Contract Clause

A contract clause is a provision that states a term, condition, obligation, right, remedy or other requirement applying to a procurement solicitation or to the contract that results from it. In U.S. federal acquisition terminology, a clause is a provision used in solicitations and contracts that applies after award, or both before and after award. Canadian federal procurement uses the term in the same ordinary sense.

Clauses can impose duties on the supplier, establish rights for the government, define remedies, and set out dispute-resolution and complaint mechanisms. Related terms include resulting contract clause, standard acquisition clause, contract condition, standing-offer clause and call-up clause.

How resulting contract clauses work in a federal solicitation

Canadian federal solicitations commonly include a section titled "Resulting contract clauses". It sets out the clauses and conditions that will apply to the contract awarded through that solicitation. Standing-offer solicitations follow a similar pattern: one part sets out the standing offer, and another sets out the clauses and conditions that apply to contracts issued through call-ups. The Government of Canada describes this structure in its guidance on bidding on opportunities.

Anti-forced-labour clauses at PSPC

Public Services and Procurement Canada (PSPC) states that its anti-forced-labour clauses are mandatory for PSPC procurements. Other Government of Canada departments may also use them. The clauses do several things:

• They require the contractor to represent and warrant that the work was not mined, manufactured or produced wholly or partly by forced labour.
• They prohibit the contractor from delivering to Canada, or importing, work whose importation is prohibited under section 136(1) of the Customs Tariff and tariff item 9897.00.00.
• They require the contractor to notify the Contracting Authority immediately, in writing, if a tariff-classification determination makes importation of the work or part of it prohibited.
• They allow Canada to terminate the contract for default if it has reasonable grounds to believe the work was produced wholly or partly by forced labour or was linked to human trafficking.

CanadaBuys reports that, beginning December 13, 2024, these requirements were expanded to procurements for services, research and development, and architecture and engineering contracts. The details are in the Supply Manual annexes.

Office of the Procurement Ombud clauses

The Office of the Procurement Ombud (OPO) publishes standard clauses that appear in federal solicitation documents, in regret letters to unsuccessful bidders, and in federal contracts. Two of them matter to most suppliers:

• The dispute resolution clause requires the parties to make reasonable efforts to settle a dispute through negotiation. If there is no settlement within 25 working days after the dispute is first raised in writing, either party may contact OPO for dispute-resolution services, including mediation.
• The contract administration clause tells suppliers and federal organizations that OPO reviews complaints about the administration of certain federal contracts, regardless of contract value.

Where federal clauses are maintained

CanadaBuys provides a dedicated contract clauses resource for buyers. It identifies the Standard Contract Clause Inventory as the replacement for the former Standard Acquisition Clauses and Conditions (SACC) Manual, which is now archived. It also points to PSPC's Contract Modernization Initiative as part of federal clause management.

Allied defence procurement systems also rely on numbered clauses. The U.S. Defense Federal Acquisition Regulation Supplement, for example, directs contracting officers to use specified clauses in solicitations and contracts when stated conditions apply.

What a contract clause means for a supplier

Read the resulting contract clauses section of every solicitation, along with each clause it incorporates. Identify which obligations will bind you, including representations and warranties, import restrictions, notification duties and dispute procedures, and confirm you can meet them before you bid and throughout performance. A breach of some clauses, such as the anti-forced-labour provisions, can lead to termination for default.