Vendor Performance Corrective Measure (VPCM)

A Vendor Performance Corrective Measure (VPCM) is a formal measure used by Public Services and Procurement Canada (PSPC) under its Vendor Performance Corrective Measure Policy. It applies when evidence shows that continuing to contract with a vendor presents an unacceptable risk to Canada. PSPC describes the policy as a way to mitigate procurement risk in future contracts and to improve client service (CanadaBuys policy overview).

A VPCM is not an ordinary contract management action. Routine contract-performance actions and remedial plans are expected to be used first where appropriate. A VPCM follows a major performance failure, such as a termination for default or a conditional amendment, or a cumulative record of such incidents (PSPC, Addressing misconduct and wrongdoing).

Events that lead to a VPCM assessment

The policy is concerned with poor performance that results in, or is associated with, specific events:

• a termination for default;
• a partial termination for default;
• a conditional contract amendment; or
• a cumulative record of these incidents.

An assessment may be triggered at the end or expiry of sole-source contracts, contracts awarded through competitive solicitations, standing offers and supply arrangements. The trigger identified in the policy material is generally a full or partial termination for default, a conditional amendment, or both (CanadaBuys policy process).

Effect of a VPCM on offers and existing contracts

Where a VPCM is relevant to a procurement, the CanadaBuys policy sets out the consequences for the supplier:

• an offer in a competitive procurement for goods or services may be rejected;
• an offer for a standing offer may be rejected;
• an offer for a supply arrangement may be rejected;
• a bid under a supply arrangement may be rejected where PSPC's appropriate authority is the contracting authority; and
• for a sole-source contract, negotiations are not initiated and an offer is not accepted.

Existing contracts are not automatically affected. Extensions and options are restricted, except in stated exceptional circumstances (CanadaBuys policy process).

Where VPCM wording appears in solicitations

Solicitations state the consequence directly. A CanadaBuys request for proposals for a Multi-Terrain Ski System says Canada will reject an offer where the offeror, or a subcontractor included in the offer, is subject to a VPCM that makes it ineligible for the requirement (Multi-Terrain Ski System RFP).

PSPC supply arrangement documents carry related language. The terms for professional audit support services and for task-based professional services state that a full or partial termination for default triggers a mandatory assessment under the VPCM Policy (Professional Audit Support Services supply arrangement; task-based supply arrangement).

VPCM compared with Vendor Performance Management

The VPCM Policy is separate from the Vendor Performance Management (VPM) framework. VPM evaluates supplier performance against contractual indicators. A VPCM is a corrective or restrictive response to serious performance risk (PSPC briefing for the Standing Committee on Public Accounts).

What a VPCM means for a supplier bidding on Canadian public contracts

A supplier needs to know whether it is subject to a VPCM and whether the measure is relevant to the requirement it is bidding on. The solicitation or resulting contract normally identifies the eligibility consequence, so bid teams should read the eligibility and integrity clauses closely.

Subcontractors matter as well. Where a solicitation names subcontractors, a VPCM against one of them can make the whole offer ineligible. Suppliers that have had a termination for default, full or partial, or a conditional amendment should expect an assessment and should confirm their status before they bid on PSPC work, including standing offers and supply arrangements.