Contracting

In Canadian government procurement, contracting is the part of the process that involves negotiating and issuing actual contracts. It is the creation of a formal agreement between a contracting authority and a person or firm to provide a good, a service or a construction project for consideration. The Government of Canada describes contracting in these terms.

Contracting is not the same thing as procurement as a whole. The National Research Council separates the two: procurement establishes terms and conditions and selects vendors, while contracting negotiates and issues the contracts themselves. For a supplier, contracting is the point where a bid becomes a binding relationship with a federal buyer.

How contracting differs from the wider procurement process

Procurement covers planning, defining requirements, solicitation, supplier selection, contract administration and close-out. Contracting focuses on establishing the contractual relationship and issuing the contract. Departments and agencies use it for goods, services and construction alike.

Each federal organization applies contracting within its own authorities. The Canada Revenue Agency, for example, states that it has procurement authority for goods, services and construction, exercised through delegated procurement authorities.

The contracting phase in a federal solicitation

The CanadaBuys Supply Manual uses the term contracting phase for the activities from bid solicitation through to contract award. In a federal solicitation, contracting therefore begins while bids are being sought and continues until the contract is awarded. The Supply Manual glossary sets out this definition.

Contracting authorities and delegated approval

Contracts are entered into by contracting authorities acting under delegated authority and subject to Treasury Board requirements. The Treasury Board Directive on the Management of Procurement contains mandatory contracting-approval requirements. It applies to contracting authorities as defined in the Government Contracts Regulations, subject to stated exceptions.

Public Services and Procurement Canada (PSPC) uses delegation tables that cover both contract entry and contract amendments. The required approval level depends on the procurement's complexity, risk and value. PSPC's contracting limits guidance explains how authority is determined through complexity and procurement-risk assessments. Separate Defence and Marine Procurement Branch authorities apply to certain complex procurements.

Competitive thresholds and written contract changes

Federal procurement above stated thresholds is conducted by soliciting bids or quotations from potential suppliers. Those thresholds are $25,000 for goods and $40,000 for services and construction, as described in the PSPC introduction to the procurement process.

Once a contract is in place, the contracting authority manages it and authorizes changes in writing. Under a federal ProServices contract, the contractor must not perform work outside the contract's scope or act on instructions from anyone other than the contracting authority. The ProServices supply arrangement page states this requirement.

What contracting means for a supplier

• Treat the contracting authority named in the solicitation and the contract as your only source of binding direction.
• Get every change to scope in writing from the contracting authority before you perform the work.
• Expect the approval path for your contract to depend on its complexity, risk and value.
• Remember that contracting starts during the bid-solicitation phase, so your bid and your negotiations form part of it.