Contract Strategy and the Request for Proposal

Contracting Strategy

One of the first decisions to be made in developing an RFP is the type of contract needed to meet the project requirements. Another important decision is whether the requirements should be set up for multiple years by building exercisable options into the contract.

Single Supplier Contract

A single contract is used when project requirements can be clearly identified and services can be provided by one supplier.

The requirements can be set up in phases to meet work requirements: for example, a "Phase 1" for developing the project's scope and a "Phase 2" for conducting the work. For the basis of payment, a fixed price could be considered for Phase 1 and a limitation of expenditure for Phase 2.

Multiple Supplier Contract

A multiple contract is used when the service is best provided by more than one supplier. For example, a project may consist of three recipient audits, related to the same program, that need to be completed simultaneously during a specific time frame.

Sometimes the project authority may not be certain if multiple suppliers will be required. In this situation, a single contract can be used with a clause stating that "Canada reserves the right to issue more than one contract as a result of this RFP." This clause would be included in the Basis of Selection section within the RFP. The justification for choosing two contracts instead of one must be clearly stated in this scenario.

Task-Based Contract

A task-based contract is used when there is a definite requirement for a category of service, but the precise nature and timing of the need cannot be determined in advance. For example, perhaps a project authority requires intermittent forensic audit services over three years, but the scope of the work will be different in each year, and the timing cannot be predicted. The project authority may want to set up a task-based contract with a qualified supplier from the Forensic Audit Work Stream (Stream 4) so that a contractor's services are retained only when needed.

The project authority and the supplier enter into a task-based contract after the RFP process is complete. Once the contract is established, the project authority issues a task authorization for each project and negotiates the terms of service with the supplier. Although this process must be documented (i.e. a statement of work must be prepared), discussions are on a one-on-one basis with the supplier and do not involve notifying any other pre-qualified suppliers.

Task-based contracts can be set up to cover multiple years. This can alleviate concerns about establishing a new RFP every year. With every contract there is, however, the risk that issues may arise about the working relationship between the project authority and the supplier — and the longer the contract, the longer these issues will continue. It is best for the project authority to determine an acceptable contract length.

The government must guarantee winning suppliers that they will receive business opportunities resulting from the contract. Either a dollar value or a percentage of the overall expected budget is used as a minimum; the usual method is to guarantee suppliers a minimum of 1% of the overall expected budget, and this value must be stated in the signed contract.

For more information on task authorizations, please visit Public Works and Government Services Canada's Task Authorization Contracts web page.

Multiple Supplier Task-Based Contract

A multiple task-based contract is a task-based contract with more than one pre-qualified supplier. This may be the best option if the project authority believes that the level of effort is greater than any one supplier could provide. Keeping in mind that a task-based contract can cover multiple years and a broad range of services, the level of effort required may be significant. In addition, the project needs may run concurrently, making it difficult for any one supplier to provide sufficient resources.

With this type of contract, work can be allocated to suppliers in two ways:

• right of first refusal for the supplier ranked first in the bid evaluation; and
• work sharing on a percentage split (e.g. 50% to the supplier ranked first, 30% to the supplier ranked second, and 20% to the supplier ranked third)

When entering into a multiple task-based contract, project authorities should be careful about the number of suppliers. For example, if a project authority enters into a multiple task-based contract with three suppliers, there should be enough work for all three suppliers to meet the 1% payout.

Roles and Responsibilities

Department or Agency

Project Authority

• Identifies the requirement for a professional services contract.
• Prepares the Statement of Work (SOW) using performance specifications whenever possible.
• Develops the mandatory and point-rated evaluation criteria to evaluate bidders (often with the assistance of the procurement officer).
• Determines the basis of selection for the winning bidder(s).
• Selects the appropriate security requirements.
• Acts as the technical authority.
• Submits the SOW and evaluation criteria in both official languages, when required.
• Answers technical questions, through the contracting authority, during solicitations.
• Monitors the contract activity.
• With a team, evaluates technical proposals.

Contracting Authority

• Prepares the terms and conditions of the Request for Proposal (RFP), bidder instructions, basis of payment, certification requirements and resulting contract.
• Provides advice and assistance to the project authority to develop the SOW and bid evaluation criteria.
• Finalizes the RFP for release.
• Evaluates financial proposals.

Security Team

• Consults with the project authority to determine the appropriate security clearance requirements for the RFP.

Office of the Comptroller General

• Reviews the SOWs prepared by departments and agencies (on an as requested basis).
• Provides guidance on different contracting strategies within the Professional Audit Support Services(PASS) Supply Arrangement.
• Updates the PASS website with news and other information as needed.
• Holds seminars to discuss SOW issues and continually adds new SOWs into the PASS Statement of Work Builder.

Public Works and Government Services Canada

• Signs memorandums of understanding with departments.
• Provides training to contracting authorities on the use of PASS as needed.
• Provides contracting guidance as needed.
• Develops and issues all Requests for Proposal for contracts over a department's Treasury Board Delegated Authority.