Competitive procurement

Competitive procurement is a procurement method in which eligible suppliers compete to provide required goods, works or services. The buyer issues a solicitation, suppliers respond with offers, and the buyer chooses one supplier from among the competitors. It is the counterpart of sole-source contracting, where a buyer awards a contract without a competition.

In Canadian public procurement, Treasury Board guidance identifies the basic features of competitive bidding as an invitation to bid, binding bids from suppliers, and the buyer selecting a bid for award. NATO uses the same idea under its own name, NATO Competitive Procurement, for common-funded purchasing.

How the Government of Canada applies competitive procurement

Federal guidance on determining a sourcing strategy states that the Government Contracts Regulations generally require offers to be solicited before a contract is entered into, subject to exceptions. It also states that, whenever possible, contractors must be selected through a competitive process.

Public Services and Procurement Canada (PSPC) and other federal departments run competitive solicitations through the federal procurement system, including open tendering notices. Open tendering invites all interested businesses to submit offers, and the same guidance describes it as the preferred approach.

Solicitation types: RFQ, ITT and RFP

The Treasury Board guidance names three common types of competitive solicitation in Canada:

• Request for Quotation (RFQ)
• Invitation to Tender (ITT)
• Request for Proposal (RFP)

Which method a department uses depends on the applicable procurement framework, including trade-agreement requirements, and on the nature of the requirement. Whatever the label, the competition has the same defining features: a competition for award, binding bids, and a buyer who chooses among the competitors.

Open, selective and limited tendering

The federal sourcing framework also distinguishes three forms of tendering under trade agreements: open, selective and limited. Open tendering is the broadest, because every interested business may submit an offer. Reading a solicitation notice to see which form applies tells a supplier who is allowed to compete and how the buyer will run the process. Details are set out in the CanadaBuys sourcing strategy guidance.

NATO Competitive Procurement

NATO defines NATO Competitive Procurement as a procurement method that is open to all eligible vendors from participating nations. The NATO procurement policy requires the procurement authority to conduct formal competitive bidding and to ensure fair and equal treatment of eligible vendors. Common-funded procurement is governed by the NATO Procurement Policy for Common Funding and the Procedure for NATO Competitive Procurement, as described on the NATO business ecosystem page.

NATO procedures include sealed bidding through an Invitation for Bids (IFB) and competitive proposals through a Request for Proposals (RFP). For certain communications and information procurements, the NATO Communications and Information Agency (NCIA) uses international competitive bidding. Companies from NATO countries are invited to participate unless otherwise indicated, and each competition requires a Declaration of Eligibility.

What competitive procurement means for a supplier

A supplier in a competitive procurement must submit a compliant bid, quotation or proposal by the stated deadline and meet the solicitation's mandatory requirements. Because bids are binding, the offer submitted is the offer the buyer can accept. For NATO common-funded opportunities, the supplier must also be an eligible vendor from a participating nation, and for NCIA competitions it must hold a Declaration of Eligibility.

Because competition is the default in federal contracting, most Canadian opportunities a supplier can pursue will be published as open competitive solicitations. Identify the solicitation type, confirm the tendering form and check eligibility before committing bid resources.