Exclusive Rights

Exclusive Rights is a limited-tendering, or non-competitive, procurement justification used in Canadian federal procurement. It applies when goods or services can be supplied only by a particular supplier and no reasonable alternative or substitute exists because of patents, copyrights or other exclusive rights, or because of certain technical-compatibility circumstances.

The Supply Manual identifies this justification as CAP Code 71, Exclusive Rights. Contracting authorities cite it in CanadaBuys award notices and in proactive contract disclosure, so suppliers can see where and how often departments rely on it. The guidance is set out in the Supply Manual annexes on CanadaBuys.

CAP Code 71 in the Supply Manual

The Supply Manual states that limited tendering may be used where goods or services can be supplied only by a particular supplier and no reasonable alternative or substitute exists. The reason must be the protection of patents, copyrights or other exclusive rights. The justification is tied to trade agreements, and the manual refers specifically to the Canadian Free Trade Agreement (CFTA).

The same guidance associates the justification with several circumstances: intellectual-property rights, statutory monopolies, compatibility with existing equipment, maintenance by the manufacturer or its authorized representative, warranties, leased property and technically unavailable alternatives.

What a procurement official must confirm

The Supply Manual directs the official assessing the justification to ask specific questions:

• Does the vendor or approved distributor have exclusive ownership of, and rights to use, the relevant intellectual property?
• Is the supplier the original equipment manufacturer or the sole authorizing value-added reseller?
• What rights does the Crown have to use the intellectual property?

These questions show that the justification rests on the supplier's actual position in the market. A preference for a familiar product does not meet it.

Where Exclusive Rights appears in published records

Several departments use the category. Public Services and Procurement Canada lists Exclusive Rights as the contract-award procedure in CanadaBuys notices. Examples include an award notice for airborne radio and television communications equipment and an award notice for ADP software. Other PSPC notices cover laboratory equipment, vacuum pumps and marine hardware.

National Defence records the reason for software licensing and maintenance and for defence-related equipment or services. One contract record for Carahsoft Technology Corp. lists Exclusive Rights as the limited-tendering reason for application-software licence and maintenance fees. A separate National Defence record covers a contract with CAE.

Shared Services Canada uses the category as well. Its non-competitive contract record for the Open Government Portal cites Exclusive Rights. The RCMP has also used it in reporting on a contract or call-up against a standing offer or supply arrangement.

What it means for a supplier bidding on Canadian public contracts

A supplier that relies on Exclusive Rights must be able to substantiate the exclusivity. Relevant evidence includes ownership or control of patents, copyrights, licences or proprietary technology, as well as distribution authority and manufacturer-maintenance rights. The Supply Manual supports the need to provide vendor and intellectual-property details. It does not set a universal supplier form or evidentiary standard for every procurement.

Suppliers should keep clear records of who owns the intellectual property, whether they are the original equipment manufacturer or the sole authorizing reseller, and what use rights the Crown receives. Published award notices and contract records show which departments have already used this justification, and for what kinds of goods and services. Suppliers without exclusive rights can use the same records to see where an incumbent's position rests on proprietary technology or compatibility with existing equipment.