Chapter 8 – Contract management

8.1 Overview of contract management

Effective date: 2015-09-24

The pre-contractual phase is addressed in the contents of Chapter 2 - Defining the requirement and requisition receipt and Chapter 3 - Procurement strategy. The importance of early involvement by contracting officers during the pre-contractual phase cannot be overstated, as this sets the tone for the balance of the contract life cycle activities.

1. Contract management is the process of systematically and efficiently managing contract development, implementation, and administration for maximizing financial and operational performance and managing inherent risk. Contract management encompasses the life cycle of a contract and involves many stakeholders including, but not limited to the contracting officer, the client department and the supplier.
2. Contract administration is an important part of contract management, which includes those activities performed after a contract award, to ensure files are properly maintained and that the contractor meets the requirements of the contract.

3. Contract management is an essential element of the procurement process that protects the interests of Canada while ensuring that suppliers are being treated fairly. Contract management can be divided into four distinct phases:

   1. pre-contractual (planning);
   2. contracting (bidding and awarding of contract);
   3. contract administration (after the contract is awarded);
   4. post-contractual (close out, warranty and audit).

   The pre-contractual phase is addressed in the contents of Chapter 2 - Defining the requirement and requisition receipt and Chapter 3 - Procurement strategy. The importance of early involvement by contracting officers during the pre-contractual phase cannot be overstated, as this sets the tone for the balance of the contract life cycle activities.

4. Planning of the details of how the contract will be managed should start during the formulation of the requirement itself, which will set the standards of what the contractor must do, how performance will be monitored and what standards will be used. These details, together with other procedures related to how the contract will be managed, should be included in the bid solicitation, to allow bidders to determine what is required of them, to plan the activities needed and to reflect the costs in their bids.
5. The contracting phase is addressed in Chapter 4 - Solicitation process through Chapter 7 - Award of contracts and issuance of standing offers and supply arrangements. Responsibility for the elements of the contracting phase fall generally to the contracting officer, though client departments have lead responsibility for some elements (see Annex: Specific Division of Responsibilities Agreements).
6. In general, the level of effort required for contract management will vary depending on the value and complexity of the procurement. Low dollar value or simple contracts may require only minimum management, while more complex contracts will require continuous monitoring by both the client and the contracting officer. A dedicated team of clients and contracting officers may be assigned to large projects, where roles and responsibilities are defined in more detail.

8.5 Contract administration

Effective date: 2022-03-29

1. Both the client department and Public Works and Government Services Canada (PWGSC) must administer the contracts. It is important that the client and the contracting officer understand and agree on who is responsible for managing and administering the various aspects of the contract.
2. Contracting officers responsible for the management of contracts should be aware of any institutional or personal sanctions. As per section 12.1.3 of the Treasury Board (TB) Contracting Policy, TB may require that sanctions be imposed on either the department or certain officials when contracting practices or contract administration is not acceptable.
3. Contracting officers should set up and maintain complete and up to date documentation on every aspect of the contract, both to provide a record of actions taken and to protect Canada's interests under the contract. The files will provide an organizational memory of activities and events and should include, where applicable, but not be limited, to the following:
   1. the procurement planning documents;
   2. the requisition and any amendments;
   3. the solicitation documents;
   4. bid evaluation plan and resulting evaluation documents;
   5. professional and specialist's advice;
   6. risk identification, assessment and mitigation;
   7. environmental considerations, impacts, and mitigation;
   8. conditions or sanctions imposed by the Vendor Performance Corrective Measure Policy or the Ineligibility and Suspension Policy;
   9. correspondence with clients;
   10. contract conditions;
   11. contract amendments;
   12. work schedule, including milestones and deliverables;
   13. payment schedules, invoices and payments;
   14. other correspondence (written and email);
   15. records of phone discussions;
   16. formal records of meetings, including minutes;
   17. records of decisions;
   18. warranties;
   19. management reports, including audit reports, and
   20. contract closeout documents.
4. For guidelines on file documentation, see Annex 1.4: Guidelines on paper file documentation for procurement and Annex 1.5: Guidelines on electronic file documentation for procurement.

8.10 Administration of service contracts

Effective date: 2022-05-12

The contracting authority should appoint a contracting officer and the technical authority should appoint a project officer (who may be the same person), to be responsible and accountable for monitoring the work through:

1. regular physical progress and financial reports from the consultant or professional;
2. attending progress meetings with the consultant or professional;
3. examining the work in progress to ensure conformity with contract requirements;
4. monitoring time, resource, cost and quality aspects of the work against a pre-determined and agreed work plan;
5. amending the contract to reflect new requirements, work schedules and payment provisions in response to changing circumstances;
6. conducting technical and financial audits;
7. accepting or approving the work at intermediate stages and at completion;
8. certifying all payments and following up to ensure timely payment.

The division of these responsibilities among authorities should be agreed to before placing the contract.

8.15 Contract performance

Effective date: 2010-01-11

1. The management of a contract involves many activities to ensure fulfillment of that contract. Events can sometimes alter or disrupt the performance of a contract. For example, a contractor may default on contractual obligations, disputes may arise about contract conditions, or there may be a need to make amendments to the contract after it has been awarded.
2. Whenever the satisfactory fulfillment of a contract is jeopardized, contracting officers should take the necessary steps to serve and protect the interests of Canada. Contract disputes should be dealt with fairly, and as promptly as possible. Contracting officers should keep procurement files complete and up to date, to provide a record of actions taken.

8.20 Canada's obligations

Effective date: 2010-01-11

In managing a contract, contracting officers must ensure strict adherence to all of Canada's obligations. A breach of such obligations could nullify a surety bond. Where responsibility lies with a client department, the contracting officer should ensure the client authority is aware of the obligations.

8.25 Contract payments

Effective date: 2010-01-11

Work performed or goods received under a contract must be paid for in accordance with the government's policy on the payment of accounts providing for payment within 30 days. The payment period is measured from the date that the goods or services were received, in acceptable condition, at the location(s) specified in the contract, or the date that an invoice in proper form was received, whichever is later.

8.30 Progress payments

Effective date: 2010-01-11

1. Progress payments need to be measured against milestones. A project progress monitoring system should be in place to provide an indication of when the work has been accomplished. Progress payments must include appropriate documentation that is retained on file.
2. When milestone progress payments are not appropriate, then payments may be made at set times during the contract period.

8.35 Claims for progress payment and invoicing

Effective date: 2010-01-11

1. No payment, other than a progress payment, may be made under a contract unless a person authorized by the appropriate minister certifies that:
   1. the work has been performed;
   2. the goods have been supplied or the services rendered as the case may be; and
   3. the price charged is according to the contract or, if not specified by the contract, is reasonable.
2. When a payment must be made before the completion of the work, delivery of the goods or rendering of the service, the payment must be in accordance with the contract.
3. Claims for progress payment are normally routed, through the contracting officer, to the client for verification and authorization of payment. Contracting officers processing payment claims must act promptly. The standard due date for payment is 30 days, after invoicing or receipt of goods, whichever is later. Acceptable performance standards should be set by the sectors/regions to allow adequate time for the certification of the claim by an authorized representative of the client.
4. Claims for progress payment must include the completed form PWGSC-TPSGC 1111 Claim for Progress Payment, which requires a certification of contract expenditures.
5. The contractor normally sends invoices directly to the client. A copy must also be sent to the contracting officer and kept on file.
6. Invoices that include billings for items not received are not considered due until all items are received. If a contractor wishes payment for a partial shipment, a revised invoice, if permitted by the contract, must be submitted.
7. Clients are required to notify contractors of any error or missing information in an invoice or supporting documentation, within 15 days of receipt. Clients should return, within 15 days, any invoice not in accordance with the terms of the contract, to the contractor for resubmission.

8.40 Exchange rate fluctuation provision

Effective date: 2013-11-06

For contracts with an exchange rate fluctuation provision, client departments and contracting authorities must ensure that this provision is applied during invoicing and payment. Invoices must indicate the adjustment required and would typically include form PWGSC-TPSGC 450 Claim for Exchange Rate Adjustments showing the adjustment calculations, all in accordance with the contract terms.

8.45 Interest

Effective date: 2010-01-11

1. Simple interest will be paid automatically on any amounts that are overdue, provided that Canada is responsible for the delay. The general conditions of the SACC Manual reflect this policy. The amount of interest will be shown separately on the cheque stub or accompanying remittance advice.
2. Interest will be calculated from the day after the due date to the day before the date that the payment is issued. However, interest will not be paid until the contract payment is made.
3. Interest is calculated according to the following formula:
   Interest = Amount owed x ([that date's bank rate + 3%] x [number of days interest payable/365])
4. The provisions for payment of interest on overdue accounts set out in the general conditions must be strictly adhered to, except in special cases where the client requisition and appropriate provisions in the contract specifies a payment period longer than 30 days, for example when extensive product evaluation, inspection or testing requirements are involved.

8.50 Overtime

Effective date: 2017-11-28

1. When a contractor performs overtime under a contract, added costs may be incurred by Canada in the form of overtime premiums. Recognition of the additional cost by Canada depends upon the attendant circumstances and the cause of the overtime. Work performed under contract to Canada should not attract higher overtime charges than would apply to similar commercial work.
2. Scheduled overtime premium costs included in a contractor's overhead account and applied to contracts are allowed, if contracts account for a pro rata share of the overtime.
3. Unscheduled overtime premium costs to specific contracts are allowable only, if the overtime is due to Public Works and Government Services Canada (PWGSC) or client demands for accelerated delivery, increased delivery quantities, or other reasons initiated by the client for which benefit to Canada can be demonstrated.
4. If the need for unscheduled overtime appears likely, the contracting officer should ensure that proper provisions concerning authorization, rates and dollar limits are included in the contract.
5. The contracting officer should consult with the cost analyst to ascertain whether the contractor's cost system includes overtime premium costs in the overhead account or as a direct charge to the particular contract, in accordance with the Guideline on the Use of Cost and Price Analysis Services (accessible only on the Government of Canada network)(PDF).
6. When deciding to authorize unscheduled overtime, the contracting officer must:
   1. consult with the client and jointly determine that authorization and the need of overtime will result in benefit to Canada;
   2. ensure that funds are available to reimburse the contractor;
   3. determine the aggregate limits of time and costs of the overtime to be authorized;
   4. determine what delegation of authority, if any, should be made to the client representative;
   5. ensure that provision for proper claiming and approval of overtime claimed, and overtime payments to the contractor, is included in the contract, and
   6. ensure that the procurement file includes clear documentation of all elements included in the decision to authorize overtime.

8.55 Claims for extra payment

Effective date: 2017-08-17

1. From time to time, contractors submit claims for upward price revision of firm price contracts, based on changes caused by Canada. A firm price contract may not be amended to provide for upward price revision, without prior approval of Treasury Board (TB), unless either the contract contains an escalation clause, covering the adjustment requested or the contract conditions allowed for the adjustment requested.
2. The advice of Legal Services should be obtained to determine whether a proposed extra payment is considered an amendment to the contract or an "ex gratia" payment.
3. The approval of TB is required for all extra payment claims, irrespective of the dollar amount. As a general rule, TB will not approve claims for extra payments arising solely from the following causes:
   1. increases in labour or material costs;
   2. changes in freight rates;
   3. revisions in exchange rates;
   4. delays caused by the contractor;
   5. errors on the part of the contractor; or
   6. other difficulties that the contractor overlooked, but should have foreseen.
4. TB has granted full authority to deputy heads to make "ex gratia" payments, and to designate officials within the department to act on their behalf. See TB Directive on Payments.

8.60 Services of non-residents - entry requirements

Effective date: 2010-01-11

1. In the performance of a contract, a contractor may wish to use the services of a non-resident employee on a temporary basis. The determination of eligibility to enter Canada is the responsibility of Immigration Canada.
2. United States nationals may apply for employment authorization at the port of entry. All others must obtain authorization before the point of entry. To obtain the correct documentation and necessary authorizations, the applicant must contact the nearest Canadian embassy or consulate.
3. Canadian citizens residing outside Canada always have the right to work in Canada.
4. In cases of emergency service requirements, the client department (or Public Works and Government Services Canada) must provide the contractor with written notice, including details of the emergency. In some emergencies, this information may be provided by telephone to the appropriate immigration authorities.

8.65 Assignment of monies

Effective date: 2020-05-28

1. Contracting officers may receive from contractors, banks, other financial institutions, or other sources, statements or documents showing that persons or companies, other than the contractor, claim to be entitled to receive monies under a contract with Public Works and Government Services Canada (PWGSC) or Canadian Commercial Corporation (CCC).
2. Payments to persons other than those named in the contract will only be made in cases of bankruptcy, the appointment of a receiver-manager, or an assignment of debt pursuant to Part VII of the Financial Administration Act.
3. This does not include those cases where the contractor owes a debt to Canada for tax arrears where Canada Revenue Agency has obtained Treasury Board (TB) approval to collect taxes due or has requested a deduction for taxes due to Canada.
4. If the claim relates to a bankruptcy or insolvency situation, see 8.120 Bankruptcy, receivership, insolvency.
5. The contracting officer, immediately upon receipt of a notice of assignment of money under a contract with a request to pay the assignee of the Crown debt, should contact the Payment Products and Services Directorate via email at: RCNOPSDPSP.NCRPPSDOPS@tpsgc-pwgsc.gc.ca to obtain information on how to process an assignment of Crown debt.

8.65.1 Receipt and deposit of monies

Effective date: 2013-03-21

1. When contracting officers receive monies directly from contractors with respect to a particular claim by Canada, these monies must be sent, in compliance with TB Contracting Instrument "ARCHIVED - Policy on Deposits", to the departmental accounting unit, as soon as possible. A memorandum must accompany the monies, with copies to the client and the Cost and Profit Assurance Group (CPAG). The memorandum should include:
   1. a brief description explaining why monies are being remitted;
   2. the name of the client;
   3. the PWGSC file/contract serial number; and
   4. the name and telephone number of the contracting officer.
2. In the National Capital Region (NCR), the monies are sent to: 

   Finance Branch
   Public Works and Government Services Canada
   Portage III, 12B1
   Gatineau, Quebec K1A 0S5

3. Outside NCR, the recipient is the appropriate PWGSC regional director's office.
4. Reference should be made to section 10.70 Recovery and disposition of contract claims adjustments process.

8.65.5 Release of contract financial security

Effective date: 2010-01-11

1. Surety bonds, according to their terms, automatically expire when the contractor has fulfilled all obligations under the contract. When the contract has been completed, surety bonds must be destroyed.
2. Where a contract, in respect of which a security deposit (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit) was given, has been completed or terminated through no fault of the contractor, the security deposit must be returned to the contractor. The contracting officer must instruct the Finance Branch to requisition a cheque for the amount of a bill of exchange plus accumulated interest, or to request to arrange the release of bonds, letters of credit and other negotiable instruments deposited.

8.65.10 Financial claims by Canada

Effective date: 2022-05-12

1. There are two general categories of claims by Canada as a result of contracting activities:
   1. overpayments or overclaims, as may occur when reported as a result of audit, and
   2. legal disputes, for example, termination for default, bankruptcy (only when the amount owing is actually known and final).
      Note: Either instance can only be determined when a contract has been completed or terminated.
2. Where monies may be owing to Canada as a result of contracting activity, sectors/regions are to determine the liability and amount owing with assistance, as necessary, from Legal Services.
3. There are special procedures to be followed whenever there are suggestions of unreasonably high profits from any contract placed pursuant to the Defence Production Act, or from any contract other than a competitive firm priced contract. See Annex 8.5: Refunds of excess profits earned on PWGSC contracts for details of these procedures.
4. The contracting officer should liaise with the contractor to get concurrence of the final amount owing. Once that amount has been established, the contracting officer, must advise the client to establish an accounts receivable. The client must advise PWGSC that this has been done, and take collection action.
5. Many organizations have roles to play relating to these claims by Canada.
   1. The contracting officer is responsible to:
      1. review the acceptability of contractor claimed amounts;
      2. respond to audit observations, as required;
      3. liaise with the client department as to concurrence on the final amount, and
      4. advise Cost and Profit Assurance Group (CPAG) of all settlements reached.
   2. Audit Services Canada (ASC) provides audit reports on specific contracts.
   3. Legal Services is responsible to:
      1. identify the potential risks and liability faced by Canada as a result of claims against the contractor;
      2. inform the contractor, when requested by the contracting officer, of Canada's claim, by way of a formal legal demand;
      3. initiate legal action against the contractor.
   4. Industrial Technologies Office of Industry Canada (IC) is responsible to:
      1. follow up on the disposition of all audit qualifications and/or observations raised by ASC, except for audit issues involving interpretation of the Contract Cost Principles 1031-2, which are a responsibility of PWGSC; and
      2. resolve issues and disputes in the case of joint Canadian Commercial Corporation and Industry Canada agreements.
6. Reference should be made to section 10.70 Recovery and disposition of contract claims adjustments process.

8.65.15 Financial security issues related to amendments

Effective date: 2010-01-11

1. Before authorizing any material changes in contract conditions, contracting officers should ensure that such changes do not invalidate security obligations by obtaining the consent of the surety company.
   "Material changes" means any change to the contract, except a change which on the face of it and without further explanation or investigation, is clearly for the benefit of the surety. Examples of changes requiring the surety company's approval are: changes in the contract price; changes in the scope of the work; revision to the completion and/or delivery dates specified in the contract; and changes in the payment schedule."
2. When the change must be made via a contract amendment, a copy of the draft amendment should be sent to the surety company for concurrence. When the contract contains a provision for design or engineering changes within certain limits, it is not necessary to obtain the surety company's prior consent. In this case, the company only needs to be kept informed. If the limits must be changed, the surety company's consent is required.
3. In cases where the contract price is being increased, it may be advisable to increase the amount of security to reflect the revised contract price. The face amount of a contract support letter of credit may be increased or reduced commensurate with the change in risk that has occurred. It may be changed by an amendment to the letter of credit. Alternatively, the letter of credit may contain an express provision for a change by a specified or determinable amount or amounts on a specified date or dates or upon presentation of the document(s) specified for this purpose, such as an interim certificate of completion. Any new letter of credit, if applicable, should be received before the contract is amended.
4. If a security deposit exceeds the amount required due to changes in the contract price, the excess must be returned to the contractor (see 8.155.1 Refunds of excess profits). The face amount of a contract support letter of credit may be reduced commensurate with the change in risk that has occurred. The face amount may be changed by an amendment to the letter of credit. Alternatively, the letter of credit may contain an express provision for change by a specified or determinable amount or amounts on a specified date or dates or upon presentation of the document(s) specified for this purpose, such as an interim certificate of completion.

8.70 Contract administration considerations

Effective date: 2010-01-11

8.70.1 Contract security

Effective date: 2022-05-02

When there is a security requirement identified in the Security Requirements Check List (SRCL), the client department must ensure that the contractor has a valid security status for the entire duration of the contract and the contractor’s personnel have a valid security status before accessing protected/classified information, assets or sites. When using standing offers or supply arrangements as a method of supply, client departments must confirm with the Contract Security Program (CSP) that the required level of security is met prior to issuing call-ups and contracts. It is the responsibility of the client department to ensure that every person accessing the work site(s) has the proper security status. The contracting officer must ensure that the organization security status, at the time of contract award, is communicated to the client department. The contracting officer must also communicate to the client department any changes in security statuses during the contract period as identified by the CSP.

8.70.1.1 Compliance and enforcement with Industrial Security Requirements

Effective date: 2013-01-28

1. In the case of non-compliance with the security requirements during the life of a contract, the Industrial Security Sector (ISS) has put in place a Policy on Compliance and Enforcement with Industrial Security Requirements (accessible only on the Government of Canada network)(DP 123) that provides Public Works and Government Services Canada (PWGSC) with a mechanism to address private sector non-compliance with Government of Canada (GOC) industrial security requirements and to adopt a progressive and measured approach to handle non-compliance.
2. ISS will track non-compliance with industrial security requirements on GOC procurement instruments and update the contracting authority(ies), client department(s) and other parties at select points within the compliance and enforcement process. In the event of revocation of a security clearance, the Assistant Deputy Minister of the respective Branch will also be notified so that PWGSC contracting authorities managing other procurement instruments can be advised.
3. The DP 123 will be applied when non-compliance has been confirmed.
4. There are three levels of gradual enforcement, which will require action from the contracting authority.
   1. Level 1: Letter of warning listing corrective measures required by the organization.
      ISS will inform the contracting authority and client department by providing a copy of the letter sent to the private sector organization. The contracting authority should start discussion with the client department as to what actions/option may be available if the contractor does not redress the non-compliance issues. Legal counsels should also be involved in the discussions. The organization has 30 calendar days to comply.
      The file must be documented accordingly
   2. Level 2: Letter restating corrective measures and advisement of intent to revoke an organization’s clearances, if not corrected.
      Once again, ISS will inform the contracting authority and client department by providing a copy of the letter sent to the private sector organization. The contracting authority and the client department should discuss the consequences non-compliance with the security requirements may have on the contract. Ensure that the legal counsels are involved in discussions. The organization has 30 calendar days to comply.
      The file must be documented accordingly
   3. Level 3: Letter advising of revocation of the security status.
      At this time, it is really important for the contracting authority and the client department to do a risk assessment that would look at different options like:
      1. amending the security requirements of the contract at the level met by the contractor. In this case there is a need to establish measures that will address the portion of the work the contractor cannot do anymore due to not holding the required security status. Any amendments need to be discussed with the legal counsel as it may not always be considered under the Canadian International Trade Tribunal as contract management;
      2. terminating the contract for default (refer to 8.135.15 Termination for default). In this case, the Vendor Performance Corrective Measures Policy applies. (See 8.180 Vendor Performance Corrective Measure Policy)

8.70.2 Compliance with the Integrity Provisions

Effective date: 2016-04-04

1. As stated in the Ineligibility and Suspension Policy the contractors, offerors or suppliers must notify the Registrar of ineligibility and suspension (the Registrar), in writing, within 10 business days, of any criminal charges, convictions or other circumstances as described in the Policy with respect to themselves, their affiliates and their first tier subcontractors, as well as any change affecting the list of directors or corporate owners.
2. Where non-compliance with the Integrity Provisions is identified during the period of the contract (including contracts with task authorizations, standing offers or supply arrangements), the contracting officer must consider, after weighing the impact on operational requirements and having regard to any representation made by the contractor, terminating the contract for default, setting aside the standing offer and terminating any call-ups, or canceling the supply arrangement and terminating any resulting contracts issued by Public Works and Government Services Canada (PWGSC).
   1. If informed by the Registrar that a contractor has been determined ineligible or suspended, the contracting officer must contact the Acquisitions Program Integrity Secretariat (APIS), by e-mail at TPSGC.DGAIntegrite-ABIntegrity.PWGSC@tpsgc-pwgsc.gc.ca for assistance.
   2. Where a contract is terminated for default for reasons of non-compliance with the Integrity Provisions, the contracting officer must provide the contractor with a notice period of no less than two weeks that the contract is being terminated. During this time, the contractor may make representations on such matters as maintaining the contract.
   3. A contractor subject to a termination for non-compliance with the Integrity Provisions may be required to enter into an Administrative Agreement with PWGSC, as an alternative to termination. Administrative Agreements are negotiated by the Departmental Oversight Branch (DOB) of PWGSC, and the terms and conditions are within the sole discretion of DOB.
3. For the approval of procurement instruments, contracts, supply arrangements, standing offers, as well as for contract assignments where the supplier has been determined to be ineligible or suspended, see section 1.1 Exceptions to Internal Approval Authorities of Annex 6.4.1 Approval authorities and additional signing authorities in support of clients' programs only – other than for Canadian Commercial Corporation.

8.70.5 Amending contracts

Effective date: 2021-05-20

1. Contract amendments are used to formally delete, modify, or introduce new conditions to the original contract. The need for an amendment may arise from continuing negotiations or to deal with an unforeseen circumstance. When amending a contract, Canada's best interest should be considered. Amendments are subject to agreement by both parties to the contract. Where the vendor is subject to a relevant Vendor Performance Corrective Measure Policy (VPCMP), the length of the contract cannot be extended either by an amendment or through the exercise of an option unless:
   1. there is insufficient time to recompete; or
   2. there are other exceptional circumstances.
      
      These situations require ADM approval in accordance with 8.180.25 Exceptions.
2. Contracting officers must carefully analyze the need for an amendment versus the need to issue a new contract and every effort should be made to avoid:
   1. inadequate initial funding, resulting in an amendment to increase the contract value;
   2. inadequate pre-planning, resulting in an amendment to the design, specifications or quantity involved; and
   3. improper administrative procedures, necessitating an amendment to the specifications and delivery or other requirement in order to protect the contractor or government agency involved.
3. In addition to the above regarding contract amendment in general, for the purpose of the Vendor Performance Corrective Measure Policy (VPCMP), a conditional amendment is a specific type of contract amendment. It is used for operational reasons in lieu of a full or partial termination for default when there is a performance issue for which the vendor is primarily responsible. When a contracting officer is ready to terminate or partially terminate for default, a conditional amendment is available as an alternative to immediate termination. If the vendor refuses the conditional amendment, then the contract must be terminated for default and no normal amendment can be issued. (See 8.180.10 Definitions for more information on conditional amendments and 8.180.15.1(c) for the paragraph to be inserted in a conditional amendment. See also 8.135.15 Termination for default and Annex 8.4 Termination for default.) As with terminations for default, conditional amendments will trigger a VPCMP Assessment process under the VPCMP. (See 8.180 Vendor Performance Corrective Measure Policy.)
4. Integrity Provisions
   1. For each amendment to a contract where the Integrity Provisions have been amended, except for administrative amendments and call-ups against standing offers, contracting officers must follow the verification process specified in section 5.16 Integrity compliance. For further details on the verification process, see sections 5.16 Integrity Compliance and 8.70.2 Compliance with the Integrity Provisions.
   2. When a significant contract amendment is to be done for an existing contract which does not contain the most recent Integrity Provisions (e.g. increase to the contract value, to exercise an option, to extend the contract period, to modify the requirement, or the assignment of a contract), contracting officers must propose to add or revise the Integrity Provisions of the contract. Contracting officers may use the Template Letter for Addition of Provisions to an Existing Contract (see 8.13. Annex: Letter templates for integrity).
   3. Where the contractor refuses to make changes to the Integrity Provision or provide the certification as requested in the Template Letter for Addition of Provisions to an Existing Contract, best efforts should be made to ensure that the supplier has a clear understanding of the terms of the new Integrity Provisions. This may include having a manager contact the contractor directly. Where the contractor still refuses to update the Integrity Provisions, the refusal should not prevent the continuation of business operations and the contract amendment may proceed. For assistance, contact the Acquisitions Program Integrity Secretariat (APIS), by e-mail at TPSGC.DGAIntegrite-ABIntegrity.PWGSC@tpsgc-pwgsc.gc.ca.
5. The amendment format will follow the form of the original contract. The amendment should identify, by using complete clauses, any changes, additions, conditions or deletions.
6. To reduce administrative costs, contracting officers and client departments should combine as many individual changes as possible into each amendment. For example, multiple design changes or deviations can be amended together.
7. Amendments should receive the same distribution as the original contract.

8.70.10 Approval of contract amendments

Effective date: 2014-09-25

1. Legal services must be consulted on conditional amendments before being considered.
2. With the exception of administrative amendments and pre-approved options, contracting officers are to complete the Procurement Risk Assessment for Amendments to determine the risks associated with the proposed amendment and the appropriate approval authority required.
3. For more information on forms of amendment requests and the appropriate approval levels, see Chapter 6 Approvals and authorities.

8.70.15 Exercising options

Effective date: 2011-10-04

1. Before exercising a contract option, contracting officers must first verify if the option was pre-approved. If not, the appropriate approval authority must be sought, in accordance with Chapter 6 Approvals and authorities, before amending the contract.
2. Before exercising the option, the contacting officer should confirm that the prices for the option are still fair and reasonable. It may be appropriate to negotiate a lower price when market prices for such goods or services have dropped significantly since contract award.

8.70.20 Administration of contracts with Task Authorizations

Effective date: 2011-05-16

1. The following paragraphs highlight some considerations regarding the administration of task authorizations (TA). (See 3.35.1 Contracts with Task Authorizations for information on issuing and monitoring contracts with task authorizations.)
2. A detailed and current record of all authorized tasks must be kept for each contract with a task authorization process. The contractor or the client department is responsible for creating and updating this record, as established in consultation with the client department during the procurement planning stage. This record may contain but is not limited to:
   For each authorized task:
   1. the task number and, as applicable, task revision number(s);
   2. a title or brief description of each authorized task, as applicable;
   3. the total estimated cost specified in the authorized TA of each task, GST or HST extra, as applicable;
   4. the total amount, GST or HST extra, expended to date against each authorized task (as applicable);
   5. as applicable, when a task is completed, the committed amount should be reduced to reflect the actual expenditure and the change should be reflected in the record of task authorizations;
   6. the start and completion date for each authorized task, as applicable;
   7. the active status of each authorized task.

   For all authorized tasks:

   1. the amount (GST or HST extra) specified in the contract (as last amended, as applicable) as Canada's total liability to the contractor for all authorized TA; and
   2. the total amount, GST or HST extra, expended to date against all authorized task authorizations.
3. Before authorizing a task, the organization authorized to issue the task to the contractor (normally the client) must ensure that:
   1. the task can be completed on or before the expiry date of the contract with task authorizations. If it cannot be, the task authorization cannot be issued until after the contracting officer amends the period of the contract with task authorizations;
   2. the total estimated cost of the TA, GST or HST extra, is within the client’s authority limit relative to individual task authorizations specified in the contract. (If the total value exceeds that limit, the TA must be forwarded to PWGSC for authorization and issuance); and
   3. the task authorization will not cause the exceeding of the amount (GST or HST extra) specified in the contract as Canada’s total liability to the contractor for all authorized TA.
4. When a task is completed, the committed amount may be reduced to reflect the actual expenditure, and such changes must be reflected in the record of task authorizations.
5. See 3.35.1.35 Separation of duties relative to the separation of duties in TA.

8.70.25 Design change or deviation

Effective date: 2011-10-04

1. If there is no design change or deviation provision in the contract, the procedure may be instituted only after an authorization document is received from the client and is incorporated in the contract via an amendment (see 8.70.10 Approval of contract amendments). Adequate funds should be authorized and set aside for changes. If additional funds are required, a requisition amendment is required.
2. Each design change or deviation request must have technical approval by the technical authority or project authority and, as specified in the contract, be approved by the contracting officer.
3. Whenever possible, a design change requiring a price adjustment should be negotiated before the change in work is made.
4. Design changes or deviations can result in upward, downward or nil adjustment to contract costs. After approval by the client, the contracting officer is responsible for prompt negotiation of price adjustments, and ensuring that these changes are reflected in the total contract price.
5. The form PWGSC-TPSGC 9038 Design Change/Deviation, should support deviations and changes.
6. Surplus materiel resulting from an authorized design change or deviation must be accounted for and reported to the contracting officer.

8.70.25.1 Design change or deviation procedure

Effective date: 2010-01-11

The following is an example of a design change or deviation procedure:

1. When it is necessary to depart, either temporarily or permanently, from the governing technical data in a contract, the technical authority or project authority or the contractor may originate a request for design change or deviation.
2. The contractor may initiate the design change or deviation process by completing section 1 of form PWGSC-TPSGC 9038 Design Change/Deviation including a ceiling price for the change, subject to negotiation, and sending three copies to the technical authority or project authority and one to the contracting officer. When required, copies of the supporting technical data should be submitted.
3. A subcontractor must submit the form through the contractor, who will ensure that all the information required is entered, before submission.
4. The technical authority or project authority, with the sole right to deny approval, will review the design change or deviation request, and either approves it, and forwards it to the contracting officer, or rejects it, and returns it to the contractor.
5. The technical authority or project authority may initiate the process by sending five copies of the form to the contractor. After providing the contractual information required, the contractor will retain one copy, and send three copies to the technical authority or project authority and one to the contracting officer.
6. Where equipment or stores affected by the change are being procured under more than one contract, a separate form is required for each contract, unless the technical authority or project authority has specifically authorized the use of one form for all contracts held by a single contractor. In all cases, the form should show all contract references, including the file number and the serial number assigned by the contracting officer.
7. The contracting officer will:
   1. negotiate a firm price, if possible, or another pricing basis that is consistent with the existing basis of payment in the contract;
   2. provide contractual authority for the design change or deviation; and
   3. sign the form and send a copy to the contractor and the technical authority or project authority. Upon receipt, the contractor will implement the change.
8. The contractor should direct enquiries regarding the design change or deviation procedure to the technical authority or project authority. The contracting officer or the technical authority or project authority will provide blank forms to the contractor, who will provide them to the subcontractors.

8.70.30 Loans of Department of National Defence materiel

Effective date: 2010-01-11

1. When a contract does not provide for the loan of the Department of National Defence (DND) materiel, the contractor may request such a loan.
2. Such requests should be directed to DND, Director Disposal, Sales, Artifacts and Loans (DND/DDSAL).
3. Returns must be made:
   1. when the materiel is no longer required;
   2. when repairs are beyond the capability of the contractor;
   3. when recalled by DND/DDSAL, or
   4. on completion of the contract.
4. The contractor must return the materiel, as directed by DND/DDSAL, and should request from DND/DDSAL, in writing, instructions for the disposition of the items to be returned. The request should include a description of the items, identification or NATO stock number, their condition, and the loan agreement number.
5. DND/DDSAL will issue disposition instructions, and inform all concerned. The contractor must arrange for the return of the items as directed and confirm action by returning a signed copy of the "Notice to Ship" to DND/DDSAL.
6. At their discretion, the local Canadian Forces Quality Assurance Representative will carry out inspection on issue and return of DND-loaned materiel.
7. The contractor must report lost, damaged or destroyed DND loaned materiel, in writing, to DND/DDSAL, which is responsible for coming to a resolution with the contractor.

8.70.35 Return of special test equipment and special production tooling

Effective date: 2010-01-11

1. Contractors must provide DND/DDSAL with at least 60 days written notice before the date when the production assets will no longer be required. The notice should identify the contract or loan agreement serial number under which the production assets were held, location of the equipment, a brief but adequate description of the surplus production assets and the total estimated value, if applicable.
2. A decision to retain production assets for future use should be supported by a cost/benefit analysis, which provides an estimate of the storage and transportation costs involved, the duration of the storage, the refurbishing/modification costs that may be required to re-activate the assets, including installation/set-up charges, if applicable, and the remaining operational use or life of the equipment.
3. DND/DDSAL will advise the contractor on the most appropriate method of retention and storage of the assets. DND/DDSAL will arrange for the transfer of production assets to another contractor, or a storage facility; or will prepare the appropriate documentation, declaring the items surplus, and forward it to Crown Assets Distribution Centre.

8.75 Administration of standing offers and supply arrangements

Effective date: 2010-01-11

8.75.1 Reporting for standing offers and supply arrangements

Effective date: 2010-01-11

1. Contracting officers must ensure that the supplier fulfills all reporting requirements in the standing offer (SO)/supply arrangement (SA), as applicable. Typically, suppliers must report on a quarterly basis on the call-up/contract activities. Such reports may contain, but are not limited to, the following information:
   1. the standing offer/supply arrangement number;
   2. the supplier name;
   3. the reporting period;
   4. the call-up/contract number for each call-up/contract, including amendments;
   5. the client department;
   6. the contracting authority;
   7. the date of the call-up/contract;
   8. the call-up/contract period;
   9. the line items acquired/services provided;
   10. the value of the call-up/contract, Goods or Services Tax/Harmonized Sales Tax included, as applicable.
2. Each standing offer/supply arrangement should clearly describe the reporting requirements for the supplier, as applicable, and must indicate the timeframe by which each report must be submitted after the reporting period. For that purpose, contracting officers must insert Standard Acquisition Clauses and Conditions Manual clauses M7010C in their standing offer and S0010C in their supply arrangement.
3. Reporting Requirements for Client Departments
   Contracting officers must ensure that client departments fulfill all reporting requirements as identified users of the standing offer/supply arrangement, as applicable, in a timely fashion. Client departments may be required to provide more detailed reports than those required of suppliers and include information regarding bid solicitation, supplier responses and selection of successful bidder(s). These reports provide contracting officers with valuable information on the effectiveness of these methods of supply.

8.75.5 Revisions to standing offers

Effective date: 2010-08-16

1. Standing offers are not contracts so cannot be amended or assigned.
2. Standing offers typically have a provision that an offeror must provide 30 days written notice of its intent to withdraw its RFSO. The contracting officer would then issue a "Revision to the Standing Offer and Call-up Authority", to notify all the identified users and the offeror of the effective date of the withdrawal. Call-ups received by the offeror before the effective withdrawal date are legally binding and must be honored.
3. The Contracting Officer can issue a "Revision to the Standing Offer and Call-up Authority" for reasons such as to extend the RFSO period or update other relevant instructions in the RFSO.
4. An offeror may revise their standing offer within the limits established in the RFSO solicitation process. The Contracting Officer would then issue a "Revision to the Standing Offer and Call-up Authority" to reflect the appropriate revisions.

8.75.10 Managing proportional basis of selection

Effective date: 2010-01-11

1. When proportional basis of selection is used for selecting the contractor among multiple standing offers, the contracting officer must ensure that identified users are aware of their obligation to award call-up activities, in accordance with the predetermined work distributions stated in the SO.
2. The offeror that is furthest under the ideal percentage in relation to work distributed to the other offerors will be selected for the next call-up. The ideal percentage is stated in the standing offer. A spreadsheet is an acceptable method to track all call-ups and to maintain a cumulative total for each offeror.
3. For more information on the ranking methodology for multiple standing offers, see 4.10.20.5 Ranking and methodology for multiple standing offers.

8.80 Employer-employee relationship

Effective date: 2010-01-11

1. The client department is responsible for ensuring that an employer-employee relationship does not develop during the performance of the contract.
2. The contracting officer must ensure that descriptions of the work or changes to the work will not result in an employer-employee relationship. For more information on employer-employee relationships, see 2.55 Employer-employee relationships.

8.85 Subcontracting

Effective date: 2010-01-11

1. As stated in certain Standard Acquisition Clauses and Conditions(SACC) Manual general conditions (e.g. 2030) forming part of the contract, a contractor must, in this case, obtain the consent of the contracting officer before subcontracting, by using form PWGSC-TPSGC 1137 Permission to Subcontract (PDF Version 121 KB)(accessible only on the Government of Canada network) - (Help on File Formats). In this case, the contractor must certify that the proposed subcontract is subject to all of the same conditions as contained in the contract. The contracting officer will only consent if satisfied with the subcontractor and the proposed subcontract.
2. Any deviations are entirely at the risk of the contractor.
3. The award of a subcontract does not relieve the contractor of any contractual obligations, or impose any liability upon Canada in relation to the subcontractor.

8.90 Assignment of contracts

Effective date: 2023-06-08

1. Under the Standard Acquisition Clauses and Conditions (SACC) Manual general conditions, the written permission of Public Works and Government Services Canada (PWGSC) is required before any contract assignment.
2. When the contract contains security requirements, the contracting officer, with the assistance of the Contract Security Program (CSP), must ensure that the assignee meets all security requirements specified in the contract.
3. In order to comply with the Integrity Provisions, the proposed assignee needs to provide a signed certification (see Annex 8.13 Letter templates for integrity) and, if applicable, a list of names of directors, or, for privately owned corporations, the names of the owners of the corporation. The contracting officer must then proceed to verify compliance to the Integrity Provisions as further detailed in section 5.16 Integrity compliance.
4. If the assignee, or its affiliates, is found to be ineligible or suspended under the Ineligibility and Suspension Policy, the contracting officer may refuse the assignment or request a Public Interest Exception to the Assistant Deputy Minister of Acquisitions Branch for the contract of the proposed assignee. See section 4.21 Integrity provisions for details on procurements where the supplier is ineligible or suspended.
5. All proposed assignments supported by a contracting officer must be referred to a cost analyst for review.
6. Legal Services is available to provide advice about whether or not an assignment of contract is an available option under the terms and conditions of the contract and whether one is necessary (i.e. in some situations, such as a change in the name of the contractor rather than a change in the entity, it is possible simply to revise the name in the contract). Legal Services can also provide a template Consent to Assignment.
7. When a contractor assigns a contract, the responsibility for all or part of the performance is transferred to a third party. However, the assignment of a contract must not relieve the original contractor of any obligations under the contract or impose any additional liability on Canada, in relation to the assignee.
8. In order to protect Canada's interest, the transfer of the liabilities and rights of the contract from the original contractor under the original contract to the assignee, will be done so that the original contractor is ultimately liable for the performance of the contract. An acceptable manner of protecting Canada's interest is to obtain the original contractor's guarantee of performance in the event that the assignee fails to perform.
9. The contracting officer will forward the assignment agreement to the appropriate PWGSC signing authority, with the reasons for the assignment, the number and value of contracts involved, and the financial condition of the assignee.
10. In the case of Canadian Commercial Corporation (CCC) contracts, a copy of the approved assignment should be forwarded to the Cost and Profit Assurance Group (CPAG), in order to maintain data on supplier financial status, or to the appropriate vice-president of the CCC.

8.95 Financial security and contractor difficulties

Effective date: 2010-01-11

If the contract contains financial security, and the contracting officer becomes aware that a contractor may have difficulty in successfully completing the contract, then the surety company should be informed immediately.

8.100 Bonding companies

Effective date: 2010-01-11

Whenever a bonding company has failed to honour its undertakings, the matter must be referred to Legal Services for appropriate action, and to the Corporate Secretary who must notify Treasury Board (TB).

8.105 Protecting Canada's goods

Effective date: 2017-11-28

1. If a contractor is delinquent in discharging its accrued liabilities, subcontractors or suppliers may attach liens to goods that Canada has taken title to through full or partial payment. Steps should be taken to protect Canada's interests.
2. This is not required for service contracts, and is generally not cost effective for goods contracts under $25,000.
3. Where a contractor has given security under section 427 of the Bank Act, a waiver must be obtained for the bank's priority over Canada's title to the goods. The contracting officer must consult with Legal Services.
4. If the contractor should change bank, and a new waiver is not obtained, or if the contractor fails to disclose that security was given, Canada's title could be affected.
5. To protect Canada's interest with potentially insolvent or bankrupt contractors, the contracting officer must obtain a waiver when a bank or other financial institution has a prior lien on the contractor's assets. If the waiver is unobtainable, consult with Legal Services, the cost analyst, and Cost and Profit Assurance Group (CPAG), to determine if the contractor's credit position warrants relieving the contractor of the contractual obligation relating to bank liens.
6. To preclude the attachment of liens, the contracting officer should check that the contractor has met payment obligations under the contract to its workmen, subcontractors and suppliers.
7. The contracting officer should promptly review all indications of unpaid invoices or wages or unreasonable delays in the payment; and carry out a cost analysis, if appropriate, in cooperation with a cost analyst, in accordance with the Guideline on the Use of Cost and Price Analysis Services (accessible only on the Government of Canada network)(PDF).
8. The frequency, scope and extent of checks will be determined and carried out by the contracting officer, based on cost/benefit, and the contractor's payment record, credit rating and financial strength.
9. When the financial analysis indicates potentially serious financial problems, a report should be sent to CPAG, who will distribute copies to all procurement sectors/regions. The sectors/regions in turn should compile lists of all open contracts with the contractor involved, including the contract values and anticipated completions dates and return these lists to CPAG.
10. CPAG will then determine whether a discretionary verification should be carried out, and what would be the scope and extent of the verification.
    Sectors/regions should only enter into new contracts with the contractor with due caution and proper justification.
11. A discretionary verification is carried out by qualified personnel and approved by CPAG. Discretionary verifications may be commissioned only by CPAG, and will be performed on a timely and prompt basis, so as to lessen potential risks to Canada.
12. If the total risk exposure is $2,000,000 or over, a discretionary verification will normally be undertaken. A determination will be made, as to the protection provided to Canada by any security deposits (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit), performance bonds, labour and material payments bonds, or registration action taken or intended.
13. If the total risk exposure is under $2,000,000, CPAG will, in consultation with the sector/region involved, determine the need to commission a discretionary verification, after taking into account any financial security provision or registration action.
14. When the verification points to a breach of the contractor's specific contractual obligation to effect prompt payment to its workmen, subcontractors, or suppliers, CPAG will provide written advice to the sectors/regions and senior financial officers of the client(s) holding the contracts in default.

8.110 Registering notice of interest in goods

Effective date: 2010-01-11

1. In provinces other than Quebec, Canada can register notice of its interest in the goods with a view to protecting itself against the risk of liens. The registration requirements differ for each province. The contracting officer must consult with Legal Services.
2. In practical terms, because of the complexities involved, this action is appropriate only on high dollar value contracts.

8.120 Bankruptcy, receivership, insolvency

Effective date: 2013-03-21

1. The contracting officer must consult Legal Services when:
   1. a contractor proposes a settlement while in an impending or actual receivership, bankruptcy or insolvency condition;
   2. the contract is secured by surety bond guarantees or other securities; or
   3. a contractor has given security to a bank under section 427 of the Bank Act.
2. Upon receipt of a bankruptcy, receivership or insolvency notice or when there is an indication of such, the contracting officer must:
   1. inform the relevant director;
   2. develop a plan, in consultation with the client, for completion of the work; and
   3. advise Cost and Profit Assurance Group (CPAG) and Legal Services.
3. When a contractor is in formal bankruptcy, the contracting officer must, in consultation with Legal Services, pursue the rights of Canada, including:
   1. realizing on any contractual securities;
   2. proving title to any Canada property in the contractor's possession;
   3. ensuring payment, if Canada is unsecured, in priority of other unsecured creditors; or
   4. offsetting money payable to the contractor against any amount due to Canada.
4. After formal bankruptcy or receivership, monies due to the contractor must be sent to the trustee in bankruptcy or the receiver-manager, as applicable.

8.125 Goods or services not in accordance with the contract

Effective date: 2010-01-11

It is the responsibility of the client to inform the contractor, as specified in the contract, if the goods or services are not in accordance with the contract. Failure to do so may prejudice any subsequent claims by Canada.

8.130 Timely performance

Effective date: 2010-01-11

1. Under SACC Manual general conditions, time is of the essence of the contract. If a contractor fails to deliver the goods or perform the services on time, the contracting officer should ascertain, in consultation with the client and Legal Services, the facts surrounding the delay. If the delay was caused by factors beyond the control and without the fault or negligence of the contractor, the contracting officer should extend the time of performance of the contract for a period equal to the length of the delay. Excusable delays are detailed in general conditions. In all other circumstances, the contractor is responsible for the delivery default. If the contractor is in default in carrying out the delivery commitments, the contracting officer may, upon giving notice in writing to the contractor, terminate the contract fully or partially.
2. Where the time of delivery is to be extended due to delays beyond the control of the contractor, and if the contract is secured by surety bonds, the contracting officer must:
   1. advise the surety company and obtain its concurrence before the completion dates specified in the contract are actually extended; and
   2. advise the surety company and obtain its concurrence before adjusting the contract price, due to additional work requirements, if applicable.

8.135 Terminations

Effective date: 2010-01-11

To determine which type of termination might be involved, see 8.135.5 Termination for convenience of Canada, 8.135.15 Termination for default and 8.135.20 Termination by mutual consent. For termination clauses, see subsection 5-J of the Standard Acquisition Clauses and Conditions (SACC) Manual.

8.135.1 Suspension of the work - stop work order

Effective date: 2010-01-11

When a client wishes to suspend the work under a contract rather than cancel it, SACC Manual clause J0500C or J0502C should be used. The suspension of the work allows the client to obtain a review of the contract status before deciding the type and extent of termination (including a termination for default). If a client wishes to reinstate a contract after a stop work order has been issued, the stop work order must be cancelled (see clause J0501C). In this event, it may be necessary to adjust the delivery terms and/or contract price. It is the responsibility of the contracting officer to determine the reasonableness of all claims for additional costs that the contractor may make. Amendments to cover payment of such costs must be approved in accordance with the contract amendment approval and signing authorities. (See Annex 8.3: Termination for convenience process for a detailed description of the termination for convenience process.)

8.135.5 Termination for convenience of Canada

Effective date: 2010-01-11

1. Occasionally, Canada may terminate a contract for convenience in accordance with the termination for convenience provision of the general conditions applicable to the contract. See Annex 8.3: Termination for convenience process for a detailed description of the termination process. This may be due to curtailment of funds, discontinuation of a government program, or other circumstances, which make the procurement of the good or service unnecessary. To protect the integrity of the bid solicitation process, Canada may also terminate a contract for convenience, if it is determined that it has been mistakenly awarded to other than the lowest-responsive bidder. Clauses related to the termination for convenience notices are in subsection 5-J of the SACC Manual (see clauses J0001C, J0002C, J0003C, J0006C).
2. Termination for convenience applies when:
   1. the client has requested termination;
   2. a termination for default cannot be considered because the contractor is not in default; and
   3. a termination by mutual consent would not be more advantageous to Canada.

8.135.10 Involvement of the Termination Claims Officer

Effective date: 2018-06-21

The Termination Claims Officer (TCO), Price Support Directorate (PSD), Procurement Business Management Sector (PBMS), should be involved immediately in the claim settlement process resulting from contracts that are partially or completely terminated for convenience. Accordingly, the contracting officer should contact the TCO, as soon as the notice of termination for convenience (see SACC Manual clauses J0001C, J0002C, J0003C, J0006C) is issued, and should provide the TCO with a copy of the notice. The email address for the TCO's group is tpsgc.parrc-aptfc.pwgsc@tpsgc-pwgsc.gc.ca.

8.135.15 Termination for default

Effective date: 2010-01-11

Termination for default applies when the contractor is in default in carrying out any of the obligations under the contract, usually through non-performance or delayed delivery. The section "Default by the Contractor" in the SACC Manual general conditions provides the basis for termination for default. For more information on termination for default, see Annex 8.4: Termination for default.

8.135.20 Termination by mutual consent

Effective date: 2018-06-21

1. On rare occasions both parties may agree to termination without claims or penalties, usually where the client has requested full or partial termination of a contract, the contractor has incurred minor or no expenses and is willing to forego a claim, and the matter may be settled at no cost to Canada.
2. Termination by mutual consent does not apply when it is in Canada's interest to issue a termination for default or when the contractor claims additional costs following the reduction or cancellation of all or a portion of the contract.
3. On receiving the client's request for termination by mutual consent, the contracting officer should request the contractor to confirm that no claim is involved, and must refer the matter to Legal Services in accordance with 8.135.35 Involvement of Legal Services in cases of termination.
4. Since no claim is made, the TCO is not involved in this process.

8.135.25 Request for termination by the contractor

Effective date: 2010-01-11

When a contractor requests a termination because of anticipated losses in performing the contract, consent will not be granted. Instead, the contractor should be instructed to carry out its obligations under the contract. The contractor may, on completion of the contract, request an "extra payment" for additional costs incurred or losses suffered, if some responsibility for the additional cost or for the loss can be ascribed to Canada. (See 8.135.1 Suspension of the work - stop work order).

If the contractor refuses to carry out the contractual obligations, the contract must be terminated for default.

8.135.30 Financial security issues related to terminations

Effective date: 2010-01-11

1. If the contract is secured by a security deposit (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit), it should not be terminated without the prior advice of Legal Services.
2. If the contract is secured by surety bonds, it must not be terminated as this would also terminate the existing contractual relationship with the bonding company. When a contractor fails to perform a contract, or when a claim is received for non-payment of labour or material, and a payment bond is in place, contracting officers must immediately inform the surety company in writing, requesting that corrective action be taken. Contracting officers must not enter into negotiations with the contractor or claimant.

8.135.35 Involvement of Legal Services in cases of termination

Effective date: 2010-01-11

1. The following terminations must not be issued without a written legal opinion:
   1. all terminations for default;
   2. terminations by mutual consent, and
   3. terminations for convenience.
2. In seeking the opinion of Legal Services, the contracting officer should submit the procurement file with a chronological index of the documents forming the basis for the termination request, together with a short note outlining the events leading to termination. Based on this information, Legal Services will render an opinion and advise as to the appropriate method of termination.

8.135.40 Adjustment to source lists

Effective date: 2010-01-11

Terminations for convenience by Canada should not result in any adjustment of the source lists, while terminations by mutual consent may require correction of source lists. Terminations for default are usually the cause for the deletion or suspension of the contractor from the source list.

8.135.45 Public Works and Government Services Canada offices outside Canada

Effective date: 2010-01-11

Termination procedures for contracts awarded by Public Works and Government Services Canada (PWGSC) offices outside Canada may differ from those for contracts issued in Canada; therefore, the termination procedures serve only as a general guide.

8.135.50 Approval authority

Effective date: 2014-11-27

Stop work orders and notices of termination must be approved and signed by a contracting officer in accordance with the Procurement Risk Assessment for Amendments (PRAA). The total contract value at the time of the termination is used in the value question of the PRAA.

8.140 Disputes

Effective date: 2017-04-27

1. When managing a contract, disputes may arise between parties to the contract. Disputes must be handled expeditiously. All parties must meet their contractual obligations. Proper record keeping is vital for clarification, audit or termination purposes.
2. If a contracting officer is unable to resolve a contract dispute, the matter should be brought to the attention of the contracting officer's immediate supervisor.
3. Consultation with Legal Services is recommended to ensure the protection of the interests of Canada. Consultation with the Business Dispute Management (BDM) Program, Departmental Oversight Branch (DOB), is recommended to prevent or limit unnecessary escalation and to create conditions for early resolution.
4. When any business dispute associated with a contract (i.e. construction, acquisition, letting, leasing and disposal of real property) cannot be resolved through discussion, the contracting officer should immediately advise the contractor, in writing, of the Alternative Dispute Resolution (ADR) services available in the BDM Program.
5. Any questions concerning the BDM Program or any of its services should immediately be referred to the Manager, Business Dispute Management Program by email at the following address: GestionConflit.ConflictManagement@tpsgc-pwgsc.gc.ca.

8.140.1 Contract dispute resolution

Effective date: 2021-05-20

1. All enquiries, from contractors or contracting officers concerning the options for dispute resolution should be addressed to the Manager of the Business Dispute Management (BDM) Program, Departmental Oversight Branch, by email at the following address: GestionConflit.ConflictManagement@tpsgc-pwgsc.gc.ca.
2. The BDM Program provides coordination, prevention and Alternative Dispute Resolution (ADR) services upon request to support the management of business disputes with third parties, other government departments and PWGSC employees to facilitate timely and appropriate action. ADR services provided through the BDM Program include consultation, facilitated discussions, mediation and arbitration.
3. Prevention and Mitigation
   1. When a conflict does arise, the contracting officer must make every effort to resolve the dispute with the contractor as soon as possible.
   2. If the contracting officer and contractor do not resolve some or all of the issues in dispute, they should then attempt to resolve the dispute as soon as possible through the involvement of a senior level contracting authority or a senior project authority.
4. Conflict Intervention
   1. If involving a senior level contracting authority or a senior project authority (as stated in c. ii.) does not resolve some or all of the issues in dispute, the contracting authority should immediately advise the contractor, in writing, of the ADR services available through the BDM Program, Departmental Oversight Branch. The contracting authority can also enlist the assistance of the BDM Program.
   2. Any party to a PWGSC contract can approach the BDM Program and request assistance in managing a business dispute.
   3. If an ADR service is requested, the BDM Program will inform the other parties of the request and determine their interest in such process. If the parties are interested, the ADR process will be initiated.
   4. If an ADR process does not resolve the dispute, the parties’ rights are not compromised.

8.145 Contract Settlement Board

Effective date: 2012-07-16

This section of the Supply Manual has been removed. The dispute process is replaced as per section 8.140 Disputes.

8.145.1 Contract Settlement Board - procedures

Effective date: 2012-07-16

This section of the Supply Manual has been removed. The dispute process is replaced as per section 8.140 Disputes.

8.145.5 Contract Settlement Board - meetings

Effective date: 2012-07-16

This section of the Supply Manual has been removed. The dispute process is replaced as per section 8.140 Disputes.

8.145.10 Contract Settlement Board - settlement offer

Effective date: 2012-07-16

This section of the Supply Manual has been removed. The dispute process is replaced as per section 8.140 Disputes.

8.145.15 Contract Settlement Board - non-acceptance of settlement

Effective date: 2012-07-16

This section of the Supply Manual has been removed. The dispute process is replaced as per section 8.140 Disputes.

8.150 Contract Dispute Advisory Board

Effective date: 2012-07-16

This section of the Supply Manual has been removed. The dispute process is replaced as per section 8.140 Disputes.

8.150.1 Contract Dispute Advisory Board - procedures

Effective date: 2012-07-16

This section of the Supply Manual has been removed. The dispute process is replaced as per section 8.140 Disputes.

8.150.5 Contract Dispute Advisory Board - non-acceptance of settlement

Effective date: 2012-07-16

This section of the Supply Manual has been removed. The dispute process is replaced as per section 8.140 Disputes.

8.155 Final payments

Effective date: 2012-01-18

1. The total time charged under a fixed rate contract should be verified for acceptability and accuracy of recording before the final claim is processed for payment. The findings of such verifications will be noted on the procurement file.
2. The contracting officer, or other qualified personnel designated by the sector/region concerned, should carry out the verification of time for acceptability.
3. Verification of time for accuracy of recording should be carried out by qualified personnel from the financial division or section in the directorate concerned, or other suitably qualified personnel with the prior approval of the director who is also responsible for setting the standards of verification for the accuracy of recording.

8.155.1 Refunds of excess profits

Effective date: 2010-01-11

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 such occasion, a contractor may need to return excess profits to the department. The special procedures for dealing with these situations are in Annex 8.5: Refunds of excess profits earned on Public Works and Government Services Canada contracts.

8.160 Cost submissions standards for cost reimbursable contracts

Effective date: 2010-01-11

1. The contractor will be paid, in accordance with the contract, the cost reasonably and properly incurred in the performance of the work. Upon completion of the work, on all cost reimbursable contracts meeting the cost threshold, the contracting officer must place on the procurement file a certification to the effect that the final amount paid represents a reasonable price. This certification should be based on the findings of a cost audit, if one was done.
2. The agreed final price, after all reconciliations, is then formalized in a contract amendment, generally referred to as "finalization of cost amendment", which adjusts the total contract price to reflect the final price. This amendment should also state that further claims cannot be submitted.
3. The audit provision in contracts valued over $50,000 with Canadian contractors allows for the determination of the actual costs incurred, to determine the final contract cost of cost reimbursable contracts and the reasonableness of the price.
4. All cost reimbursable contracts require a cost submission upon the completion of the contract. All multi-year cost reimbursable contracts, except for repair and overhaul (R&O) services, will include a provision for an annual cost submission, as a mandatory deliverable item.

Note: For R&O service contracts, an annual cost submission is at the contracting officer and the audit agency's discretion.

8.165 Cost audit

Effective date: 2013-03-21

1. The selection of cost reimbursable contracts for audit will be made by the contracting officer after consultation with the Cost and Profit Assurance Group (CPAG) within the Policy, Risk, Integrity and Strategic Management Sector, in accordance with the following:
   1. all contracts associated with Major Crown Projects (MCPs); and
   2. if risks of significant overpayment are apparent.
2. For those contracts selected for audit, the sectors/regions will supply to CPAG a copy of the contract document, along with copies of all cost submissions received.
3. A copy of the audit report will be forwarded to the contracting officer, along with an audit notification form prepared by CPAG detailing overpayments and/or comments requiring approval.
4. The contracting officer will establish a final price with the contractor based on the audit findings. Every effort will be made to do this within 90 days of the audit report being received. The contracting officer will notify CPAG of the terms of the settlement and resolution of all audit issues raised in the contract audit.
5. When the contractor has agreed to the final price, the contracting officer must certify that the price charged is reasonable and in accordance with the contract.
6. Reference should be made to section 10.70 Recovery and disposition of contract claims adjustments process.

8.175 Contract end and contract close out

Effective date: 2014-11-27

1. It is the contracting officer’s responsibility to ensure that all contract activities are completed in order to consider the contract closed out.
2. A contract is considered to be fully completed when:
   1. the required deliverables have been received in accordance with the contract; and
   2. the client has accepted the deliverables and the invoice has been paid in accordance with the contract price and basis of payment; and
   3. there are no outstanding work deficiencies, changes, payments or claims that require formal release action.
3. Contracting officers should ensure the administrative closure of the file has been carried out in accordance with established procedures (e.g. reporting, return of Government Furnished Equipment/Government Supplied Material disposal of surplus material and assets etc.).
4. Contracting officers should ensure that the procurement file is properly documented and archived in accordance with established Public Works and Government Services records management procedures.
5. Best Practices:
   1. Wherever possible, files/contracts with warranty periods should be retained and warranty periods noted, until the warranty has expired or until any warranty claims are resolved.
   2. Where a contract created Intellectual Property (IP) for Canada or associated rights, the related documentation should be kept until such time as the Government of Canada no longer has need of the IP. The contract may need to be kept indefinitely.
   3. Contract files with any outstanding legal or operational issues or requirements related to oversight (e.g. audits) should not be archived until such time as the issues are resolved.

8.180 Vendor Performance Corrective Measure Policy

Effective date: 2011-06-29

8.180.1 Vendor Performance Corrective Measure Policy - introduction

Effective date: 2022-01-28

1. The purpose of the Vendor Performance Corrective Measure Policy (VPCMP) is to assist the PWGSC procurement community in mitigating procurement risk for future contracts and improving client service. There are a number of tools to meet this purpose. The VPCMP is just one of those tools. Other tools include the Code of Conduct for Procurement and the Standard Acquisition Clauses and Conditions (SACC) Manual. Collectively these tools provide a foundation on which the relationship with vendors is established.
2. The VPCMP is in effect as of November 4, 2010. However, the VPCMP was implemented on an extended trial basis with no consequences for vendors from November 4, 2010 to June 28, 2011 inclusive. There will be no consequences resulting from terminations for default and/or conditional amendments that fall within the scope of the VPCMP and that occurred during that period. Otherwise, the provisions of the applicable previous version remain in effect for transactions issued prior to November 4, 2010.
3. Vendor performance issues are an important component of procurement risk management. As shown in the Process Chart on the Risk Management Approach to Vendor Performance (See Annex 8.6), those issues have to be considered at all four phases of the contract management process.
4. The VPCMP applies to PWGSC Acquisitions Branch as a common service provider for transactions under its authority. The scope of the VPCMP on such transactions is clarified below. The VPCMP focuses on using a vendor’s performance information from closed contracts for:

    

   1. Rejection of offers for competitive and non-competitive procurements: Bids/offers/arrangements received from vendors subject to a Vendor Performance Corrective Measure (VPCM) will not be considered for evaluation if the terms of the VPCM are relevant to that procurement. Specifically, with respect to vendors with a VPCM, the following applies:
      1. no negotiation is to be initiated and no offer is to be accepted for a sole source contract;
      2. bids on competitive procurements of goods or services are to be rejected;
      3. offers for standing offers for goods or services are to be rejected; and
      4. arrangements for supply arrangements for goods or services are to be rejected as well as bids for contracts under supply arrangements where PWGSC Acquisitions Branch is the contract authority.
   2. VPCM Assessment: Terminations and/or partial terminations for default and/or conditional amendments on the following transactions trigger a VPCM assessment at the end of the contract or at the expiry date of the standing offer:
      1. sole source contracts awarded on or after November 4, 2010;
      2. contracts awarded pursuant to competitive solicitations (other than (ii)(C) and (ii) (D) below) issued on or after November 4, 2010;
      3. call-ups under standing offers awarded pursuant to a Request for Standing Offers issued on or after November 4, 2010; and
      4. contracts under supply arrangements awarded pursuant to a Request for Supply Arrangements issued on or after November 4, 2010 where PWGSC Acquisitions Branch is the contract authority.

      However, for the above transactions, no consequences against vendors under the VPCMP will be enforced for terminations for default and/or conditional amendments that occurred from November 4, 2010 to June 28, 2011 inclusive.

5. In addition, a relevant VPCM entails the following effects on procurement:
   1. A VPCM does not affect existing contracts.
   2. Where the vendor is subject to a relevant VPCM, the length of the contract cannot be extended either by an amendment or through the exercise of an option unless:
      1. there is insufficient time to recompete; or
      2. there are other exceptional circumstances.

      These situations require ADM approval in accordance with 8.180.25 on exceptions.

   3. No call-up can be issued against any existing standing offer.
6. In addition, the general information on the nature and extent of performance problems gained during the contract and post contract phases should be used in the other phases. In the pre-contractual phase this information will assist in the development of the procurement risk strategy. During that phase it will also assist with assessing the need for a customized or tailored program for managing vendor performance on specific commodity or commodity groupings. This information is also important in developing not only performance criteria but also any other risk mitigation terms for both solicitation and contract documents in the contracting phase.

8.180.5 Principles

Effective date: 2011-06-29

1. PWGSC has the authority and the duty to take reasonable measures to ensure that it can rely on its vendors to perform their obligations. It has the same right as other purchasers in the market to assess a vendor's performance, and may take action to prevent future problems, based on the vendor's past performance. The discretion to take such action will be taken in a fair and reasonable manner.
2. The VPCMP is founded on principles that support PWGSC’s commitment to carrying out contracting in a manner that enhances competition, fairness and transparency.
3. Any corrective measure taken should rationally relate to the nature and severity of the problem for which it is applied.

8.180.10 Definitions

Effective date: 2023-03-30

For the purpose of the generic process in this policy, the following terms or expressions have the following meaning:

1. Conditional amendment: refers to an amendment to a contract being made for operational reasons in lieu of a termination for default or a partial termination for default because of poor performance. This type of amendment may only be considered when the contracting officer is ready to terminate (full or partial) for default. It is an alternative to immediate termination for default. If not accepted by the vendor, the termination for default will be issued.
2. Poor performance: means anything less than full performance of a contract by a vendor that results in either a termination for default or a conditional amendment. In both situations the vendor is primarily responsible for the poor performance. This definition extends to all aspects of performance that the contracting officer and the client want to consider and specify for evaluating the vendor's performance during the contract. (Terminations for default also include partial terminations for default.)
3. Vendor Performance Corrective Measure (VPCM): is a condition or limitation placed on a vendor's ability to contract with Public Works and Government Services Canada (PWGSC) in the future on the basis of PWGSC's assessment of the vendor’s past performance. The VPCM affects the vendor’s eligibility for consideration for award of contracts and issuance of contract amendments.
4. Expiry date of the standing offer: means the date upon which the standing offer has ended or the date the standing offer is permanently set-aside, whichever occurs first.
5. Vendor Information Management System (VIM): is a database that stores vendor information including VPCMP notes and VPCMs.

8.180.15 Generic process

Effective date: 2011-06-29

8.180.15.1 Contract administration concerning the Vendor Performance Corrective Measure Policy

Effective date: 2016-01-28

1. Contracting officers must enforce the terms of contracts. A performance issue may lead to the following:
   1. enforcement of the remedies available under the contract;
   2. a note placed in the Vendor Information Management (VIM) System; and
   3. a Vendor Performance Corrective Measure (VPCM) Assessment.
2. The contracting officer will document the following in the contract file:
   1. vendor performance issues, i.e., non-compliance with the performance criteria specified in the contract;
   2. proof of communication with the vendors on the issues; and
   3. proof of having sent a copy of the VPCMP to the vendor as part of the above communication.
3. When a contract is terminated for default or when a conditional amendment is issued, the vendor is to be notified in writing of the performance issue(s) and a copy of the notification must be kept in the contract file. The contracting officer must include the following applicable text in the notification:
   1. For conditional amendments:
      "The parties agree to this amendment on condition that Canada has the right to consider the poor performance, which has led to this conditional amendment, for the purpose of assessing whether a VPCM will be placed against the vendor. The parties agree that this conditional amendment will result in a note in VIM and will trigger a VPCM assessment process at the end of the contract or at the expiry date of the standing offer."
   2. For terminations for default, see SACC Manual clauses J1000C and J1001C for the text that must be inserted.
4. The procedures on terminations for default are set out in section 8.135.15 Termination for default and Annex 8.4 Termination for default. For conditional amendments see section 8.70.5 Amending contracts. Legal Services are to be consulted for both actions.
5. A contract terminated for default or for which there was a conditional amendment issued triggers a mandatory assessment to determine whether a VPCM is to be applied. The contracting officer will follow the generic process set out in 8.180.15.5 Vendor Performance Corrective Measure Assessment.
6. As soon as the VPCM co-ordinator is made aware of the default event, a letter of reminder will be sent to the contracting officer by email, outlining the initial steps in the assessment process.
7. Timeliness in the Tracking, Recording and Follow-Up of Corrective Measures
   1. The contracting officer must complete Part I of form 149 and return it to the VPCM co-ordinator at CoordPMCRF.VPCMPCoord@tpsgc-pwgsc.gc.ca within five business days of receipt of the letter of reminder.
   2. A verification of the VPCM database will then be done to determine the vendor’s VPCM history and whether there is an ongoing assessment involving the same vendor.
   3. If there is an ongoing assessment for another contract, the contracting officer will be informed by email that the authorization for assessment of the new case will be put on hold until the previous assessment is completed.
   4. If there is no ongoing assessment for the same vendor, the contracting officer will receive the authorization to proceed with the assessment. This authorization will include the history of default events already registered in the VPCM database for that vendor.
   5. The assessment is to be completed (including all required signatures) within three months from the date of authorization.
8. A note in VIM for a contract or a standing offer that was terminated for default or for which there was a conditional amendment issued will remain for six years from the date of the termination for default or conditional amendment. After six years, the note will be removed from VIM. The note may be removed sooner if the termination or conditional amendment was part of the history which contributed to the imposition of a VPCM.
9. In addition to the above, PWGSC reserves the right to put a note in VIM, called "Other Performance Records", for other significant issues pertaining to the performance of a contract. Other Performance Records require Assistant Deputy Minister, Acquisitions Branch (ADM/AB) approval to be added to VIM. The provisions of the generic process described in section 8.180.15.5 do not apply in such cases. While such notes may result in the application of a VPCM, they are not considered for the purpose of the generic process.
10. For information on the VPCMP and its application, please contact the VPCM co-ordinator by sending an e-mail to CoordPMCRF.VPCMPCoord@tpsgc-pwgsc.gc.ca. Questions related to the Vendor Performance Policy promulgated in 1996 can also be addressed to the VPCM co-ordinator.

8.180.15.5 Vendor Performance Corrective Measure Assessment

Effective date: 2012-10-25

1. Formal corrective measures are put in place when there is evidence that continued contracting with a vendor may pose a greater risk to Canada than is acceptable. This will be the case when there is a major instance of poor performance of a contract resulting in a termination for default or conditional amendment, or a cumulative record of terminations for default and/or conditional amendments.
2. All steps of the VPCM Assessment process set out below must be fully documented in the file. See Annex 8.6.1 Required procedure for applying a Vendor Performance Corrective Measure (VPCM) for additional guidance on the required procedure for applying a VPCM using the generic process.
3. As soon as the contract ends or as soon as the standing offer expires where there has been a termination for default and/or conditional amendment, the contracting officer on behalf of the director will complete the VPCM Assessment form PWGSC-TPSGC 149-1 (PDF Version 72 KB) - (Help on File Formats) by:
   1. taking into account the relative importance of the requirement(s) in the overall context;
   2. including VPCM history without considering the notes used as the basis for applying a previous VPCM; and
   3. establishing the ensuing consequence pursuant to the VPCM consequence grid in the form.

   The principal elements of the form are set out in Annex 8.7 Principal elements of the Vendor Performance Corrective Measure Assessment.

4. In the case of a joint venture, a VPCM Assessment will be completed for each member. The Current Contract(s) Score will be the same; however, each member will have a distinct history for the purpose of establishing consequences.
5. The director must present the results of every assessment to the relevant director general/regional director general (DG/RDG).

8.180.15.10 Notice of intent for applying a Vendor Performance Corrective Measure

Effective date: 2015-12-23

1. For the purpose of the VPCMP, there are two types of VPCM:
   1. Debarment is the refusal by PWGSC Acquisitions Branch to do business with a vendor for a specified period. A debarment renders a vendor ineligible to bid on:
      1. contracts;
      2. standing offers and call-ups; and
      3. supply arrangements and contracts under supply arrangements where PWGSC Acquisitions Branch is the contract authority.
   2. Conditions may be applied against vendors in place of debarment, where considered more appropriate. Where a vendor is subject to conditions and has not met those conditions before bid closing date or before commencement of a non-competitive process, the vendor is declared ineligible to bid on or to receive:
      1. contracts;
      2. standing offers and call-ups; and
      3. supply arrangements and contracts under supply arrangements where PWGSC Acquisitions Branch is the contract authority.
2. Notice to the vendor on the result of a VPCM Assessment:
   1. If the threshold to apply a VPCM is not met, the DG/RDG informs the vendor that (see Annex 8.8 Letter template where no Vendor Performance Corrective Measure will be applied at this time for letter template):
      1. No VPCM is applied at this time.
      2. The category of impact and the associated score for the contract(s) on which the VPCM Assessment was completed.
      3. Canada reserves the right to take the history score of all contracts with terminations for default and conditional amendments into consideration if another assessment is triggered by a further termination for default or conditional amendment on other contracts.
      4. The vendor has 15 business days to respond in writing and his response could include a request to present orally to the DG/RDG.
   2. If the threshold to apply a VPCM is reached, the DG/RDG will notify the vendor of the intent to apply a VPCM (See Annex 8.9 Letter template for notice of intent to apply a Vendor Performance Corrective Measure for letter template). In addition to the corrective measure, the notice of intent for applying a VPCM to the vendor must include:
      1. a list of:
         • terminations for default and conditional amendments for the relevant contract or standing offer including information on the category of impact and the associated score;
         • history of closed contracts with terminations for default and conditional amendments taken into account; and
         • history of VPCMs;
      2. the procurements against which the VPCM would apply, i.e., whether the VPCM will be across-the-board (affecting all aspects of the vendor's operations) or limited by product, division, geographic division, type of contract (such as urgent delivery requirement) or other factors;
      3. when, and how if applicable, the VPCM will end;
      4. where conditions are recommended, who will determine that they have been satisfied;
      5. a notification that the VPCM extends to any other business arrangements involving the vendor, including subcontracting, partnership and joint venture; and
      6. indication that the vendor has 15 business days to respond in writing and that his response could include a request to present orally to the DG/RDG.
3. Review of Vendor’s Response
   1. For both cases in (b) above, if after having reviewed the vendor’s written response and any presentation material, the DG/RDG revises the assessment results, the DG/RDG informs the vendor of the following:
      1. the revised assessment results; and
      2. that Canada reserves the right to take the history score of all contracts with terminations for default and conditional amendments into consideration if another assessment is triggered by a further termination for default or conditional amendment in another contract.
4. A vendor will be given access to documents relevant to its performance including the VPCM Assessment form on the same basis as would be available in a contract dispute.
5. In the case where the threshold to apply a VPCM has been reached:
   1. The DG/RDG will send by e-mail a one-page summary of the VPCM case, a signed copy of the assessment form (PWGSC 149-1), along with any of the vendor’s written response and any presentation material to the VPCM co-ordinator;
   2. The VPCM co-ordinator will request a review and seek recommendation regarding a VPCM against a vendor from the Acquisitions Program – Policy Committee (AP-PC) line directors. The AP-PC line directors will be required to submit a response within five business days from the date the VPCM co-ordinator sends the request; and,
   3. Following the consultation period, the VPCM co-ordinator will forward the proposed VPCM and the results of the consultation with the line directors to the Director General, Policy, Risk, Integrity and Strategic Management (PRISM) Sector for review and recommendation.

8.180.15.15 Assistant Deputy Minister decision

Effective date: 2015-12-23

1. In the case where a VPCM is to be applied, the Director General, Policy, Risk, Integrity and Strategic Management (PRISM) Sector will submit the assessment results to the Assistant Deputy Minister, Acquisitions Branch (ADM/AB). The ADM/AB is the sole approval authority for the imposition of a VPCM.
2. Except where there is an approved Sector/Region Vendor Performance Program, the ADM/AB will review the assessment results, including information provided by the vendor.
3. The ADM/AB will inform the vendor of the decision whether a VPCM will be applied (See Annexes 8.10 Letter template for decision to apply conditions as a Vendor Performance Corrective Measure and 8.11 Letter template for decision to apply debarment as a Vendor Performance Corrective Measure for letter templates).

8.180.15.20 Actions pursuant to a decision to apply a Vendor Performance Corrective Measure

Effective date: 2015-12-23

1. The Assistant Deputy Minister’s (ADM) office sends a copy of the completed VPCM Assessment form to the VPCM co-ordinator in the Policy, Risk, Integrity and Strategic Management (PRISM) Sector. Information on a VPCM will only be entered into VIM by PRISM.
2. The VPCM co-ordinator informs the authorities of relevant standing offers and supply arrangements about the imposition of a VPCM.
3. A decision to reject a bid/offer/arrangement because of a VPCM can be made at any time up to contract award or issuance of a standing offer or supply arrangement. VIM is to be checked for a VPCM at bid closing for competitive procurements and prior to any interaction with a sole source vendor. With respect to call-ups, standing offers must be set aside for vendors that are subject to relevant VPCMs. In addition, VIM is to be rechecked prior to contract award. Where extending the length of a contract is being considered, VIM is also to be checked before issuing amendments or exercising options. For the right to reject a bid/offer/arrangement because of a VPCM, see section 5.55.5 Authority to reject a bid/offer/arrangement.
4. In accordance with section 7.35 Notification to unsuccessful bidders/offerors/suppliers , the vendor must be informed of the decision to reject a bid/offer/arrangement because of a VPCM.
5. If a member of a joint venture is subject to a VPCM, the bid/offer/arrangement, contract or call-up is to be rejected as a whole.
6. VPCM information will be relevant and will remain on VIM for six years from the date the VPCM is implemented. Therefore, for the entire six year period, with regards to any future VPCM calculations, the VPCM in VIM will contribute to the history score of all subsequent assessments.
7. When a VPCM ends, the VPCM co-ordinator will notify the sector/region that initiated it, which is then responsible for promptly notifying the vendor.

8.180.20 Standard Acquisition Clauses and Conditions Manual provisions for stop work orders, contract suspensions and other reasons for bid rejection

Effective date: 2011-06-29

No provisions under the VPCMP will in any way override PWGSC’s rights with respect to stop work orders, contract or supply arrangement suspensions, standing offer set-asides and other reasons for bid/offer/arrangement rejection set out in the SACC Manual.

8.180.25 Exceptions

Effective date: 2011-06-29

In cases of emergency in procurement, a DG/RDG may make a recommendation for an exception to a VPCM. In such cases, special care should be taken to protect Canada. Where an exception is made, the reason should be recorded on the contract file. Such exception must be approved by the ADM/AB or the approval authority designated in a sector/region vendor performance program

8.180.30 Sector/region vendor performance programs

Effective date: 2011-06-29

1. A sector/region may establish a customized or tailored program for evaluating vendor performance and determining appropriate measures to apply for specific commodities or commodity groupings. Where such a program has the approval of the ADM/AB, it is not necessary that the ADM/AB review the cases. The decision can be made by the persons delegated that authority under the program.
2. The determination to have such a program will be made in the context of the procurement risk management strategy for the specific commodity during the pre-contractual phase of the procurement process. If it is determined that a sector/region program will be developed, until this program is operational, the contracting officer is to apply the generic VPCMP process. Annex 8.12 Framework for developing a sector/region vendor performance program provides a framework for developing such a program.
3. The program may incorporate elements from the generic VPCMP process.
4. Once established, the customized vendor performance program is administered by the sector/region.

8.1651 Differences of opinion or interpretation

Effective date: 2010-01-11

On occasion, differences of opinion or interpretation may arise between the contracting officer and the auditor regarding the legitimacy of audit findings. The relevant director should resolve these differences of opinion or interpretation in concurrence with the Director, Acquisition Program Integrity Secretariat, before the Cost Audit Group will take close out action.

Annexes

Consult the list of annexes below related to Chapter 8 – Contract Management.

• 8.1 - Annex: Guidelines on procurement file organization and composition
• 8.2 - Annex: Contract management early warning indicators
• 8.3 - Annex: Termination for convenience process
• 8.4 - Annex: Termination for default
• 8.5 - Annex: Refunds of excess profits earned on Public Works and Government Services Canada contracts
• 8.6 - Annex: Risk Management approach to Vendor Performance Process Chart
  • 8.6.1 - Annex: Required procedure for applying a Vendor Performance Corrective Measure (VPCM)
• 8.7 - Annex: Principal elements of the Vendor Performance Corrective Measure Assessment
• 8.8 - Annex: Letter template where no vendor performance corrective measure will be applied at this time
• 8.9 - Annex: Letter template for notice of intent to apply a vendor performance corrective measure
• 8.10 - Annex: Letter template for decision to apply conditions as a vendor performance corrective measure
• 8.11 - Annex: Letter template for decision to apply debarment as a vendor performance corrective measure
• 8.12 - Annex: Framework for developing a sector/region vendor performance program
• 8.13 - Annex: Letter templates for integrity