ARCHIVED - Purchasing Activity Report 2006

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Introduction

Each year the Government publishes, on the Internet, statistics on purchases and contracts conducted in departments and agencies. The annual Purchasing Activity Report is used to provide statistical analysis of the processes and tools through which government contracting is conducted. 

In reviewing the statistics it must be kept in mind that the federal Government's Contracting Policy objective is to acquire goods and services and to carry out construction in a manner that enhances access, competition and fairness and results in best value or, if appropriate, the optimal balance of overall benefits to the Crown and the Canadian people.

As well, contracting is to be conducted in a manner that will:

• Stand the test of public scrutiny in matters of prudence, probity, facilitate access, encourage competition and reflect fairness in the spending of public funds;
• Ensure the pre-eminence of operational requirements;
• Support long-term industrial and regional development and other appropriate national objectives.
• Comply with the government's obligations under the North American Free Trade Agreement, the World Trade Organization – Agreement on Government Procurement, and the Agreement on Internal Trade. 

The Government is committed to working on strengthening and modernising government procurement, and to ensure greater transparency, accountability, fiscal responsibility, and ethical conduct in government. 

In keeping with these overall objectives, on March 23, 2004, the Government announced a new policy on the mandatory publication of contracts over $10,000.  The published lists of contracts in the proactive disclosure pages on various departmental web sites are accessible from this Treasury Board Secretariat web site http://www.tbs-sct.gc.ca/pd-dp/gr-rg/index-eng.asp.

On April 11, 2006, the Government of Canada introduced the Federal Accountability Action Plan, which contains specific measures to help strengthen accountability and increase transparency and oversight in government operations, including procurement. 

The Government is also committed to ensuring that Canadians are provided with appropriate information on activities in a cost-effective, efficient and transparent manner.  Suppliers who wish to find out more about doing business with the federal government should consult Canada's Electronic Tendering Service at http://www.merx.com. Those who wish to find out more about the inter-departmental initiative to improve supplier and buyer awareness and simplify access to federal government purchasing information should go to the Business Access Canada (formerly Contracts Canada) web site at http://contractscanada.gc.ca/en/index.html.

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2006 Purchasing Activity Report - Summary

Departments and Agencies subject to Government Contracts Regulations

Total Number and Value of Contracts including Net Amendments

Contract Type	Solicitation Procedure	Number	% of Total Number	Value $ 000	% of Total Value
Goods	Contracts below $25,000, including amendments	204 224		465 835
	Electronic bidding (Note 2.3 & 5)	3 219		1 253 420
	Traditional competitive (Note 2.3 & 5)	903		258 304
	ACANs (Note 2.3 & 5)	756		252 729
	Competitive awards (Note 2.3)	4 878		1 764 453
	Net amendments	-		754 086
	Competitive including amendments	4 878	71,4%	2 518 539	66,8%
	Non-competitive awards (Note 2.3)	1 952		1 181 507
	Net amendments	-		68 948
	Non-Competitive including amendments	1 952	28,6%	1 250 455	33,2%
	Subtotal Contracts $25,000 and above	6 830	100,0%	3 768 994	100,0%
	Total of All Goods Contracts	211 054		4 234 829
	Proportion of All Contracts		54,3%		34,8%
Services	Contracts below $25,000, including amendments	142 988		669 049
	Electronic bidding	4 729		3 122 812
	Traditional competitive	5 353		691 305
	ACANs	819		243 527
	Competitive awards	10 901		4 057 644
	Net amendments	-		1 791 736
	Competitive including amendments	10 901	81,2%	5 849 380	92,0%
	Non-competitive awards	2 519		326 726
	Net amendments	-		179 460
	Non-Competitive including amendments	2 519	18,8%	506 186	8,0%
	Subtotal Contracts $25,000 and above	13 420	100,0%	6 355 566	100,0%
	Total of All Service Contracts	156 408		7 024 615
	Proportion of All Contracts		40,2%		57,8%
Construction	Contracts below $25,000, including amendments	19 465		73 807
	Electronic bidding	896		607 396
	Traditional competitive	669		86 382
	ACANs	6		506
	Competitive awards	1 571		694 284
	Net amendments	-		99 843
	Competitive including amendments	1 571	89,5%	794 127	96,9%
	Non-competitive awards	185		25 554
	Net amendments	-		80
	Non-Competitive including amendments	185	10,5%	25 634	3,1%
	Subtotal Contracts $25,000 and above	1 756	100,0%	819 761	100,0%
	Total of All Construction Contracts	21 221		893 568
	Proportion of All Contracts		5,5%		7,4%
All Contracts	Contracts below $25,000, including amendments	366 677		1 208 691
	Electronic bidding	8 844		4 983 628
	Traditional competitive	6 925		1 035 991
	ACANs	1 581		496 762
	Competitive awards	17 350		6 516 381
	Net amendments	-		2 645 665
	Competitive including amendments	17 350	78,8%	9 162 046	83,7%
	Non-competitive awards	4 656		1 533 787
	Net amendments	-		248 488
	Non-Competitive including amendments	4 656	21,2%	1 782 275	16,3%
	Subtotal Contracts $25,000 and above	22 006		10 944 321
Total Contract Awards including Net Amendments		388 683		12 153 012

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Notes to 2006 Purchasing Activity Report

1. Objective

The objective of the annual Purchasing Activity Report is to provide a basic snapshot of purchasing activities of the Government of Canada.  It is based on the Government of Canada's policy framework in effect in 2006.  It is important to note that there is no statutory requirement for such a report.  It complements information on contracting statistics on Business Access Canada (formerly Contracts Canada) web site at http://www.contractscanada.gc.ca/.  Further information on contracting and contracting activities may be found for major purchasing departments in the Government's public and Parliamentary reporting documents, specifically their Annual Report on Plans and Priorities and Departmental Performance Reports.  Internal departmental audits on the contracting function are posted on http://www.tbs-sct.gc.ca/aedb-bdve/home-accueil-eng.aspx. Also, as mentioned in the Introduction above, the published lists of contracts in the proactive disclosure pages on various departmental web sites are accessible from this Treasury Board Secretariat web site http://www.tbs-sct.gc.ca/pd-dp/gr-rg/index-eng.asp

Information on the Procurement Strategy for Aboriginal Business can be found at the Department of Indian Affairs and Northern Development web site http://www.ainc-inac.gc.ca/saea-psab/index_e.html.

The Purchasing Activity Report was derived from data provided by the reporting entities specified below.  Since the data is not audited, no warranty or other legal assurance as to the truth, accuracy or completeness of any of this information is stated or can be implied.  Any person making use of this information for any purpose whatsoever does so entirely at his/her own risk, and the Crown shall have no liability whatsoever. This report covers government purchasing activities for the period January to December 2006 inclusive. 

2. Procurement Policy Framework

The main features of the Government of Canada's procurement policy framework in effect in 2006 that are relevant to the Purchasing Activity Report are as follows:

2.1 The objective of government procurement contracting is to acquire goods and services and to carry out construction in a manner that enhances access, competition and fairness and results in best value or, if appropriate, the optimal balance of overall benefits to the Crown and the Canadian people.

2.2 Government contracting shall be conducted in a manner that will:

(a) stand the test of public scrutiny in matters of prudence and probity, facilitate access, encourage competition, and reflect fairness in the spending of public funds;

(b) ensure the pre-eminence of operational requirements;

(c) support long-term industrial and regional development and other appropriate national objectives, including aboriginal economic development;

(d) comply with the government's obligations under the North American Free Trade Agreement, the World Trade Organization – Agreement on Government Procurement and the Agreement on Internal Trade.

2.3 Appendix A of the Treasury Board Contracting Policy defines a competitive contract as a contract where the process used for the solicitation of bids enhances access, competition and fairness and assures that a reasonable and representative number of suppliers are given an opportunity to bid by:
EITHER

1. giving public notice, using electronic bidding methodology, possibly supplemented by traditional bidding procedures, of a call for bids for a proposed contract or of an intention to award a contract to a pre-identified contractor (a directed contract advertised by an Advance Contract Award Notice – ACAN), in accordance with limited tendering reasons set out in the trade agreements, or in accordance with the exceptions to bidding set out in section 6 of the Government Contracts Regulations (GCRs)

   and where

   1. in the case of a call for bids, the lowest bid or the bid that offered the best value, as set out in the evaluation criteria in the bid solicitation and as determined by the contracting authority, was accepted;
   2. in the case of a call for bids where only one bid compliant with mandatory criteria set out in the bid solicitation was received, fair value to the Crown, as determined by the contracting authority, was obtained; or

   3. in the case of an ACAN, no valid statement of capabilities is received within the fifteen calendar day posting period.

      OR

2. giving public notice, using traditional bidding procedures (such as a suppliers' list, etc.) and in a manner that is consistent with generally accepted trade practices, of a call for bids for a proposed contract,

   and where

   1. in the case of a call for bids, the lowest bid or the bid that offered best value, as set out in the evaluation criteria in the bid solicitation and determined by the contracting authority, was accepted, or
   2. in the case that only one bid compliant with the mandatory criteria set out in the bid solicitation was received, fair value to the Crown, as determined by the contracting authority, was obtained.

2.4 Section 6 of the Government Contracts Regulations specifies that a contracting authority may enter into a contract without soliciting bids where

1. the need is one of pressing emergency in which delay would be injurious to the public interest;
2. the estimated expenditure does not exceed
   1. $25,000,
   2. $100,000, where the contract is for the acquisition of architectural, engineering and other services required in respect of the planning, design, preparation or supervision of the construction, repair, renovation or restoration of a work, or
   3. $100,000, where the contract is to be entered into by the member of the Queen's Privy Council for Canada responsible for the Canadian International Development Agency and is for the acquisition of architectural, engineering or other services required in respect of the planning, design, preparation or supervision of an international development assistance program or project;
3. the nature of the work is such that it would not be in the public interest to solicit bids; or
4. only one person is capable of performing the contract.

3. Reporting Entities

The reporting entities targeted in the report are the contracting authorities, as defined in the Government Contracts Regulations and the Financial Administration Act (FAA):

1. The appropriate Minister, as defined in paragraph (a), (a.1) or (b) of the definition "appropriate Minister" in section 2 of the FAA, as follows:
   1. with respect to a department named in Schedule I, the Minister presiding over the department,
   1. (1) with respect to a division or branch of the federal public administration set out in column I of Schedule I.1, the Minister set out in column II of that Schedule,
   2. with respect to a commission under the Inquiries Act, the Minister designated by order of the Governor in Council as the appropriate Minister.
2. A departmental corporation named in Schedule II to the FAA, or
3. The National Capital Commission (listed in Schedule III).

In accordance with subsection 41(2) of the Financial Administration Act, the Government Contracts Regulations do not apply to Canada Revenue Agency.  However, the agency has voluntarily provided data on its purchasing activity in year 2006.

4. Exclusions under Government Contracts Regulations

The Government Contracts Regulations apply to all contracts except

1. a contract entered into by the National Film Board;
2. a contract for the construction of buildings entered into under the Veterans' Land Act;
3. a contract entered into under the Indian Act that involves Indian moneys as defined in that Act;
4. subject to section 4 of those Regulations, a contract for the performance of legal services entered into by or under the authority of the Minister of Justice,
5. a contract for the fit-up of an office or a residential accommodation where the contract for fit-up is part of a transaction authorized pursuant to the Federal Real Property Act or the regulations made thereunder; or
6. arrangements entered into under an Interchange Canada Agreement.

In addition, the Treasury Board (TB) has given approval to exempt the Canadian Security Intelligence Service and the Office of the Governor-General's Secretary from TB reporting requirements.

5. Definition of Terms

The Government's Contracting Policy includes a series of definitions that serve as the basis for the categories found in the report.

Advance contract award notice (ACAN) - An ACAN allows departments and agencies to post a notice, for no fewer than 15 calendar days, indicating to the supplier community that it intends to award a good, service or construction contract to a pre-identified contractor. If no other supplier submits, during the 15-calendar day posting period, a statement of capabilities that meet the requirements set out in the ACAN, the competitive requirements of the government's contracting policy have been met. Following notification to suppliers not successful in demonstrating that their statement of capabilities meets the requirements set out in the ACAN, the contract may then be awarded using the Treasury Board's electronic bidding authorities.  If other potential suppliers submit statements of capabilities during the 15-calendar day posting period, and meet the requirements set out in the ACAN, the department or agency must proceed to a full tendering process on either the government's electronic tendering service or through traditional means, in order to award the contract.

Electronic bidding – a method of procurement that promotes suppliers' access to, and transparency in, the procurement process and facilitates the Crown's receipt of best value, by using:

1. public notice by means of an approved electronic information service of procurement opportunities (e.g., MERX);
2. public notice by means of an electronic information service of proposed directed procurements by means of an Advance Contract Award Notice (ACAN);
3. public notice in the "Government Business Opportunities" publication; or
4. such other procurement methods as may be approved by the Treasury Board.

Traditional competitive – a method of procurement that involves giving public notice, using traditional bidding procedures and in a manner that is consistent with generally accepted trade practices, of a call for bids for a proposed contract.

6. Amendments

In 2006, the total value of positive amendments (i.e., those that result in an increase in the contract value) was $3,390.4 million.  The total value of negative amendments (i.e., those that result in a decrease in the contract value) was $394.0 million.  The total value of net amendments was $2,996.4 million. 

7. Acquisition Cards

The above data do not include transactions using acquisition cards.  Those cards are normally used for low dollar value purchases.  In 2006, there were 2.0 million acquisition card transactions for a total value of $713.9 million.

8. Other Excluded Items

The data do not include expenditures for travel, hotel accommodation, hospitality and petty cash.