Competitive Bidding Exception

A competitive bidding exception is a legally or procedurally authorized circumstance in which a contracting authority may set aside the normal requirement to solicit competitive bids and award a contract non-competitively. Competition is the default. The exception is the documented departure from it.

The term is used in Canadian federal contracting policy and in NATO procurement. In Canada, the recognized exceptions are a pressing emergency, expenditure below prescribed thresholds, circumstances where soliciting bids would not be in the public interest, and cases where only one person or firm is capable of performing the contract. NATO describes its ordinary process as competitive procurement open to eligible vendors, and treats sole source as an exception to it.

The four exceptions in section 6 of the Government Contracts Regulations

Section 6 of the Government Contracts Regulations allows a contracting authority to enter into a contract without soliciting bids in four defined circumstances. The Treasury Board publishes the text in its policy suite. The four grounds are:

• Pressing emergency: delay in awarding the contract would be injurious to the public interest.
• Low value: the estimated expenditure is below the applicable threshold.
• Public interest: soliciting bids would not be in the public interest.
• Only one capable supplier: only one person or firm is capable of performing the contract.

The Office of the Procurement Ombud also summarizes these four grounds in its 2021 review.

Dollar thresholds for low-value contracts

The low-value exception depends on the estimated expenditure. Since June 10, 2019, the thresholds identified in the Procurement Ombud's 2021 review are $25,000 for goods and $40,000 for most services. Below those values, a department is not required by the regulations to solicit bids.

Sole source, ACANs and the documentation behind them

Federal policy treats sole-source procurement as an exception that sets competitive bidding aside. A department may proceed without competition where only one person or firm is capable of performing the work.

An Advance Contract Award Notice (ACAN) is the public step that accompanies this kind of award. The government states that it intends to award a contract non-competitively, names the intended supplier, and gives other suppliers an opportunity to challenge the assertion that only one source is capable. The Procurement Ombud describes this practice in its 2011-2012 report.

Departments must also document the decision. CanadaBuys guidance requires approval documents for a non-competitive procurement to identify the legal basis for the exception to competitive bidding. A Government of Canada internal audit of procurement states that when a business owner seeks an exception, the contracting authority must fully justify the decision and place the supporting documentation on the contract file.

How NATO uses sole source and deviations from international competitive bidding

NATO's standard competitive method is open to eligible vendors from participating nations, as set out in its procurement policy and procurement procedure. NATO audit material, including the 2021 NSPO financial audit, treats "sole source" as an exception to competitive bidding. It applies where only one known source can provide the required materiel or service.

For Infrastructure Committee-funded and Budget Committee-funded procurements above stated value levels, international competitive bidding is the normal route. Deviations from it require approval under the applicable NATO process.

What it means for a supplier bidding on Canadian public contracts

An exception does not guarantee an award to the named supplier. Bid teams should read the notice or solicitation first and note the stated legal basis for the non-competitive approach.

• If an ACAN is published for work you can perform, submit a timely statement of capability that shows how you meet every mandatory requirement. The contracting authority may then determine that competition is required.
• Support any claim to be an alternative source with evidence such as technical qualifications, certifications, intellectual-property rights, interoperability, delivery capability or relevant experience.
• Observe the response deadline and any clarification or challenge process.
• For NATO procurements, follow the specific notice and contracting instructions, including eligibility and any international competitive bidding requirements.