Right of First Refusal (ROFR)

A Right of First Refusal (ROFR, often written RFR in Government of Canada documents) is a procurement arrangement in which a designated or highest-ranked supplier must be offered a requirement first. That supplier can accept the work or refuse it. If it refuses or cannot fulfil the requirement, the buyer offers the opportunity to the next eligible supplier.

In Canadian procurement, a ROFR works as a way of allocating work, most often under standing offers. It is not a new competition. The buyer goes to suppliers in an established order and moves down the list only when the supplier ahead of it cannot meet the need. Federal policy also recognizes ROFRs that belong to specific entities, such as the Corps of Commissionaires and Correctional Service Canada's CORCAN.

How a ROFR works in PSPC standing offers

Public Services and Procurement Canada (PSPC) uses ROFR procedures in several standing-offer arrangements. For office ergonomic assessment services, the identified user contacts the highest-ranked offeror in the relevant region or metropolitan area first. If that supplier can meet the call-up, the contract is issued against its standing offer. If not, the user contacts the next-ranked offeror.

The same approach appears elsewhere:

• Plumbing and heating supplies, Western Region: Canada may issue multiple standing offers on a ROFR basis. If the highest-ranked offeror cannot fulfil the requirement, the identified user must document the procurement file.
• Optical scanning and digitization services: call-ups are made on a ROFR basis, and participants must document when the highest-ranked offeror cannot fulfil the need.
• Portable office-trailer rentals, Ontario: the highest-ranked offeror is approached first, inability to fulfil must be documented, and the resulting call-ups are treated as competitive.

The Office of the Procurement Ombudsman describes the same process for translation-service standing offers. The department contacts the highest-ranked standing-offer holder first, issues a call-up if that holder can meet the requirement, and otherwise proceeds to the next holder.

The Corps of Commissionaires and federal guard services

The Corps of Commissionaires holds an exclusive ROFR to supply federal guard services on a sole-source basis under the Treasury Board common-services policy. The policy covers services that safeguard federal assets, information, people, buildings and property owned or occupied by federal departments and agencies. PSPC's guard services page explains that when the Corps refuses work, PSPC manages regional master standing offers for commercial guard services. The federal procurement preference behind this arrangement dates from 1945, as noted in PSPC briefing material.

CORCAN and treaty-based rights

Correctional Service Canada's financial directive 350-3 requires officials to give CORCAN the right of first refusal for goods, construction services and other services that CORCAN may provide. Officials must keep written documentation concerning CORCAN on file.

A modern treaty may also give an entity a right of first refusal for a procurement. The Treasury Board directive states that such a procurement may be exempt from, or set aside from, trade-agreement coverage. The buyer must still solicit bids from the entities holding the treaty-based right.

What it means for a supplier bidding on Canadian public contracts

Your position on a standing-offer list determines whether you see the work. A highest-ranked offeror is approached first for each call-up and should be ready to respond quickly. When a call-up arrives, confirm whether you can satisfy the requirement. Accept it if you are able and eligible. If you cannot deliver, say so clearly, because that lets the buyer approach the next-ranked supplier, and buyers may be required to record the refusal.

If you offer guard services, expect the Corps of Commissionaires to be offered work before commercial suppliers. Commercial opportunities arise through the regional master standing offers for work the Corps refuses. Check each solicitation for ROFR wording, since it tells you how work will be allocated after award.