Basic Contracting Limits

Basic Contracting Limits are the financial limits within which a Canadian federal contracting authority may enter into a contract or contractual arrangement without Treasury Board approval. The applicable limit depends on the contracting authority, the procurement method (competitive or non-competitive) and the type of contract. The amount tested generally includes applicable taxes, fees and amendments, as set out in the Treasury Board directive.

The term is a Canadian federal procurement term. It comes from the Treasury Board framework for contracting authority under the Financial Administration Act and the Government Contracts Regulations. Treasury Board sets financial limits for federal departments and agencies, and those limits decide when a contract needs Treasury Board approval before it can be awarded.

How the basic limit test works

The Directive on the Management of Procurement states that a contract may be entered into without Treasury Board approval when the total amount payable does not exceed the limit for the relevant contracting authority in the basic limits schedules. The total amount payable includes applicable taxes, fees and amendments. The limits are stated in Canadian dollars and are tied to the contracting authority named in the schedules.

The CanadaBuys buyer's guide on delegation of procurement authority explains that Treasury Board establishes these financial limits under the Financial Administration Act. Its appendix sets out basic contracting limits, individual-minister limits and the thresholds above which Treasury Board approval is required.

Limits vary by authority and procurement method

The basic limits schedules do not apply one number to everyone. They separate competitive from non-competitive contracting, and they identify separate limits for departments, Public Services and Procurement Canada (PSPC) and National Defence in at least some contracting categories. PSPC has higher basic contracting limits than all other departments for certain categories, including construction contracts. National Defence has its own stated limits for some categories.

A Government of Canada procurement report describes basic contracting limits of $750,000 for competitive and $100,000 for non-competitive construction contracts for many departments, with higher limits reported for PSPC. These figures are specific to the version of the schedules and the contract category described. They are not universal current limits, so check the current schedules for the category and department in question.

Treasury Board also recognizes exceptional contracting limits, which are higher limits available to specified departments or circumstances.

Where the term appears in federal policy

The phrase has a long history in federal contracting policy. An earlier version of the Contracting Policy included a section titled Part I, Basic Contracting Limits. It carried separate columns for electronic bidding, competitive and non-competitive contracting, and it also set limits for amendments.

The current directive uses the related expression "basic limits schedules" and houses the limits within the Treasury Board contracting approvals framework. Related terms include contracting authority, contracting approvals, and competitive and non-competitive contracting limits.

What basic contracting limits mean for suppliers

Basic contracting limits are an internal approval control on federal buyers. They are not a supplier qualification or certification, and a supplier does not submit a "basic contracting limits" form or certification with a bid.

• Suppliers feel the effect through the solicitation and the contracting authority named in it.
• The limits shape amendment authority, because amendments count toward the amount tested against the limit.
• A contract that would exceed the applicable limit needs additional approval from Treasury Board, which the buying department must obtain.

Bid teams can use this to read a buyer's position. Knowing which department is buying, whether the method is competitive or non-competitive, and how large the contract and its likely amendments are helps explain what approvals sit behind an award.