Optional Use Standing Offer

An Optional Use Standing Offer is a standing offer that eligible buyers are free to use or to bypass. A standing offer is a supplier's offer to provide specified goods or services at prearranged prices and under set terms, when the buyer needs them. The "optional use" label means no buyer is obliged to place its orders through that arrangement.

The term belongs to Canadian government procurement, and the standing offers it describes are mainly those set up by Public Services and Procurement Canada (PSPC). A standing offer is not a contract. It becomes a contract for a purchase only when an authorized user issues a call-up, as explained on the PSPC page on supplying services to the government.

How a standing offer is created and used

Buyers solicit standing offers through a Request for Standing Offer (RFSO). Suppliers that meet the evaluation criteria in the RFSO become pre-qualified suppliers and holders of standing offers. The supplier agrees to provide the goods or services at fixed or prearranged prices, for a stated period, under the stated terms.

Standing offers suit recurring needs, where departments or agencies order the same goods or services again and again. Each order is a call-up. A CanadaBuys RFSO for air purifiers and air filters states that a separate contract is formed each time an authorized user makes a call-up, and that the standing offer does not itself commit Canada to funds or usage.

What "optional" means for the buyer

Optional use means the potential buyer can choose another route. An earlier federal audit document, published by the Office of the Auditor General, notes that departments could use a fleet-management standing offer or contract independently with another fleet-management company. The standing offer was available, but it was not the only way to buy.

This differs from an arrangement that buyers must use. With an optional arrangement, the volume of call-ups depends on how well the offer's prices, terms and coverage compete with a buyer's other options.

Optional use by provincial, territorial and MASH-sector buyers

The clearest example of optional use comes from collaborative procurement. In its partnership with the Province of British Columbia, the Government of Canada states that use of certain standing offers is optional for provincial and territorial governments and associated MASH-sector organizations. These buyers can draw on eligible federal standing offers when they suit their needs.

National Master Standing Offers (NMSOs) are one vehicle for this. The PSPC chemicals procurement establishes an NMSO for federal departments, agencies, Crown corporations and organizations participating in the Canadian Collaborative Procurement Initiative (CCPI). Supplies are procured through call-ups. The standing offer period is three years, with two possible one-year extensions.

What it means for a supplier

Being named a standing offer holder does not guarantee orders. No contract exists until a call-up is issued, and an authorized user can choose a different supplier or method. Where use is optional, you earn call-ups by offering prices and terms that buyers find worth using.

• Read the RFSO evaluation criteria closely, because meeting them is what makes you a pre-qualified holder.
• Price for the full standing offer period, including any extension periods, since you must honour the stated prices and terms on every call-up.
• Check who the eligible users are. Some standing offers can also be used by provincial, territorial and MASH-sector buyers, which widens the possible customer base.
• Plan your revenue around call-ups, not around the standing offer itself, which does not commit Canada to any funds or usage.