Mandatory Standing Offers

In Canadian federal procurement, a mandatory standing offer is a standing offer that departments and agencies are required to use for specified commodity classes when it meets their requirement. A standing offer is an offer from a supplier to provide goods, services or both under a pricing basis and terms and conditions set out in advance. The instruments are established mainly by Public Services and Procurement Canada (PSPC).

A standing offer is not a contract on its own. A separate contract is entered into each time an authorized government organization issues a call-up against it, as the Treasury Board contracting policy material explains. The word "mandatory" refers to the buyer's side: where a mandatory standing offer exists for what a department needs, the department uses it instead of running its own procurement.

How a call-up turns a standing offer into a contract

Suppliers compete to obtain a standing offer. Once it is in place, the government can order against it as and when it needs the goods or services, at the prices and under the conditions the supplier already agreed to. The call-up incorporates those predetermined terms, and the contract exists from that point.

PSPC's temporary-help standing offers show the pattern. They cover as-and-when-requested temporary-help services for specified federal departments and agencies in Ontario outside the National Capital Region. They were issued to suppliers that met the solicitation's mandatory criteria, including financial criteria. The lowest-priced supplier for a resource category and geographic area receives the call-up, and if that supplier cannot provide the resource, the next-lowest-priced supplier may receive it. The details are in the PSPC temporary-help fact sheet.

Who must use mandatory standing offers

The requirement comes from the Treasury Board's Directive on the Management of Procurement. It states that PSPC standing offers and supply arrangements are mandatory for the commodity classes listed in its applicable table. The Office of the Procurement Ombud notes that federal departments and agencies listed in Schedules I, I.1 and II of the Financial Administration Act must use mandatory standing offers and supply arrangements for certain commodities (Office of the Procurement Ombud).

During procurement planning, a department must check whether a mandatory standing offer or supply arrangement can meet its requirement. If one can, the department uses it before considering a new procurement. The CanadaBuys buyer's guide sets out this step.

Commodity classes covered

The mandatory categories include, among others:

• Information-processing and related telecommunications services
• Professional, administrative and management support services
• Vehicles and trailers
• Telecommunications equipment
• Information-processing equipment and software
• Furniture
• Office machines and office supplies
• Clothing
• Fuels, lubricants, oils and waxes

Related instruments include the National Master Standing Offer (NMSO), a PSPC standing-offer instrument available for federal government use, and the supply arrangement, a related method of supply built around pre-qualified suppliers.

The Comprehensive Land Claims Agreement exception

The Directive identifies one stated exception. It applies where a procurement is subject to a Comprehensive Land Claims Agreement and the mandatory standing offer or supply arrangement does not address the applicable contracting obligations. In that case the department is not bound to use the instrument.

What it means for a supplier bidding on Canadian public contracts

For suppliers in a mandatory commodity class, the standing offer solicitation is often the main route to federal business. Departments are required to use the resulting instrument, so a supplier that is not on it may be shut out of that demand. Suppliers must respond to the relevant solicitation and satisfy every mandatory requirement, including financial criteria where they apply.

A supplier holding a standing offer must supply the goods or services when a call-up is properly issued under its terms, pricing and conditions. Read the standing offer document closely, because it controls ordering rules, pricing and how call-ups are allocated among suppliers.