Disposal

In Canadian materiel management, disposal means removing assets from a department, either by transferring ownership to another party or by recycling the assets as scrap. The federal Guide to Management of Materiel uses this definition for departments across government.

Defence procurement documents use a more specific meaning. In a Department of National Defence (DND) request for proposals, disposal means removing materiel from the supply system through sale, trade-in or destruction, and it includes the routine disposal of defective parts (example solicitation on CanadaBuys). Disposal is also the final stage of life-cycle costing, alongside planning, acquisition and utilization.

How DND disposes of surplus materiel

DND's policy on the disposal of materiel applies to the divestment of materiel. It requires disposal to occur as soon as possible after materiel is declared surplus or reaches end-of-life, while seeking best value for the Crown. DND must generate and retain a declaration of surplus and a disposal plan for materiel declared surplus to requirements.

DND uses several methods:

• Sale of surplus materiel, using the applicable Public Services and Procurement Canada sales instruments when selling in Canada.
• Trade-in, where surplus materiel is offered as full or partial payment for newly procured items.
• Transfer to another federal government recipient where practicable.
• Conversion to waste, including destruction, recycling or discarding, carried out in an environmentally sustainable manner.

DND describes these options on its page about reuse and disposal methods for surplus military materiel.

The Treasury Board order of disposal options

The Treasury Board Directive on Disposal of Surplus Materiel governs how departments divest surplus assets. Departments must dispose of surplus assets as soon as possible after they become surplus to program-delivery requirements, and they must seek the highest net value for the Crown.

The broader Directive on the Management of Materiel sets a hierarchy. Departments arrange transfer where possible, then sale, then other forms of divestment such as donation. Conversion to waste comes last, when no other option is available.

Trade-ins have their own rule. Under the related Treasury Board requirements, a trade-in must be integrated into the contract for the replacement assets when procurement through a standing offer is not mandatory. Its value is recorded as disposal proceeds.

Disposal conditions for dual-use goods

Stricter rules apply to controlled goods. Under DAOD 3003-2, DND procurement documentation must address the return, disposal or demilitarization of dual-use goods transferred to bidders, unsuccessful bidders, vendors or subcontractors.

When a dual-use good is declared surplus, disposal may occur only in one of two ways:

• retransfer to an authorized person, in accordance with applicable Canadian and foreign export-control laws; or
• destruction, in accordance with the applicable controlled-technology access and transfer manual.

Disposal in life-cycle costing and hazardous-waste services

CanadaBuys lists disposal as one of four life-cycle stages in its green procurement guidance. Suppliers can therefore meet disposal requirements in procurements that involve environmental performance, end-of-life management, recycling, waste handling or total cost of ownership.

The word also appears in service requirements. One CanadaBuys notice of proposed procurement describes a need for hazardous-waste disposal services under a pre-qualified supplier arrangement.

What disposal means for a supplier bidding on Canadian public contracts

Read the solicitation and draft contract for disposal terms before you price. Check whether the Crown expects a trade-in, whether you must return or destroy materiel or demilitarize goods, and whether export-control rules limit who can receive surplus items. If you sell hazardous-waste services, confirm whether the requirement sits under a pre-qualified supplier arrangement. In a trade-in, the offered value is treated as disposal proceeds, so state it clearly in your bid.