Contract provisions

Contract provisions are the individual terms, conditions, clauses and requirements incorporated into a contract. Together they define the rights and obligations of the buyer and the supplier, the procedures each side must follow, and the remedies available if something goes wrong. In Canadian public procurement, the phrase covers everything from payment terms to conduct declarations.

The term is a general contracting expression, not an abbreviation. Canadian departments, including Public Services and Procurement Canada (PSPC), Shared Services Canada (SSC) and the Department of National Defence (DND), use it alongside related terms such as terms and conditions, general conditions, basis of payment and contract clauses. DND describes the provisions of a NATO Basic Ordering Agreement as the agreed terms and conditions, together with prices or a definitive pricing methodology, in its guide to NATO procurement.

How solicitation conditions become contract provisions

Many provisions are visible to suppliers before a contract exists. PSPC states that its contracts, solicitations and other documents connected with contract formation incorporate the clauses of the Code of Conduct for Procurement. Bidders must certify compliance, and the solicitation conditions become contractual obligations after award. The PSPC Code of Conduct page sets this out. A commitment made in a bid is therefore carried into the contract and can be enforced.

Examples of provisions in Canadian federal contracts

Several federal sources show the range of provisions suppliers encounter:

• Ethical conduct clauses at SSC: the Standard for Ethical Behaviour in Procurement requires contracts to include provisions on contingency fees, supplier declarations about specified Criminal Code offences, corruption, collusion, bid-rigging and other anti-competitive activity, and consent to public disclosure of basic contract information.
• Transparency provisions in professional services: PSPC has introduced new master-level user agreements for professional-services supply arrangements. Their provisions are intended to increase transparency about costing and subcontractors and to clarify the role of departmental technical authorities, as described in the procurement improvement action plan.
• Price adjustment provisions: the CanadaBuys Practitioner's Guide for Pricing explains that economic price adjustment and foreign-currency adjustment provisions may be used in competitive and non-competitive procurements when warranted. They must be identified in approval documents and in the resulting contract.
• DND terms and conditions: CanadaBuys lists the applicable terms and conditions, including the basis of payment, as items to be identified in agreements involving DND.

How provisions are managed after award

Treasury Board policy gives contracting authorities responsibility for managing and administering contracts so that they are carried out according to the agreed terms of time, cost and performance. The Treasury Board Directive on the Management of Procurement sets out this requirement. In practice, the provisions in the contract are the standard against which the buyer measures delivery, schedule, price and payment.

What contract provisions mean for a supplier

A supplier must comply with the provisions in the solicitation and the resulting contract. Depending on the procurement, that can include:

• certifying compliance with mandatory conduct requirements;
• providing required declarations;
• accepting confidentiality, disclosure, anti-collusion and anti-corruption clauses;
• providing pricing or a pricing methodology;
• meeting subcontractor-transparency requirements;
• following task-authorization and documentation requirements; and
• performing the work according to the agreed time, cost, performance and payment terms.

The exact obligations depend on the solicitation, the contract, the general conditions, the statement of work, the basis of payment and any incorporated clauses. Bid teams should read each of these documents before submitting, because the conditions accepted at bid stage carry into the contract.