Default by the Offeror

When a contractor fails to meet their obligations under a government contract, they're considered in default. This isn't just about poor performance—it can trigger contract termination, financial penalties, and exclusion from future federal procurement opportunities. The consequences extend well beyond a single contract.

How It Works

Default occurs when an offeror doesn't comply with the terms they committed to, whether during the bidding process or contract execution. According to the Supply Manual, this can include failing to deliver goods or services as specified, missing deadlines, or providing false certifications. Here's the thing: even before a contract is awarded, providing misleading information in your bid constitutes grounds for default.

The government takes certification requirements seriously. If you submit an offer with certifications that turn out to be untrue—say, about your business qualifications or compliance with the Integrity Regime—Canada can terminate the resulting contract for default and set aside any standing offer. This applies equally to prime contractors and their subcontractors. Under the Vendor Performance Corrective Measure (VPCM) Policy, if you or a proposed subcontractor are subject to a corrective measure that renders you ineligible, your offer will be rejected outright.

Standing offers come with specific default provisions. If you hold a standing offer and fail to fulfill obligations under a call-up, you could face immediate termination. Some arrangements require the prime offeror to step in and complete work if an authorized reseller fails—at no additional cost to Canada. That's a significant financial risk if you haven't properly vetted your partners. PSPC and other federal departments maintain records of vendor performance, and repeated defaults can result in suspension from federal contracting through the VPCM framework.

Key Considerations

• Certification accuracy matters from day one: False or misleading certifications during the bidding process are treated as seriously as performance failures. Verify everything before you submit, because corrections after the fact won't save you from default provisions.

• Subcontractor status affects your eligibility: You can be disqualified if a subcontractor you've included in your offer is subject to a corrective measure under the VPCM Policy. Due diligence on partners isn't optional—it's self-preservation.

• Standing offers carry ongoing obligations: Compliance isn't a one-time event when you win the standing offer. Every call-up is a fresh opportunity to either perform or default, and the consequences compound over time.

• Default triggers can be administrative, not just performance-based: You don't have to fail spectacularly at service delivery to be in default. Failing to maintain required insurance, missing reporting deadlines, or not keeping certifications current can all constitute default under your contract terms.

Related Terms

Vendor Performance Corrective Measure (VPCM), Standing Offer, Contract Termination, Integrity Regime

Sources

• Supply Manual - Default Provisions

• Vendor Performance Corrective Measure (VPCM) Policy - Canada Buys

• Request for Standing Offer Template - PSPC

The best way to avoid default is straightforward: understand every obligation you're committing to before you bid, and build internal processes that ensure compliance throughout the contract lifecycle. Your reputation in federal procurement is cumulative. Defaults follow you.