Funding

Funding is the provision of financial resources for a purpose or activity. The word carries specific meanings in the public-sector settings where Canadian suppliers work. In NATO usage, it refers to the resources provided through direct and indirect contributions from member countries.

In Canadian government administration, funding is also used for appropriations, transfer payments, grants, contributions and the identification of a department's source of funds. A supplier reading a solicitation needs to know which of these meanings applies, because each one sits under a different set of rules.

How NATO funding is structured

NATO is resourced through two kinds of contribution, set out on the NATO funding page:

• National, or indirect, contributions: the forces and capabilities that individual member countries provide.
• Direct contributions: payments that finance NATO budgets, programmes and capabilities serving the interests of the Alliance as a whole.

NATO common funding is made up of direct contributions to collective budgets and programmes. It rests on an agreed cost-share formula derived from each Ally's gross national income.

The three common-funded budgets and multinational funding

NATO has three principal common-funded mechanisms: the Civil Budget, the Military Budget and the NATO Security Investment Programme (NSIP). Procurement paid for through common funds follows the NATO procurement policy for common funding. That policy covers the formal process for requesting bids, proposals or quotations from vendors for goods, services or works.

NATO also uses the term multinational funding. It means costs funded by two or more nations on a shared basis, normally under a memorandum of understanding or similar arrangement, as defined in a NATO financial audit document. This differs from common funding, which draws on collective budgets.

Funding in Canadian government contracting

Funding appears in Canadian public procurement in several distinct ways.

• Source of funds in approvals: Treasury Board contracting documentation requires the cost section to state the amount requested and the source of funds. Examples include a vote number, a revolving fund, operating-and-maintenance funding or capital funding. Where applicable, it also names the department funding the proposal. See the Treasury Board documentation.
• Transfer payments: A contribution is a transfer payment made subject to performance conditions set out in a Funding Agreement. A transfer payment does not result in the Government acquiring goods, services or assets, which separates it from a procurement contract.
• Funding Agreement: This is a written agreement or documentation between the Government of Canada and an applicant or recipient. It sets out the obligations or understandings of both parties concerning one or more transfer payments, as described in Public Services and Procurement Canada's integrity directive.
• International development assistance: Global Affairs Canada maintains specific terms and conditions for procurement contracts funded with international development assistance contribution funds.

What funding means for a supplier

Check how an opportunity is funded before you bid. A procurement contract, a transfer-payment Funding Agreement and a NATO common-funded requirement are different instruments. Each carries its own governing rules.

A supplier responding to a Canadian or NATO-funded opportunity must follow the solicitation's stated funding, appropriation, eligibility, cost, invoicing, reporting and audit requirements. Funding source and funding arrangements form part of the governing financial framework. No single supplier procedure applies to every procurement, so the solicitation documents and any referenced policy are the authority for your bid.

For NATO common-funded work, read the procurement policy for common funding alongside the bid documents. For Canadian federal work, the CanadaBuys glossary is a useful reference for related procurement terms.