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CRA Contracts Directive
November 1999
| Finance and Administration Manual | POLICY |
| Volume: | Materiel Management | Section 1: | CRA Contracts Directive |
| Chapter 1: | Materiel Management Program Framework | Subsection: | |
| Links: | Guidelines & Procedures |
Appendix | Bulletin/Other |
Table of Contents
- Policy Statement
- Application
- Policy Requirements
- Advance Contract Award Notice (ACAN)
- Trade Agreements
- Contract Phases
- Payment
- Review
- Roles and Responsibilities
- Additional Information
- Reporting
- Definitions
- Enquiries
1. In order to comply with the key principles outlined in the Materiel Management Program Framework, contracts will be awarded as the result of a competitive process. The purpose of the competitive process is to:
(a) give equal access to opportunities to do business with the Canada Revenue Agency (CRA) to all qualified competitive bidders;
(b) achieve best value;
(c) meet operational needs in a timely and effective manner;
(d) be fair to all potential suppliers of goods and services to the CRA; and
(e) comply with applicable trade agreements.
2. This policy applies to all contracts entered into on behalf of the CRA in relation to the acquisition and management of material and assets for the CRA.
3. All contracts will be entered into as a result of a competitive process. A competitive process is said to have occurred if a minimum of three (3) potential suppliers are invited (limited tendering) or through open competition where suppliers are invited, through the public posting of the opportunity, to submit proposals to satisfy the needs identified. Public posting can be accomplished through local or internal newspapers, the Government Business Opportunities (GBO) or the Government Electronic Tendering Service (GETS).
4. There are four (4) exceptions that permit the employee, who is exercising delegated contracting authority, to set aside the requirement to use the competitive process and to direct a contract to a sole supplier (this is referred to as a directed contract or a sole source contract). These are:
(a) The need is one of pressing emergency in which a delay would be injurious to the public interest.
Emergencies are normally unavoidable and require immediate action, which would preclude the competitive process. An emergency may be an actual or imminent life-threatening situation, a disaster which endangers the quality of life or has resulted in the loss of life, or one that may result in significant loss or damage to the property of the CRA.
(b) The estimated expenditure does not exceed:
- $25,000, for goods
- $25,000, for services
- $100,000, where the contract is for the acquisition of architectural, engineering and other services required in respect of the planning, design, preparation or supervision of the construction, repair, renovation or restoration of a work and the acquisition of printing services from the Canada Communication Group Inc., under a Privileged Administrative Arrangement (Order in Council, PC 1997-189).
This exception sets specific dollar limits below which an employee exercising delegated contracting authority may set aside the competitive process. However, employees exercising delegated contracting authority are expected to follow the provisions of the competitive process whenever it is cost effective to do so. When the proposed contract is estimated to exceed the dollar limits set out above, the employee exercising delegated contracting authority is to comply with the requirements set out in this policy for the competitive process.
(c) The nature of the work is such that it would not be in the public interest to follow the competitive process.
This exception should normally be reserved for dealing with security considerations or to alleviate some significant socio-economic disparity. For example, the preservation of a certain source of supply in Canada may be necessary to ensure that future needs of the CRA can be met, to ensure the sustainability of an industry in Canada. This exception should be invoked only with the appropriate approval as indicated in the instrument of delegated authority.
(d) Only one person or firm is capable of performing the contract.
This exception sets the competitive process aside when only one person or firm can do the job. This exception is quite definitive and should be invoked only where patent or copyright requirements, or technical compatibility factors and technological expertise suggest that only one contractor exists. This exception should not be invoked simply because a proposed contractor is the only one known to management. This exception should be invoked only with the appropriate approval as indicated in the instrument of delegated authority.
5. Any use of the four exceptions to the competitive process must be fully justified on the contract file or, where applicable, in submissions to obtain higher authority.
Advance Contract Award Notice (ACAN)
6. When a proposed sole source contract, for goods and services, qualifies under one of these four exceptions and when the value of the requirement exceeds the trade agreement thresholds, the contracting authority is required to use the Government Electronic Tendering System (GETS) to advertise the proposed award through an Advance Contract Award Notice (ACAN). Contracting authorities should, whenever possible, use the GETS for sole source requirements with an estimated value under the trade agreements limits. If there are no valid challenges to the ACAN after fifteen (15) calendar days, the proposed contract is deemed to be competitive and may be awarded using the electronic tendering contracting authority.
7. The trade agreements and the current Canadian dollar thresholds are described in Appendix A of FAM-MM-1 Materiel Management Program Framework. As required by the North American Free Trade Agreement (NAFTA), the World Trade Organization - Agreement on Government Procurement (WTO-AGP) and the Agreement on Internal Trade (AIT), the contracting authority shall solicit bids before any contract over the respective agreement thresholds is entered into. Because it is not always possible to seek bids for every proposed contract, the exceptions are detailed in Appendix A.
8. Contracting in the CRA will follow four (4) phases to ensure consistency throughout the CRA and to create an audit trail should there be a challenge of the process at a date in the future. The phases are:
(a) Requirements Definition – where needs are identified and clarified, specifications and/or statements of work (SOW) are prepared, sources of supply are identified, selection methods and bid evaluation criteria are described, requisitions are prepared and all approvals to proceed are obtained.
(b) Contract Activity – where the plan of action determined during the requirements definition phase are executed, tender and/or proposal request packages are distributed, a bidders conference may be held, proposals are received and evaluated, the successful bidder is chosen and awarded the contract and the unsuccessful bidders are debriefed.
(c) Contract Administration – where the progress toward the delivery of the product or service procured is monitored and managed, difficulties and disputes are resolved, direction is given, decisions are made, variances and contract amendments are approved, deliverables are evaluated and accepted, payments are verified and completion of the assignment.
(d) Post-Contract Administration – where all facets of the project are evaluated, formally or informally depending on the size of the contract and the benefit of recording the information resulting from the evaluation. The supplier is evaluated against criteria such as were they available when needed, were they knowledgeable, were they friendly, were they open and honest and would you want to deal with them again in the future? The deliverable is evaluated against criteria such as, does it meet operational requirements, does it meet performance expectations, did it arrive on time and in the right quantity, did you pay the price agreed upon and did you get best value? The CRA team is also evaluated to determine if all the plans and decisions made during the project were appropriate and would be made again in the future or were there lessons learned that should be remembered or shared for future projects?
9. The CRA authority will solicit bids by giving public notice in a manner that ensures equitable access to opportunities to potential bidders to present proposals to the CRA and to attempt to do business with the CRA and in a manner consistent with generally accepted practices. The Government Electronic Tendering Services shall be used to solicit bids for all open tenders.
10. The basis of payment will be determined during the Requirements Definition phase and will be guided by the chart attached as Appendix B to this policy. (The basis of payment can be left up to the bidders to propose and therefore, may be part of the evaluation or to be determined depending on the results of the bid).
11. The method of payment will be determined at the Requirements Definition phase and will be guided by the chart attached as Appendix C to this policy. (The method of payment can be left up to the bidders to propose and therefore, may be part of the evaluation or to be determined depending on the results of the bid.)
12. Printing and reproduction services that meet the exemption requirements under the Materiel Management Bulletin A-MM-97-002. Qualifying acquisitions do not require a competitive process.
13. The Commissioner will, on a periodic basis, report to the Board of Management on the effectiveness of this policy.
14. The Materiel Management Directorate, Finance and Administration Branch is responsible for monitoring the compliance with this policy and for articulating an accountability regime as part of the delegation of authority matrix for contracting authority in the CRA.
15. Headquarters Materiel Management Directorate, Finance and Administration Branch is responsible for the promulgation of policies and guidelines; the delegation of contracting authority for the procurement of goods and services, for functional advice and assistance; for monitoring the exercise of delegated authority and the management of materiel and assets; for the resolution of disputes and the management of a certification and training program for the employees and managers of the CRA.
16. Executives, Managers and Supervisors of the CRA are responsible for ensuring compliance with this policy and the proper management and protection of the materiel and assets of the CRA.
17. CRA contracting activity reports shall be provided periodically or on demand to the Board of Management. The annual trade agreements reports or ad hoc reports generated by the Corporate Administrative Systems (CAS) can be used for this purpose.
18. For the purpose of this policy, the following definitions apply:
(a) Ceiling Price refers to a cost reimbursable basis of payment where a condition is incorporated into a contract, which states the maximum amount of money that may be paid to a contractor for the work/deliverables described in the contract. The contractor will be paid only those costs incurred. If the costs, as charged, reach or exceed the ceiling established in the contract, the contractor must complete the work and will receive no money beyond the ceiling established in the contract.
(b) Cost Reimbursable refers to a basis of payment under which the contractor is paid for its costs, properly incurred in the performance of the contracted work and in accordance with an established set of terms and conditions described in the contract. There are four (4) different payment methods under this basis of payment. They are, limitation of expenditure, ceiling price, cost sharing and price to be negotiated.
(c) Cost Sharing refers to a cost reimbursable basis of payment, outlined in the contract, in which the contractor agrees to absorb part of the cost of the work. The amount to be paid by each party will be clearly described in the contract including how, when and by whom payments will be made.
(d) Firm Price refers to the total amount payable being a fixed sum. In such cases, both parties agree prior to the award of the contract as to the price payable thereunder.
(e) Limitation of Expenditure refers to a cost reimbursable basis of payment where a condition is incorporated into a contract, which states the amount of money that may be paid to a contractor for the work/deliverables described in the contract. While the contractor is not legally obliged to complete all the work within this limitation, the contractor is expected to make its best effort to achieve this result. If, during the execution of the contract, the contractor discovers that there are insufficient funds to complete the work, the contractor must inform the CRA authority. This step is usually taken four months prior to the stated contract completion date or once 75% of the funds have been expended. The CRA authority then has the option of providing additional funding or requesting the contractor to complete the work to the extent that the current funding permits.
(f) Price to be negotiated (PTBN) refers to a cost reimbursable basis of payment where the contract is awarded before the labour, overhead and/or the general and administrative rates or prices have been settled. Work will begin and these elements of the contract will be the subject of continued negotiation and future contract amendments.
19. Enquiries regarding this policy should be addressed to the:
Director
Policy and Program Development Division
Materiel Management Directorate
15th Floor, Albion Tower
25 Nicholas Street
Ottawa, Ontario K1A 0L5
Telephone: (613) 688-9256
Facsimile: (613) 954-0182