Standing offers

A standing offer is an offer from a potential supplier that allows Canada to repeatedly purchase goods or services at pre-arranged prices, under set terms and conditions, when required. It is not a contract when it is issued. Canada has no obligation to buy anything until it issues a call-up, and the call-up is what creates the contract. CanadaBuys sets out this definition for federal buyers and suppliers.

Standing offers are used mainly for recurring or repetitive requirements, where departments and agencies order the same or similar goods and services again and again. Instead of running a new competition for each purchase, a buyer establishes one or more pre-qualified suppliers up front and orders from them as needs arise. Public Services and Procurement Canada (PSPC) describes this approach in its overview of how the government buys.

How a call-up turns a standing offer into a contract

A supplier that qualifies agrees to provide the offered goods or services at the stated prices and under the applicable conditions for the specified period. Qualification alone does not guarantee any purchase. When a department or other authorized user has a requirement, it issues a call-up to the appropriate standing offer holder. The call-up serves as the notice to deliver and creates the resulting contract. Employment and Social Development Canada's interpretation confirms that Canada is not obligated to purchase before a call-up is issued.

Where several suppliers hold standing offers for the same requirement, the standing offer may prescribe how users choose among them, including proportional distribution of work. Identified users must follow those predetermined rules.

Standing offers compared with supply arrangements

The two instruments are related but work differently. A standing offer carries pre-determined pricing and creates contracts through call-ups. A supply arrangement establishes terms with qualified suppliers, and the government then enters into a contract when a requirement arises. CanadaBuys explains both instruments in its guidance on the Standing Offers and Supply Arrangements application.

The RFSO and how federal standing offers are set up

The solicitation used to obtain standing offers is the Request for Standing Offer, abbreviated RFSO. Suppliers that meet the evaluation criteria become pre-qualified standing offer holders. PSPC establishes and manages federal standing offers for use by departments and agencies, with examples covering information-retrieval services, office supplies and medical supplies and equipment.

• The medical supplies and equipment standing offer specifies a five-year standing offer period and requires fixed, all-inclusive prices.
• That same standing offer is intended for federal departments, agencies, Crown corporations and organizations participating in the Canadian Collaborative Procurement Initiative.
• For public opinion research, standing offers form an inventory of pre-qualified suppliers, but only PSPC may issue call-ups against them.

Mandatory use under the Directive on the Management of Procurement

Federal departments do not always have a choice. The Directive on the Management of Procurement makes PSPC standing offers and supply arrangements mandatory for the commodity classes listed in its table, subject to specified exceptions. Those exceptions include certain Comprehensive Land Claims Agreement obligations.

What standing offers mean for a supplier

Getting onto a standing offer is a qualification step, not a sale. Revenue arrives only when a user issues a call-up, so a supplier needs to be pre-qualified for the right commodity and priced to win its share of call-ups. Prices and terms are fixed for the standing offer period, so bid teams should build all costs into the offer before submitting. Where the standing offer is mandatory for a commodity class, being a holder is often the only route to that federal demand. Watch for RFSOs on CanadaBuys and read each one for its period, pricing rules, authorized users and method of distributing call-ups.