Businesses

How the Government of Canada Buys Goods and Services

• Process
• Competition
• Exceptions
• Methods of supply
• Contracts
• Standing Offers
• Supply Arrangements

The Government of Canada spends about $20 billion a year on goods and services. As the Government’s main purchasing arm, Public Works and Government Services Canada (PWGSC) plays a key role by helping departments define their requirements or scope of work, and obtain the goods and services they need at the right price.

PWGSC must meet the contracting objectives of the Government of Canada—to procure goods and services in a way that enhances access and competition, treats industry fairly, and gets the best value for Canadians. Every purchase is subject to Canadian laws, regulations, government policies, and must meet Canada’s trade obligations.

In keeping with Government of Canada policy, PWGSC purchases goods and services using a competitive procurement process whenever possible and only follows a non-competitive process on an exceptional basis.

There are several ways of doing business with us:

1. By selling directly to government departments and agencies via cash, acquisition card (credit card), local purchase order or contract.
   • Goods: Departments have authority to buy up to $5,000 directly from suppliers. Over $5,000 they must go to PWGSC.
   • Services: Departments can buy services directly (with a few exceptions).
     
2. By accessing MERX™, the electronic tendering service.
   
3. By registering on-line as a supplier for goods and services

The Government of Canada advertises procurement opportunities to solicit bids from potential suppliers. Once bids have been received, PWGSC and government departments work together to evaluate the bids based on predetermined criteria, and the supplier that offers the best value wins the contract.

The Government Electronic Tendering Service, through MERX, is the Government of Canada’s tool for advertising government procurement opportunities. PWGSC uses MERX to advertise most requirements for:

• printing services worth $10,000 or more;
• goods and services estimated at $25,000 or more;
• communications services valued at $50,000 or more;
• construction and leasing services worth $100,000 or more; and
• architectural and engineering consulting services estimated at $84,000 or more.

For more information about MERX, call 1-800-964-MERX (6379) or visit the MERX Web site at www.merx.com.

The Government of Canada can enter into a contract with a supplier, without soliciting other bids, only when:

• there is a pressing emergency, such as a an life-threatening situation, a disaster which endangers the lives of Canadians or may result in loss or damage to government property;
• the estimated value is less than $25,000 for goods and services or $100,000 for architectural, engineering and construction services, where it is not cost effective to use a competitive process;
• it would not be in the public interest due to the nature of the work (for example, requirements dealing with national security such as military projects to ensure that future needs of government can be met); or
• only one supplier is capable of fulfilling the requirement or performing the work, such as when a supplier owns a copyright or a licence.

PWGSC buys goods and services using the following methods:

• contracts;
• standing offers; and
• supply arrangements.

Contracts between PWGSC and its suppliers contain a pre-defined requirement or scope of work, and set terms and conditions including pre-determined quantities, prices or pricing basis, and delivery date. A contract is the best method of supply when the requirement is customized and unique to one government department.

Sometimes, for contracts for services only, when the Government is unable to define the precise nature and timing of a service in advance, PWGSC includes a provision for “task authorizations”. A task authorization is a structured administrative process to authorize work by a supplier on an "as and when requested" basis in accordance with the terms and conditions of an existing contract. In other words, w hen the services are eventually required, the Government issues a task authorization to the supplier. This task authorization identifies the scope of the services, the timing, and any specific instructions (such as expenditure reporting based on pre-established financial limits). Examples of services where task authorization contracts might be considered appropriate are professional services for translation, informatics professional services, and some types of repair and overhaul services.

Standing offers are the preferred method of supply when one or many government departments repeatedly order the same goods or services, which are readily available, or when the actual demand (i.e. quantity, delivery date) is not known in advance. Standing offers are put in place, for a specific period of time with pre-qualified suppliers who have met the technical criteria, and include set terms and conditions, which cannot be further negotiated.

Standing offers save the Government time and money, as a separate process does not need to be conducted for each purchase and prices are often reduced due to volume discounts. The Government is not obliged to purchase any goods or services until a need arises, at which time a contract is put in place. Items bought through this method of supply include food, fuel, pharmaceutical supplies, spare parts, paper supplies, office equipment, and some professional services.

Supply arrangements, like standing offers, are put in place for goods or services that are purchased on a regular basis from pre-qualified suppliers but the Government is not obliged to purchase any goods or services until a need arises, at which time a contract is put in place.

However, although supply arrangements include some set terms and conditions that will apply to any subsequent contracts, not all are predetermined. For example, prices, pricing basis or terms and conditions for hazardous waste disposal or cleanup may be further negotiated based on the actual requirement or scope of work. PWGSC routinely purchases IM/IT professional services using this method of supply.