, delivery/ disposal of dangerous goods. Flow charting also helps identify critical interdependencies and bottlenecks as in multiple plant operations and sources of supply.

2. Analysis of the exposures identified should then target areas for loss control activities by providing a better understanding of the primary components of those losses or loss potentials, i.e., loss frequency and loss severity. Analytical techniques employed could include regression and simulation analysis.

B. Examining the options for managing the risks

Once the risks associated with the performance of the contract have been identified, risk control techniques are used to prevent or reduce losses. Risk financing techniques are used to finance any accidental losses the contractor could not prevent.

1. Risk Control

While control of the risks being indemnified should be the primary focus of the risk management plan, it must also address the other risks of accidental loss associated with the performance of the contract. There are four primary means of risk control, i.e., avoidance, loss prevention, loss reduction, and contractual transfer. The risk management plan should show the loss control options that the contractor has considered.

1. Avoidance can be on a planned basis before a loss occurs, e.g. by taking a different route or means of accomplishing an objective or cancellation of the activity. It can also refer to abandonment of an activity giving rise to the loss - permanently, or pending re-design, e.g., new packaging to prevent tampering with a drug.
2. Loss prevention is generally favoured in cases of high frequency losses, probably of low magnitude, e.g., fender benders, where risk control can be effectively brought to bear on preventative measures, e.g. training.
3. Loss reduction relates to high severity (magnitude) losses, e.g., natural disasters and liability exposures, probably of low frequency but where the primary effort is directed to containing the magnitude, e.g., by fast action on a liability claim, development and rehearsal of disaster management plans.
4. Contractual transfer for control purposes which, by way of contract or other means, shifts the legal responsibility for a loss.

2. Risk Financing

Self-underwriting option of the government applies to those risks to which the government alone is exposed and over which it generally has control.

For risks under the contractor's control, provision will still have to be made by the contractor to finance any losses as they occur. Options are risk retention, risk sharing and risk transfer. Generally the preferred financing option or a combination of options will tend to be a reflection of the frequency/severity characteristics of the loss or loss potential.

1. Risk retention may generally apply more to small, frequent loss events, or predictable loss events where, related to the cost of other options and the contractor's financial capability, the contractor may elect to absorb such losses without benefit of other financing. Because of the federal government's virtually unlimited underwriting capacity through spreading the risks across the tax base, in the same way as an insurer spreads the risk across the insured, risk retention or self-underwriting is the government's selected risk financing option for its own risks.
2. Risk sharing is in the middle of the risk financing continuum. Options include deductible plans with insurers, pooling mechanisms, captives, or being a member of a risk retention group - usually all from the same industry.
3. Risk transfer for risk financing purposes is done primarily through the purchase of insurance. Contractual transfer of financial responsibility is also an option.

C. Selection, implementation and monitoring of the best option to manage the risks:

Selecting the best option(s), implementing the selected option(s), and monitoring are the remaining steps of the risk management decision making process. These steps should be addressed by the contracting officer or the contractor by taking into consideration the following main factors: (a) the contract's value, type, and complexity; (b) the cost-benefit analysis; (c) the experience of the contractor in managing similar risks; and, (d) legislation considerations.

Annex 6.7: Insurance Clauses

(2004-05-14)

A. Type of Risk - Lease of motor vehicles by the Crown

Number

Description

G6001D

Lease of Motor Vehicles by the Crown

B. Type of Risk - Contracts not involving lease of motor vehicles and only when the potential for loss arising from the Contractor's performance of the contract is identified to be high.

Number

Description

G1001D

Purchase Commercial Insurance and Proof of Insurance Coverage

G1005D

When no insurance provisions are required

Risk concerning

B.1. - Loss or Damage to Government Property

Number

Description

G3001D

All Risk Property Insurance

B.2. - Third Party Liability

Number

Description

G2001D

Commercial General Liability; and,

G2015D

Liability Insurance Endorsement

Depending on the requirement, one or more of the following clauses may also need to be included in the bid solicitation and contract.

Third Party Liability - Special Risks

Number

Description

G2002D

Requirement for Professional Expertise, e.g. architect

G2003D

Product Liability

G2020D

Automobile Liability Insurance

G2025D

Automobile Liability Endorsement

G2030D

Aviation Liability Insurance

G2035D

Aviation Liability Endorsement

G2040D

Environmental Impairment Liability Insurance

G2045D

Director's and Officer's Liability Insurance

G2050D

Bailee's Customer's Goods Liability Insurance

G4001D

Aircraft Charter

G4002D

Aircraft Dry Lease

G5001D

Ship Repair and Conversion

G5002D

Ship Repair Involving Casual and Intermittent Work

Annex 6.8: Insurance of Government-Owned or Leased Vehicles

I. Government-Owned Vehicles

II. Other Vehicles, Including Those Leased by the Government

Annex 6.9: Insurance of Government-Owned or Leased Equipment

I. Government-owned equipment

A. Operated by gvernment employees

Self-underwriting option must be utilized.

B. Leased to contractor

1. Without operator or driver:

   Equipment floater insurance or any equivalent insurance coverage must respond to any loss or damage to government equipment.

2. With operator or driver:

II. Leased from dealer

A. Operated by government employees

Self-underwriting option must be utilized.

B. Operator or driver being employees of the contractor

Annex 6.10: Exempt Supplies and Zero-Rated Supplies

(2003-12-13)

Exempt Supplies

Exempt supplies are not taxable. Thus, a supplier does not collect the Goods and Services Tax (GST), or the Harmonized Sales Tax (HST) on sales of exempt supplies. The supplier is not eligible for any input tax credits on purchases related to the exempt supply. As a result, the supplier passes on to the consumer the GST/HST that the supplier has paid, as part of the overhead. This is where exempt supplies differ from zero-rated supplies.

The following are exempt supplies.

1. Health care services. This includes:

1. homemaker services;
2. leasing of medical equipment or supplies on the written order of a medical practitioner;
3. consultative, diagnostic, treatment or other health care service (other than a surgical or dental service that is performed for cosmetic purposes and not for medical or reconstructive purposes(;
4. ambulance services;
5. nursing and personal care services;
6. dental hygienist services;
7. dietetic services;
8. catering services.

(A medical practitioner is a person entitled under provincial law to practice the profession of medicine or dentistry.)

2. Child and personal care services to:

1. children 14 years of age or under for periods normally less than 24 hours per day.
2. children, underprivileged individuals or individuals with a disability in an establishment;
3. individual with limited physical or mental capacity for self-supervision and self-care, if services are rendered at an establishment of the supplier.

4. Legal aid services. That is, the person receiving the services pays no GST/HST. The lawyer performing the service bills the legal aid plan and charges GST/HST.

5. Most educational services. This includes virtually everything associated with primary or secondary education, including tutoring. Most other educational services are exempt except those that are purely recreational in nature. University and college meal plans are also exempt.

6. Most supplies by charities and many supplies of a public service nature by public service bodies. These are exempt except for exclusions given in Schedule V, Part VI, section 2 of the Excise Tax Act. Example: The sale by a charity of property acquired for resale and any service in connection with it are not exempt (2(e)). Most universities in Canada are charities for the purposes of the GST/HST and therefore their supplies are generally exempt.

7. Most financial services provided in Canada.

8. Long-term residential rents and sales of used housing.

9. Ferry, road and bridge tolls services.

Zero-Rated Supplies

Zero-rated supplies are taxable supplies on which the tax rate is 0 percent. Persons involved in the production of zero-rated supplies can claim input tax credits on the supplies they use. This makes sure there is no GST/HST paid by the consumer.

The following are zero-rated supplies.

1. Goods and services supplied or to be supplied to a purchaser outside of Canada.

2. Basic groceries, except alcoholic beverages, soft drinks, candies and confections and snack foods.

3. Agriculture and fishing products, except the following:

1. cut flowers, foliage or trees;
2. bedding plants;
3. sod;
4. soil and soil additives;
5. seeds, in quantity ordinarily sold or offered to consumers;
6. natural fertilizer unless sold in bulk;
7. wood;
8. horses;
9. wool other than in an unprocessed state;
10. fur and animal hide.

4. Prescription drugs and biologicals for human use and dispensed by a medical practitioner or on the prescription of a medical practitioner to an individual for the personal consumption or use of the individual or an individual related thereto.

5. Medical devices (includes replacement parts and charges for installation and repair).

6. Transportation services. This includes freight outbound from Canada and freight into Canada from outside. Freight from one part of Canada to another is included if it is part of a continuous movement into or from Canada.

7. Travel services - part of a tour package that is not the taxable portion of the package.

Non-taxable Importations

Non-taxable under the GST/HST refers to certain imports listed in Schedule VII of the Excise Tax Act. No tax is paid on the importation of these supplies.

1. Certain goods which are exempt from customs duties, e.g. foreign-based conveyances coming into Canada, settler's effects, foreign diplomat's effects, tourist's baggage, foreign purchases brought back by returning residents.

2. Medals, trophies and other prizes won outside Canada (other than merchantable goods, such as a car).

3. Printed matter made available to the general public, without charge, for the promotion of tourism, imported by a foreign government or like organization.

4. Goods donated to a charity or a public institution.

5. Warranty to repair or replace the goods if defective, where replacement goods are supplied for no additional consideration.

6. Zero-rated supplies in section 2 of Part I or in Parts Il, Ill, IV, or VIII of Schedule VI of the Excise Tax Act.

7. Goods (other than prescribed goods) sent by mail or courier, the value of which is not more than $20. This parallels current customs remission orders and like them does not cover alcohol, tobacco, etc.

8. Prescribed goods. Provision is made for granting relief from GST/HST on importation of goods by way of regulations of the Governor in Council.

Indians, Indian Bands and Band-empowered Entities

Technical Information Bulletin B-039R GST Administrative Policy - Application of GST to Indians, sets out Canada Revenue Agency's (CRA) guidelines concerning the treatment of purchases made by Indians, Indian bands and band-empowered entities (BEEs). The conditions described therein must be satisfied for tax relief to apply (e.g., an Indian must present proof of registration under the Indian Act to a vendor in order to acquire property or services on reserve without the payment of GST/HST.

1. Generally, GST/HST does not apply to:

1. goods acquired on reserve by Indians, Indian bands or BEEs;
2. goods acquired off reserve by Indians, Indian bands or BEEs, where the supplier or the supplier's agent delivers the goods to the reserve;
3. services performed totally on reserve where they are acquired by Indians;
4. services performed on or off reserve, such as legal or accounting services, where they are acquired by Indian bands or BEEs for band management activities or for real property on reserve (exception: Indian bands or BEEs pay GST/HST on off-reserve purchases of transportation, short-term accommodation, meals and entertainment and recover the GST/HST paid through a rebate mechanism if the purchases are for band management activities or for real property on reserve);
5. services acquired by Indians for real property interests on a reserve.

2. Unincorporated Indian-owned businesses receive the same tax relief on the acquisition of property and services as that of their Indian owner. Indian-owned corporations are treated like all other businesses and are required to pay GST/HST on their purchases unless they qualify as BEEs and the conditions set out in B-039R are met.

3. Indian bands and BEEs (e.g., band-run schools and hospitals) may also be entitled to file the applicable Public Service Body Rebate to recover a partial rebate on any remaining GST/HST paid. Funding provided by Indian bands to non-profit organizations is the same as government funding to qualify for the 50 percent GST/HST rebate to non-profit organizations.

Note: Indian-owned businesses are required to collect and remit GST/HST on the supply of taxable goods and services to non Indians on or off a reserve.

Annex 6.11: Goods on Which Excise Tax is Payable

(2004-12-10)

PETROLEUM PRODUCTS

Gasoline: gasoline; aviation; unleaded aviation; and unleaded

Fuel: diesel and aviation

AUTOMOBILES

Automobiles (not including ambulances) in excess of 2,007 kg; station wagons and vans in excess of 2,268 kg

Air conditioners designed for use in automobiles, station wagons, vans or trucks

JEWELLERY, WATCHES

Jewellery, real or imitation; certain goldsmiths' and silversmiths' products

Clocks and watches which the duty paid value exceeds $50

OTHERS

Amusement devices (coins, discs or token operated games)

Cigarettes and manufactured tobacco

Cigars

Lighters (cigarette)

Matches

Playing cards (per pack)

Wines

Insurance premiums on policies placed with unlicensed insurers or through non-resident brokers or agents.

Annex 6.12: Application of Provincial Taxes to the Government of Canada

(2003-12-12)

Summary of the Application of Provincial Taxes to the Government of Canada

Legend:

T - Taxable
E - Exempt
N/A - Non Applicable (refers to goods and services not subject to tax according to existing provincial statutes)

Notes:

1. Tobacco, Fuel, Amusement/Admission, Broadcast Advertising and Room Tax

Departments and agencies are responsible for paying these provincial ancillary taxes directly to suppliers. The license numbers should not be quoted unless these purchases are also subject to provincial general sales tax.

2. Environmental Levies

Environmental levies for the recycling of tires may be found at: www.catraonline.ca for all provinces and territories except Ontario (decision due January 2004), Northwest Territories and Nunavut. The fees vary depending on the weight and size of the tires. In British Columbia the payment of an environmental levy is applicable on the purchase of lead-acid batteries weighing more than 2 kg and in Alberta, environmental handling charges are applicable for lubricating oil in accordance with the by-laws of the Alberta Used Oil Management Association (AUOMA). Departments and agencies shall continue to pay these fees directly to suppliers when purchasing these items, including the purchase of vehicles.

3. Quebec Tax on Insurance Premiums

The Reciprocal Taxation Agreement (RTA) with Quebec requires the payment of sales tax on insurance premiums which relate to policies dealing with life, health or physical integrity, with a portion of the premium assigned to the occurrence of risk in Quebec.

Departments and agencies are responsible for paying this tax along with the premium directly to the insurance broker. However, the sales tax applicable to the employers share of premiums for employee group insurance plans such as Disability Insurance, Group and Surgical Medical Insurance will be calculated by Public Works and Government Services Canada pay offices and be remitted directly to the Province of Quebec.

4. Motor Vehicle Registration Fees

The RTAs require the payment of motor vehicle registration fees for vehicles held by federal departments and agencies, except in Alberta (no RTA), the Northwest Territories, Nunavut and Yukon. The departments are responsible for paying motor vehicle registration fees directly.

5. Taxes on Third Party Purchases

Departments and agencies are to reimburse PST in respect of goods or services acquired by or on behalf of a department where such goods or services are acquired other than in the name of the department and are acquired by employees in the course of employment related travel or purchased out of petty cash.

Annex 6.14: Interim Corporate Security Technical Standard

(2003-12-12)

Destruction of Sensitive Information

A. Introduction

The Government Security Policy (GSP) states that sensitive information for which the retention period approved by the National Archivist has expired, and that does not have a historical or archival value, should be promptly destroyed. The associated Physical Security Standard (Treasury Board Security Policy) affirms that sensitive non-electronic information must be destroyed using equipment listed in the Royal Canadian Mounted Policy (RCMP) Security Equipment Guide. (See Appendix A, Security in Contracting for Mobile Destruction Guidelines.)

Exception: Low-sensitive information marked "PROTECTED A" may be discarded after hand shredding. This technical standard sets out the procedures for the destruction of sensitive information in Public Works and Government Services Canada (PWGSC).

B. Internal Shredding

Destruction of Classified Information and Information Marked PROTECTED "C"

1.

1. Classified assets marked SECRET or TOP SECRET or PROTECTED "C" must be destroyed using Type II destruction equipment which reduces paper assets to a maximum of 1 x 14.3 mm (Annex 6.15).
2. Classified assets at the Confidential level must be destroyed using Type III equipment which reduces paper fragments to a maximum of 5 mm in width and any length (Annex 6.15).

2. Classified information and information marked PROTECTED "C" are ONLY to be destroyed within the department.

3. An approved shredder must be used to shred sensitive information (see: RCMP Security Equipment Guide SSB/SG-20).

4. A label is to be affixed to the shredder indicating the highest level of sensitive information that can be destroyed by this equipment.

5. Sensitive information awaiting destruction is to be kept separate from other information awaiting destruction.

Destruction of Protected Information

1. Based on guidelines in the GSP and the varied nature of protected assets at the PROTECTED "A" and "B" levels among different government departments, destruction levels for these assets are left to individual departments based on a Threat and Risk Assessment (TRA). Notwithstanding, most government departments group the PROTECTED "A" and "B" assets with Confidential assets and use Type III approved equipment which reduces paper assets to a maximum of 5 mm in width and any length (Annex 6.15).

2. An approved shredder must be used to shred sensitive information (see: RCMP Security Equipment Guide SSB/SG-20).

Exception: Low-sensitive information marked PROTECTED "A" may be discarded after hand shredding.

3. A label is to be affixed to the shredder indicating the highest level of sensitive information that can be destroyed by this equipment.

4. Information awaiting destruction must be safeguarded in the same manner prescribed by the highest level of classified or protected information involved in the destruction process.

5. Sensitive information awaiting destruction is to be kept separate from other information awaiting destruction.

C. Exterior Bulk Destruction
(includes National Archives and Contractors Premises)

1. No PWGSC CLASSIFIED INFORMATION or PROTECTED "C" marked information is to be forwarded for destruction outside the department.

2. When sensitive marked (PROTECTED "A" and PROTECTED "B") information is being forwarded for destruction, at the National Archives or a Contractor's premises, the following applies:

1. Information awaiting destruction must be safeguarded in the same manner prescribed by the highest level of classified or protected information involved in the destruction process.
2. A Type IV approved equipment which reduces paper assets to a maximum of 5 mm in width and any length is required. See the RCMP Security Equipment Guide (SSB/SG-20).
3. A Request for Non-Accessioned Disposal (ARC 0203) (Annex 6.16) is to be completed for the destruction of sensitive documents. The upper half is to be completed by the originator of the request for destruction. The bottom section, Certificate for Destruction, should be completed by the Federal Records Center of National Archives Canada or the contractor. It includes the date of destruction and signature of the authorized person who witnessed the destruction.
4. The Canadian and International Industrial Security Directorate (CIISD) issues the Facility Security Clearance (FSC) for Contractor's performing sensitive government destruction at their facilities, on behalf of PWGSC and its clients.
5. CIISD ensures the client's requirements for handling, storing and transportation of the waste material at the Contractor's facilities are met in accordance with established government security policies and standards.
6. Verification of the security screening of Contractor personnel can be obtained from CIISD.
7. Information is to be destroyed on site, and under no circumstances is the waste material to be sold before it is shredded.

Mobile Destruction

The Regional Manager of Security (or, for the National Capital area, the local security representative) is to be contacted any time mobile shredding is being considered.

1. No PWGSC CLASSIFIED INFORMATION or PROTECTED "C" information is to be forwarded for destruction outside the department.

2. Information awaiting destruction must be safeguarded in the same manner prescribed by the highest level of classified or protected information involved in the destruction process.

3. Sensitive protected information awaiting destruction is to be kept separate from other information awaiting destruction.

4. The Regional Manager of Security (or, for the National Capital area, the local security representative is to ensure that equipment conforms with approved size standards and that the cutter is functioning properly by testing several sheets of waste paper.

Appendix A

(2002-05-24)

Security in Contracting for Mobile Destruction Guidelines

The Canadian and International Industrial Security Directorate (CIISD) is no longer responsible for Facility Security Clearances for Mobile Shredding companies. The onus is now on the client department to ensure security compliance. The following is offered as a guide to the client:

• Information awaiting destruction must be safeguarded in the same manner prescribed by the highest level of classified or protected information involved in the destruction process.
• Information is to be destroyed at the departmental site.
• The departmental organization is responsible for collecting and delivering it's information to the destruction equipment on the departmental site.
• An employee of the departmental organization cleared to the same level as the information being destroyed must be present to monitor the destruction process.
• Verify the residue (if questionable, forward to the local departmental security authority for RCMP verification of whether the equipment being used is satisfactory) and obtain a sample for future reference.
• If the destruction is done in multiple batches or over a number of days, hourly samples should be taken.
• Verify the residue (if questionable, forward to the local departmental security authority for RCMP verification of whether the equipment being used is satisfactory) and obtain a sample for future reference.
• If the destruction is done in multiple batches or over a number of days, hourly samples should be taken.
• The departmental employee should ensure that extra paper is run through the disintegrator to prevent sensitive information being left in the machine.
• The local departmental security representative is to ensure that equipment conforms with approved size standards and that the cutter is functioning properly by testing several sheets of waste paper.
• Mobile disintegration equipment is approved for the destruction of Confidential information and protected information up to and including particularly sensitive when it is fitted with a 3/8 inch security screen. The choice of screen size is based on a Threat Risk Assessment as per the Government Security Policy.
• The Certificate for Destruction should be completed by the company. It is to include the date of destruction and signature of the authorized person who witnessed the destruction.
• When contracting with mobile shredding companies for the destruction of classified information it is recommended there be a contract clause specifying the requirement for paper assets to be reduced to a maximum of 5mm in width and any length. Request a sample before issuing the contract.

Annex 6.15: Classified Levels of Shredder

The following lists the classification levels of shredders as defined in the Destruction in the National Interest (DNI) Test Standard. Figures 1 and 2 illustrate these definitions, where Samples 1 and 2 are actual examples of Type II and Type III Shredder chaff.

TYPE II

• A single piece of residue shall be no greater than 1.00 mm in width and 14.3 mm in length, provided there is no more than one complete alphanumeric character from any one line, and no more than one complete alphanumeric character from the one immediately above and below the said line. Consistent with the foregoing, there shall not be more than three (3) complete alphanumeric characters* on any one piece of residue.

Figure I Actual Examples	Sample I 1.00 mm in width and 14.3 mm in length, See below actual size

Note: * An alphanumeric character in this standard cannot be smaller than 15 cpi with 6 lpi.

TYPE III

A single piece of residue shall be no greater than 5.0 mm (0.20 inch) in width and any length, providing there are no more than three complete alphanumeric characters * on any one line.

Figure II Actual Examples	Sample II 5.0 mm (0.20 inch) in width and any length See below actual size

Note: * An alphanumeric character in this standard cannot be smaller than 15 cpi with 6 lpi.

Annex 6.16: Request for Non-Accessioned Disposal

Regional Operations	Opérations régionales
REQUEST FOR NON-ACCESSIONED DISPOSAL	DEMANDE D'ÉLIMINATION DES DOCUMENTS NON ENREGISTRÉS

FEDERAL RECORD CENTRES	CENTRES FÉDÉRAUX DE DOCUMENTS
Certificate of destruction	Certificat de destruction
This is to certify that the above described records have been destroyed by:	La présente atteste que les documents décrits ci-dessus ont été détruits par :

Note 1: The percentages shown apply to incurred costs (incurred hours for fixed time rate contracts).

Note 2: The percentages shown apply to the previous year's rates.

Note 3: Treasury Board includes negative amendments in its calculations. However, for internal approval purposes, a decreasing contract amendment will leave the aggregate amendment value unchanged. (Specific situations for reductions in contract value are discussed in paragraph 3 of this annex)

Note 4: Includes Traffic Management Group, Industrial and Commercial Products and Standardization Services (ICPSS) Sector

Note 5:Includes Traffic Management Group, Industrial and Commercial Products and Standardization Services (ICPSS) Sector