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3.15. Non-competitive contracting process

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  1. In all instances where bids are not solicited, the legal authority to use an exception to soliciting bids must be fully justified by the client department with a reference to the applicable exception to competitive bidding which may apply under the Government Contracts Regulations (GCRs) of the Financial Administration Act (FAA), and the limited tendering provisions of Canada's national and international trade agreements. Contracting officers are also reminded to take into account the procurement provisions under the Comprehensive Land Claims Agreements (CLCAs).
  2. The GCRs require the solicitation of bids before any contract is entered into. However, contracts may be entered into without soliciting bids when:
    1. The need is one of pressing emergency in which delay would be injurious to the public interest (GCRs 6.(a));
      Note: A pressing 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 Crown property. See 3.22 Emergency Requirements (Public Works and Government Services Canada as Contracting Authority) for further instructions on Emergency Requirements.
    2. The estimated expenditure does not exceed,
      1. $25,000;
      2. $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;
      3. $100,000 where the contract is to be entered into by the member of the Queen's Privy Council for Canada responsible for the Canadian International Development Agency and is for the acquisition of architectural, engineering or other services required in respect of the planning, design, preparation or supervision of an international development assistance program or project; GCRs 6.(b))
    3. the nature of the work is such that it would not be in the public interest to solicit bids; or GCRs 6.(c));
    4. only one person is capable of performing the contract GCRs 6.(d)).
    The exception should only be invoked where patents, copyright requirements, or technical compatibility factors and technological expertise suggest that only one contractor exists.
  3. There is a need to provide more rigor when invoking exception 6.(d) of the Government Contracts Regulations (GCRs) where only one person is capable of performing the contract. When invoking exception 6.(d) for procurements above $25K, the questions found in Annex 3.1: Treasury Board Questions for Sole Source must be answered by the contracting officer with the assistance of the client department. The answers to these questions must be appended to the approval documents and placed on the procurement file (see 6.5.5.1 CPAA Instructions and Annex 6.2: Contract Request Instructions.
  4. With respect to the trade agreements, contracting officers may award a contract without soliciting bids, only if one or more of the limited tendering reasons stated in each applicable trade agreement can be applied. The relevant articles are as follows:
    1. North American Free Trade Agreement (NAFTA) Article 1016: Limited Tendering Procedures;
    2. World Trade Organization Agreement on Government Procurement (WTO-AGP) Article XV: Limited Tendering;
    3. Agreement on Internal Trade (AIT) Article 506: Procedures for Procurement, paragraphs 11 and 12.
    Note 1: A copy of these limited tendering reasons are provided in Annex 3.2: Limited Tendering Reasons contained in the Trade Agreements.
    Note 2: In general, the Supply Manual refers only to NAFTA and the WTO–AGP, as the procedural requirements of the other international trade agreements will be fulfilled following compliance to the procedural requirements of NAFTA and the WTO–AGP. See 1.25.16 Bilateral Free Trade Agreements.

3.15.1 Justification of Non-competitive Process

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  1. While the client department must provide the rationale for any exception to soliciting bids, it is the responsibility of the contracting officers to make sure that the rationale can be adequately supported. Contracting officers are also reminded to take into account the procurement provisions under the Comprehensive Land Claims Agreements.
  2. If there is inadequate or no substantiation, the contracting officer should advise the client of alternative products or sources, if known, and attempt to reach agreement with the client on the most appropriate procurement strategy. When agreement cannot be reached by the contracting officer, the next level of management should be consulted.
  3. Use of any of the GCRs exceptions must be fully justified by the contracting officer with appropriate documentation that sets out the procurement strategy as well as the rationale for the exception used, placed on the procurement file (see 3.15 Non-competitive Contracting Process and 6.5.1 Procurement Plan). The trade agreements also contain provisions to document on file the reasons for the use of limited tendering and the appropriate article must be provided as justification, where applicable. (See 3.15 Non-competitive Contracting Process, paragraph d. and 3.25 Trade Agreements Tendering Approaches, paragraph b.).

3.15.2 Code of Conduct (Sole Source of Supply)

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The content of this section was reviewed and incorporated in sections 3.51 Integrity Overview and 4.21 Integrity Provisions. For reference purposes, section 3.15.2 is available in the Supply Manual ArchiveThe information is only accessible to federal government department and agency employees., Version 2013-7.

3.15.5 Advance Contract Award Notice

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  1. An Advance Contract Award Notice (ACAN) is a public notice indicating to the supplier community that a department or agency intends to award a good, service or construction contract to a pre-identified supplier, believed to be the only one capable of performing the work, thereby allowing other suppliers to signal their interest in bidding by submitting a statement of capabilities. If no other supplier submits a statement of capabilities that meets the requirements set out in the ACAN, the contracting officer may then proceed with awarding the contract to the pre-identified supplier. It is important to note that an ACAN is not a "competitive" process. Also of note is that an ACAN process, even if conducted in accordance with the Policy, does not constitute a "competitive" process for the purposes of the trade agreements and any Canadian International Trade Tribunal (CITT) challenge. For the purposes of contract approval authorities only, a contract awarded after posting an ACAN for which no valid statement of capabilities is submitted within the notice period is a competitive (electronic) contract.
  2. The objectives of the ACAN process are to:
    1. provide a procurement process that is efficient and cost effective while being fair, open and transparent;
    2. provide potential suppliers with the opportunity to demonstrate, by way of a statement of capabilities, that they are capable of satisfying the requirements set out in the ACAN; and
    3. respect the principles of government contracting by enhancing fairness, access and transparency.
  3. To provide transparency to the procurement process, an ACAN can be used only when there is sufficient justification for not soliciting bids in accordance with the exceptions of the Government Contracts Regulations (GCRs) and, if applicable, in accordance with the limited tendering reasons set out in the applicable trade agreements. (See 3.15 Non-competitive Contracting Process and 3.15.1 Justification of Non-competitive Process)
  4. The ACAN notice must be published on the Government Electronic Tendering Service (GETS) provided through the Buyandsell.gc.ca Tenders minisite. However, before initiating the ACAN, contracting officers must ensure that:
    1. the requirement is sufficiently defined so that industry can understand the government's high level requirements;
    2. a justification is on file to demonstrate compliance with one of the exceptions of the GCRs and, if applicable, one of the exclusions or limited tendering reasons of the applicable trade agreements;
    3. a procurement plan or Contract Plan and Advance Approval (CPAA), as applicable, is placed on the procurement file before an ACAN is posted;
    4. the pre-identified supplier meets the same criteria to be used for assessment of other suppliers who submit statements of capabilities; and
    5. the procedures provided in 3.15 Non-competitive Contracting Process to 3.15.5.20 Documenting the Procurement File are followed.
  5. Contracting officers must ensure that Canada is in a position to accept a statement of capabilities before publishing an ACAN. For more information on the process relative to the statement of capabilities, see 3.15.5.10 Statement of Capabilities (Challenge Process). In circumstances where there is no possibility of another supplier submitting a statement of capabilities or where Canada cannot, for program or policy reasons, accept a statement of capabilities from another supplier, an ACAN must not be published. Accordingly, the use of an ACAN for non-competitive requirements is not mandatory and there is no requirement to seek approval not to publish an ACAN for a requirement. In such cases where the ACAN process is not used, the non-competitive approval authorities apply to the procurement strategy and contract award notices will be issued after contract award. (See 3.15.5.15 Advance Contract Award Notice Exceptions for ACAN exceptions and 7.30 Procurement Reporting and Posting of Award Notices for contract award notices).
  6. ACANs are not to be used to circumvent electronic bidding or other bidding procedures when it is clear that more than one supplier exists that can perform the work.
  7. ACANs are not to be structured in ways that discourage submissions of statements of capabilities. For example, the notice should not say: "This is not a competitive solicitation", or "This is a non-competitive requirement".

3.15.5.1 Advance Contract Award Notice Time Limit

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  1. Although ACANs are posted for a minimum of 15 calendar days on GETS, the contracting officer should consider a longer posting period based on the individual circumstances for each procurement. In determining the ACAN time limit, contracting officers must consider the complexity associated with the procurement.
  2. Furthermore, while for reasons of timeliness and efficiency, contracting officers may enter into negotiations with the pre-identified supplier before the closing of the ACAN posting period, care should be exercised to ensure that any such negotiations do not put the pre-identified supplier at an advantage should a successful challenge take place before contract award. In addition, the pre-identified supplier must be cautioned not to commence any work or incur any costs before contract award.

3.15.5.5 Procedures for Posting an Advance Contract Award Notice

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  1. Contracting officers are responsible for preparing an ACAN for publication on GETS.
  2. The ACAN notice must follow the model provided in Annex 3.3 Model Advance Contract Award Notice and include the following information:
    1. An explanation of the purpose of the ACAN;
    2. A description of the requirement that is sufficiently defined so that industry can understand the government's high level requirements;
    3. The criteria against which all suppliers will be evaluated. Statements of capabilities submitted by potential suppliers will be assessed against these criteria. Information provided must be sufficient to allow other suppliers to determine if they possess the capabilities required to satisfy the requirement. The pre-identified supplier must also meet these criteria; Note: In general, the Supply Manual refers only to NAFTA and the WTO–AGP, as the procedural requirements of the other international trade agreements will be fulfilled following compliance to the procedural requirements of NAFTA and the WTO–AGP. See 1.25.16 Bilateral Free Trade Agreements.
    4. The applicability of one or more trade agreements to the procurement for which the ACAN will be issued;
    5. A statement indicating if the procurement is set-aside under the Procurement Strategy for Aboriginal Business;
    6. A statement indicating if the procurement is subject to one or more of the Comprehensive Land Claims Agreement;
    7. A justification for the pre-identified supplier;
    8. A statement indicating that the proposed procurement meets one or more exceptions to soliciting bids under the Government Contracts Regulations (GCRs). (see 3.15 b.);
    9. A statement indicating the exclusion(s) or the limited tendering reason(s) being invoked under the applicable trade agreement(s). Such exceptions must be fully and clearly justified in writing on the procurement file;
    10. A statement regarding ownership of intellectual property, if applicable;
    11. The period of the proposed contract or the delivery date(s), as applicable;
    12. A cost estimate of the proposed contract, where appropriate, provided that it will not prejudice negotiations with the pre-identified supplier, or compromise the supplier's competitive position if a decision is made to proceed with a competitive bidding process;
    13. The name and address of the pre-identified supplier;
    14. An explanation of how suppliers may proceed in responding to an ACAN;
    15. The closing date and time for a submission of a statement of capabilities; and
    16. The name and address of contact for inquiries and submission of statements of capabilities.
  3. When significant information not specifically set out in the ACAN becomes available or a significant clarification is required, it must be provided equally to all interested parties to ensure fairness, openness and transparency. Such information should be provided in an amended ACAN with an extension to the closing date or a new ACAN should be issued, as applicable.

3.15.5.10 Statement of Capabilities (Challenge Process)

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  1. The Advance Contract Award Notice (ACAN) process provides suppliers with an opportunity to submit a statement of capabilities regarding work identified in an ACAN.
  2. Statements of capabilities submitted by suppliers:
    1. should be provided in writing within the specified timeframe indicated on the ACAN; and
    2. include documentation demonstrating that the supplier meets the requirements and the criteria as set out in the ACAN.
  3. Despite the timeframe indicated in the ACAN, there may be circumstances when a contracting officer could consider a statement of capabilities received after the specified date but before the award of the contract. Contracting officers should discuss this with their management and Legal Services.
  4. Following receipt of a statement of capabilities, the process is as follows:
    1. All statements of capabilities received by the timeframe indicated in the ACAN are reviewed by the contracting officer in accordance with the criteria provided in the ACAN. The pre-identified supplier indicated in the ACAN is also assessed against those same criteria. The assessment must be kept on file.
    2. When a supplier's statement of capabilities provides sufficient information to indicate that it meets the requirements set out in the ACAN, the supplier is notified of the decision to compete the requirement before proceeding to a full bidding process.
    3. If a statement of capabilities is rejected, a separate review of the rejection is conducted at one level above the approval authority, but no higher than the following:
      1. Complexity Level 1: Manager
      2. Complexity Level 2: Director/Regional Director
      3. Complexity Level 3: Director General/Regional Director General
      4. Complexity Level 4 and 5: Assistant Deputy Minister, Acquisitions Branch
    4. With respect to statements of capabilities that are rejected, suppliers should be advised in writing of the decision to reject a statement of capabilities before a contract is awarded.
    5. The reasons for the decision to reject a statement of capabilities are included in the file.
    6. Suppliers that have submitted a statement of capabilities are given the reasons why their statement of capabilities was rejected.
    7. The request from a supplier to withdraw/cancel its statement of capabilities is documented on file, and should be provided in writing by the supplier.
  5. If the procurement is being set aside under the Procurement Strategy for Aboriginal Business, statements of capabilities must only be considered from Aboriginal suppliers.
  6. If the requirement subject to an ACAN is cancelled, suppliers that submitted statements of capabilities should be notified in a timely manner.
  7. Contracting officers may request additional information from suppliers or third parties, as appropriate, to ensure that the interested supplier has the capability to meet the requirements set out in the ACAN.

3.15.5.15 Advance Contract Award Notice Exceptions

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  1. Contracting officers must ensure that Canada is in a position to accept a statement of capabilities before publishing an ACAN. In circumstances where there is no possibility of another supplier submitting a statement of capabilities or where Canada cannot, for program or policy reasons, accept a statement of capabilities from another supplier, then the contract should be awarded on a non-competitive basis with transparency achieved through a contract award notice. Examples of situations where an ACAN is not to be published include:
    1. when, for reasons of security or public interest, the information contained in an ACAN cannot be provided to the public;
    2. confirming orders;
    3. Corps of commissionaires, if right of first refusal applies;
    4. government direction, such as Munitions Supply Program;
    5. works of art;
    6. where, for reasons of extreme urgency brought about by events unforeseeable by the entity, the goods or services could not be obtained in time by means of open or selective tendering procedures;
    7. tobacco products purchased for inmates by Correctional Service Canada;
    8. regulatory body determined non-competitive service contracts (e.g. National Transportation Agency, Canadian Radio-Television and Telecommunications Commission);
    9. consolidated announcements that advertise a program consisting of several non-competitive standing offers/contracts (pharmaceutical and medical supplies are the only products currently eligible for this exclusion); and
    10. when an entity needs to procure consulting services regarding matters of a confidential nature, the disclosure of which could reasonably be expected to compromise government confidences, cause economic disruption or similarly be contrary to the public interest.
  2. In such cases, the rationale underlying the decision not to publish an ACAN should be well documented on the procurement file.

3.15.5.20 Documenting the Procurement File

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When the decision is made to proceed with an ACAN, contracting officers are required to document the procurement file with the actions taken in each phase of the ACAN process. Procurement files must include documentation of the following justifications, reasons and associated steps, as a minimum:

  1. The rationale for the pre-identified supplier including the relevant exception to soliciting bids under the GCRs and, as applicable, the limited tendering reasons under the trade agreements (see 3.15 Non-competitive Contracting Process to 3.15.5 Advance Contract Award Notice).
  2. The actions taken to determine if other suppliers may have been capable of performing the work. When an industry analysis is conducted to identify the possible companies that could perform the work and one company is identified but there is a doubt (or uncertainty) that there may be additional suppliers for this requirement, then an ACAN would be published. Justification of the only known supplier based on the industry analysis along with an approved procurement strategy must be put on the procurement file before an ACAN is posted; e.g. the identified supplier is the only known source based on the industry analysis. If an exhaustive industry analysis has been completed and there is no doubt that there is only one provider capable of performing this work, then a non-competitive process would be more appropriate and an ACAN would not be posted.
  3. When invoking exception 6(d) of the GCRs for procurements above $25K, the responses to the questions contained in Annex 3.1: Treasury Board Questions for Sole Source must also accompany the approval document and be on file (see 3.15 d.).
  4. The assessment criteria and the assessment of the pre-identified supplier.
  5. An approved procurement strategy (see 6.5.1 Procurement Plan).
  6. The ACAN notice(s) posted on the Government Electronic Tendering Service (GETS) and, if applicable, the amended notice.
  7. The process followed in either accepting or rejecting a statement of capabilities from another supplier or suppliers, including the independent review, if required, and the final assessment of the suppliers (see 3.15.5.10 d.).
  8. Evidence that all suppliers that submitted a statement of capabilities were notified and were given the reasons why their statement of capabilities was rejected, if requested (see 3.15.5.10 Statement of Capabilities (Challenge Process).
  9. Details of any resulting competitive process, if conducted.
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