Limited Tendering

Limited tendering is a procurement method in which the procuring entity contacts a supplier or suppliers of its choice, rather than inviting tenders through an open process. The Canada–Honduras Free Trade Agreement and the Canadian Air Transport Security Authority (CATSA) both define it this way. See the Canada–Honduras text and the CATSA glossary.

Under Canadian trade-agreement rules, a buyer may use limited tendering only in specified circumstances. It must not be used to avoid competition, to protect domestic suppliers, or to discriminate against suppliers of another party. In practice, it is the route behind many direct awards and sole-source contracts.

How limited tendering differs from open and selective tendering

The CanadaBuys buyer's guide identifies three tendering approaches for procurements under trade agreements: open, selective and limited. Open tendering invites any interested supplier to bid. Selective tendering invites only suppliers that have qualified. Limited tendering lets the buyer contact the suppliers it chooses.

The same guide notes that the Government Contracts Regulations generally require the solicitation of offers before a contract is entered into, but provide exceptions. Limited tendering sits within those exceptions.

When CUSMA allows limited tendering

Under Chapter 13 of the Canada–United States–Mexico Agreement (CUSMA), a procuring entity must use open tendering unless the qualification-of-suppliers or limited-tendering provisions apply. The permitted circumstances include, among others:

• The goods or services can be supplied only by a particular supplier and no reasonable alternative or substitute exists.
• Additional deliveries or services are required from the original supplier in circumstances the agreement specifies.
• Extreme urgency caused by unforeseeable events makes open or selective tendering impracticable.
• The purchase is made under exceptionally advantageous short-term conditions, such as liquidation or receivership.

For each contract awarded this way, the buyer must prepare a written report or keep a record. It identifies the procuring entity, the value and kind of goods or services, and the circumstances that justify limited tendering. The Canada–European Union Comprehensive Economic and Trade Agreement (CETA) addresses the term in Chapter 19.

Limited tendering at CATSA, CMHC and in British Columbia

Buyers outside the core federal departments also use the term. CATSA's procurement and contracting policy permits limited tendering for procurements not covered by a trade agreement in these circumstances:

• Public interest or national-security considerations.
• A sole supplier capable of performing the contract.
• A pressing emergency.
• Low-dollar-value procurements.
• Location-specific restrictions that require authority-approved suppliers.

For trade-agreement-covered procurements, CATSA states that selective or limited tendering may be used only to the extent the applicable agreement permits. The Canada Mortgage and Housing Corporation also has a "Limited tendering" section in its procurement policy, defining it as selecting one or more suppliers in specified circumstances.

British Columbia uses Limited Tendering (NOI/CAN) as a sourcing-project type on BC Bid. A ministry that intends to award a contract without a competition issues a Notice of Intent (NOI). The notice explains the justification for the proposed direct award and invites suppliers to challenge it. If a supplier challenges, the ministry must assess the challenge and decide whether a competitive process is required. The BC Bid quick reference guide sets out the steps.

What limited tendering means for suppliers

If you meet a limited-tendering procurement, first work out how it reached you. You may have been contacted directly, or the buyer may have posted an NOI or similar advance notice. Then review the stated justification and confirm whether a trade agreement covers the procurement and whether the cited exception is one it permits.

Where a challenge process exists, as with a British Columbia NOI, submit your challenge within the stated deadline. Explain why the direct award is not justified or why you can meet the requirement. If you are invited to submit an offer, meet the technical, security, commercial and submission requirements in full. Limited tendering does not remove them.