Estimated expenditure

When you're preparing to award a government contract, the estimated expenditure is your starting point for determining which procurement rules apply. Get this number wrong, and you might find yourself either running an unnecessary competitive process or—worse—violating the Government Contracts Regulations by skipping competition when you shouldn't have.

How It Works

The estimated expenditure directly determines whether you can use non-competitive contracting methods under section 6(b) of the Government Contracts Regulations. According to the Supply Manual Chapter 3, if your estimated expenditure stays at or below $25,000 for goods or $40,000 for services (excluding applicable taxes), you can award without soliciting bids. Cross those thresholds? You're into competitive territory.

Here's the thing: this isn't just about the initial contract value. The Treasury Board Contracting Policy requires you to consider life-cycle costs when making your estimate—meaning you need to factor in potential options, amendments, and the full scope of what you're really buying. Say you're contracting for IT support services that you know will likely need a six-month extension. You need to include that probable extension in your initial calculation. The Financial Administration Act backs this up under section 32, requiring that expenditures align with appropriations before you commit.

In practice, procurement officers at departments like PSPC and DND use the estimated expenditure to map out their entire contracting strategy. A $23,000 requirement might seem straightforward for non-competitive contracting, but if there's any chance of amendments pushing it over $25,000, you need to plan for competition from the start. The regulations explicitly prohibit splitting requirements or using amendments to dodge competitive thresholds—a practice that can land organizations in hot water during audits.

Key Considerations

• Tax exclusions matter: The $25,000 and $40,000 thresholds exclude applicable taxes, so don't include GST/HST in your calculation. A $26,000 pre-tax goods contract still qualifies as non-competitive.

• Bundle related needs upfront: If you're buying office supplies from the same vendor across multiple requisitions within a short timeframe, those might constitute a single requirement. Splitting to stay under thresholds violates policy and defeats the competitive principles the regulations are designed to uphold.

• Options and amendments count: When estimating expenditure, include any reasonably foreseeable contract extensions or option periods. A $30,000 base contract with a $15,000 option has an estimated expenditure of $45,000—well above the non-competitive threshold for services.

• Document your methodology: Your contracting file should show how you arrived at the estimated expenditure. If you're challenged later, you'll need to demonstrate that your estimate was reasonable and complete at the time of award.

Related Terms

Understanding estimated expenditure connects to several other procurement concepts: competitive requirements dictate when you must solicit bids, contract value affects reporting obligations and approval authorities, and sole source contracting represents another exception to competition with its own justification requirements.

Sources

• Government of Canada Supply Manual - Chapter 3: Contracting Methods

• Government Contracts Regulations (SOR/2018-184)

• Treasury Board Contracting Policy

Bottom line: take the time to calculate your estimated expenditure accurately before choosing your contracting method. It's the foundation of compliant procurement.