Financial Evaluation

Financial evaluation is where procurement officers assess whether bids meet the dollar requirements and pricing structures set out in your solicitation. It happens after technical evaluation confirms a supplier can actually do the work. According to the Supply Manual Chapter 3.75, this step verifies that bids are "complete and compliant with all financial requirements" before you award a contract.

How It Works

You can't jump straight to price. The Supply Manual's Chapter 3.75 is clear that bids must be evaluated according to the criteria and procedures you laid out in your solicitation. For most procurements, that means technical compliance comes first, then you open the financial envelope.

The evaluation itself involves more than just comparing bottom-line numbers. You're checking that the pricing structure matches what you asked for—line items completed, calculations correct, all mandatory cost documentation included. For cost-reimbursable contracts, suppliers need to submit detailed cost breakdowns using clause C0300C from the Standard Acquisition Clauses and Conditions Manual. PSPC and other departments can request audits to certify that prices are reasonable, particularly for higher-value or complex contracts.

In practice, the threshold matters. For simplified procurements under $40,000, you still need documentation confirming the supplier provided all necessary financial information including mandatory criteria. Above that threshold, expect more scrutiny. The Financial Administration Act requires verification that amounts charged align with contract prices, and Treasury Board's Policy on Account Verification establishes procedures for confirming work was done before payment goes out. The catch is suppliers must retain their records for six years specifically so the Crown can audit if needed—and yes, auditors do check.

Key Considerations

• Your evaluation criteria must be established before you issue the solicitation. The Procurement Practice Review found that departments like DND and SSC had documented their mandatory and rated criteria in advance—a requirement, not a suggestion. You can't move the goalposts once bids arrive.

• Price reasonableness isn't just about accepting the lowest bid. If a price seems unusually low or high, you may need to request cost breakdowns or trigger an audit through PSPC's Cost Audit Program to validate the supplier's pricing.

• Financial compliance is binary. A bid that's missing mandatory financial documentation gets disqualified, even if it's technically superior. Complete means complete.

• Cost-reimbursable contracts require extra diligence. You'll need detailed cost submissions upfront and audit rights built into your contract terms to verify actual costs against what was claimed.

Related Terms

Technical Evaluation, Bid Solicitation, Mandatory Criteria

Sources

• Supply Manual - Chapter 3.75: Bid Evaluation

• Procurement Practice Review: Review of Bid Evaluation Processes (OPO)

• Departmental Verification of Suppliers' Records to Validate Contract Payments (OPO)

Bottom line: financial evaluation protects both you and the Crown by ensuring the money part of the deal makes sense before you sign. Get your criteria right in the solicitation, and the evaluation becomes straightforward documentation and verification.