Non-Competitive Procurement

Non-competitive procurement is a procurement strategy in which a contract is awarded without a competitive bidding process. It is commonly done on a sole-source basis, meaning the buying department deals directly with one supplier instead of issuing an open tender. Federal guidance from Public Services and Procurement Canada (PSPC) uses the phrase sole source purchasing for the same practice, and describes the circumstances in which it can be used (PSPC procurement process introduction).

The practice is an exception, not the default. It is governed mainly by section 6 of the Government Contracts Regulations, which sets out the exceptions that allow a contract to be awarded without soliciting bids, and by the Directive on the Management of Procurement, which replaced the former Contracting Policy. Related terms include sole-source procurement, directed contract, exception to competition and Advance Contract Award Notice (ACAN).

When federal rules allow a contract without bidding

Federal sources identify four main circumstances for a non-competitive contract:

• A pressing emergency, where delay would be injurious to the public interest.
• An expenditure below the prescribed financial thresholds.
• A situation where soliciting bids would not be in the public interest.
• A requirement that only one supplier is capable of performing.

The thresholds are set out in Treasury Board Contracting Policy Notice 2007-04, which cites $25,000 for goods and $40,000 for many other contracts, subject to the applicable regulations and exceptions (Treasury Board Contracting Policy Notice 2007-04).

Public Safety Canada describes the sole-source approach in similar terms. It applies in special circumstances such as a pressing emergency, where only one person can perform the work because of copyright or licensing, or where soliciting bids would not be in the public interest (Public Safety Canada procurement audit).

Justification and records a department must keep

Choosing a non-competitive strategy carries a documentation burden. Contracting Policy Notice 2007-04 states that the strategy must be fully justified and recorded. Federal audits then test whether the file supports the claim, using section 6 of the Government Contracts Regulations as the basis for the justification (Public Service Commission procurement audit). Procurement reviews have found that departments rely on "Sole Source Justification" documents to support contracts awarded without competition (Office of the Procurement Ombudsman review).

On CanadaBuys, buyer guidance covers the approval documents required when a non-competitive (sole source) strategy is selected under exception 6(d) of the Government Contracts Regulations (CanadaBuys contract request guidance).

For professional services, a PSPC checklist lists the records expected on a non-competitive file:

• The sole-source justification.
• The searches conducted.
• The solicitation or pricing request sent to the supplier.
• The supplier's technical and financial proposal.
• Negotiation records, where applicable.

The checklist is available from PSPC.

How an Advance Contract Award Notice relates

An ACAN is related to non-competitive procurement but is not the same thing. It publicly announces the government's intention to award a contract to one identified supplier and gives other suppliers an opportunity to challenge that conclusion. The underlying proposed award may still be non-competitive if no challenger demonstrates that it can meet the requirement. Federal procurement oversight material treats the ACAN as a mechanism associated with non-competitive contracting and exceptions to competition (Office of the Procurement Ombudsman chapter).

What it means for a supplier

A supplier may be approached directly for a quotation or proposal instead of responding to an open tender. The department must be able to document the legal and factual basis for not competing the requirement, so the supplier may need to provide evidence of its unique capability, proprietary rights, licensing position or urgency-related availability.

For professional services, expect requests for technical and financial proposals, résumés, pricing and negotiation responses. If an ACAN names your firm, be ready to substantiate your claimed capability, because another supplier can challenge the award by showing it can meet the requirement. If you are the challenger, your response should address the stated requirement directly.