Mandatory Standing Offers and Supply Arrangements

Mandatory standing offers and supply arrangements are procurement instruments established and maintained by Public Services and Procurement Canada (PSPC). Federal departments must use them for the commodity classes identified in the Treasury Board Directive on the Management of Procurement, provided the instruments meet their requirements. PSPC supports client departments through a series of these instruments, as described on the PSPC green procurement page.

The requirement applies in two situations. A department buying on its own behalf must use the applicable mandatory instrument, and PSPC must use it when it handles a requisition for a client department. The term is normally used in the plural, and the components are abbreviated SO for standing offer and SA for supply arrangement.

How a standing offer differs from a supply arrangement

The two instruments work differently, and a supplier needs to know which one it holds. A standing offer sets out terms, conditions and prices under which a department may issue a call-up when it has a requirement. It is not a contract until a call-up is made. CanadaBuys explains both instruments in its guidance on standing offers and supply arrangements.

A supply arrangement establishes a pool of pre-qualified suppliers and the conditions for later solicitations or contracts. A department generally runs a secondary competition among the qualified suppliers, and a contract follows from that process.

Which departments and contracts are covered

CanadaBuys states that mandatory instruments apply to all departments covered by section 2 of the Financial Administration Act, including the Canadian Forces. They also apply to Crown procurement contracts subject to the Government Contracts Regulations and the Treasury Board directive. This is set out in the CanadaBuys guidance on choosing a method of supply.

The Treasury Board directive makes PSPC's standing offers and supply arrangements mandatory for the commodity classes listed in its applicable table. The text is available in the Directive on the Management of Procurement. The same CanadaBuys guidance separates mandatory instruments from non-mandatory ones and advises buyers to use existing instruments whenever possible.

Professional services and the ProServices program

The rule extends to professional services. PSPC's ProServices program identifies standing offers and supply arrangements as mandatory procurement instruments for professional-services requirements. Client departments and PSPC must use them unless an authorized exception applies.

Exceptions to mandatory use

Mandatory use is not absolute. CanadaBuys identifies exceptions where the available good or service does not meet a department's justified operational requirements, such as required specifications or delivery dates.

The Treasury Board directive adds an exception for Comprehensive Land Claims Agreements. It applies where an agreement is in effect and the mandatory instrument does not address the applicable contracting obligations.

What this means for a supplier bidding on Canadian public contracts

For suppliers in covered commodity classes, a place on the relevant instrument is often the route to federal demand. Departments must turn to the instrument first, so a supplier outside it faces a narrower path to those requirements.

A supplier must do the following:

• Qualify for and comply with the applicable standing offer or supply arrangement.
• Meet the instrument's commodity, service, security, technical, pricing and other eligibility requirements.
• Respond to call-ups or secondary solicitations when it chooses or is required to compete.
• Comply with the resulting call-up or contract, including delivery, reporting and invoicing requirements.

Holding an instrument does not guarantee work. A standing offer requires a department to issue a call-up before a contract exists, and a supply arrangement generally leads to a further solicitation among qualified suppliers. Bid teams should treat each call-up or secondary competition as a separate bid.