Directive on the Management of Procurement

The directive ensures that procurement of goods, services and construction obtains the necessary assets and services that support the delivery of programs and services to Canadians, while ensuring best value to the Crown.
Date modified: 2021-07-06

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The requirements in the Directive on the Management of Procurement take effect on May 13, 2021; however, departments have 12 months to fully transition to the new directive.

The following instruments will remain in effect until May 13, 2022:

During the transition period, departments may adhere to the requirements described in either of the following:

Appendix B: Mandatory Procedures for Limitation of Contractor Liability and Indemnification in Contracts

B.1 Limitation of contractor liability

  • B.1.1Contracting authorities, in consultation with business owners, are responsible for the following:
    • B.1.1.1Confirming that the contract includes standard legal language that states that each party is responsible for risks under its control and accepts responsibility for risks that it can manage or mitigate;
    • B.1.1.2Where appropriate, remaining silent in the contract by not including limitation of liability or indemnification clauses in the contract and accepting that the determination of liability will be subject to common or civil law;
    • B.1.1.3Using a commodity grouping established and managed by Public Services and Procurement Canada or Shared Services Canada, without seeking Treasury Board approval, provided no changes or substitutions are required to the approved predetermined clauses, risk assessments and financial caps;
    • B.1.1.4In the absence of a viable existing commodity grouping, where appropriate, accepting standard commercial terms and conditions related to the limitation of contractor liability associated with low-risk and low-dollar-value goods and services, including subscriptions, software, mobile applications, cloud services and open source software.
  • B.1.2If there is no existing commodity grouping available for a frequently procured good or service, contracting authorities are responsible for the following:
    • B.1.2.1Ensuring that a risk assessment is undertaken to determine whether there is a substantive transfer of risk from the contractor to the Crown and consulting with legal services prior to pursuing alternatives in the following order:
      • B.1.2.1.1Requesting that Public Services and Procurement Canada, or Shared Services Canada for commodities related to information management or information technology, establish a new commodity grouping or limit a contractor’s first- and third-party liability on their behalf; and
      • B.1.2.1.2In cases where Public Services and Procurement Canada or Shared Services Canada are unable to create the commodity grouping when there is a substantive transfer of risk to the Crown, seeking Treasury Board approval for creating a commodity grouping;
    • B.1.2.2Seeking Treasury Board approval to limit first- and third-party contractor liability or to indemnify the contractor from risks under the contractor’s control.
  • B.1.3Contracting authorities must include the following for all requests for approval, whether the request is to establish a new commodity grouping, to obtain Treasury Board approval to limit first- or third-party contractor liability in the absence of a commodity grouping, or to indemnify the contractor:
    • B.1.3.1The business owner’s risk assessment approved by their chief financial officer and senior designated officials;
    • B.1.3.2The recommended clauses for the limitation of liability or indemnification clauses that have been reviewed by legal services, with supporting documentation;
    • B.1.3.3A record of all consultations with legal services, key stakeholders (where appropriate), Public Services and Procurement Canada, industry, and Shared Services Canada for information management and information technology contracts; and
    • B.1.3.4The recommended financial caps with supporting documentation.

B.2 Common service providers

In accordance with Table B.1: Summary of authorities for limitation of liability and indemnification:

  • B.2.1Public Services and Procurement Canada and Shared Services Canada are authorized to negotiate first- and third-party contractor liability, whether a commodity grouping exists or not, except when there is a substantive transfer of risk or when indemnifying the contractor, in which case they must seek Treasury Board approval.
  • B.2.2Public Services and Procurement Canada and Shared Services Canada are responsible for creating new commodity groupings within their respective mandate; Shared Services Canada is authorized to create commodity groupings for information management and information technology only.
  • B.2.3Public Services and Procurement Canada and Shared Services Canada are responsible for publishing all commodity groupings that they create and manage; Public Services and Procurement Canada is authorized to maintain a repository of all commodity groupings.
  • B.2.4Public Services and Procurement Canada and Shared Services Canada are responsible for reviewing existing commodity groupings that they manage, respectively and in collaboration with each other; for those that are related to information management and information technology, at least once every five years or at the request of senior designated officials, to ensure that the risk assessments, liability clauses and financial caps are appropriate.
Table B.1: Summary of authorities for limitation of liability and indemnification
Risk allocation strategy Without Treasury Board approvaltable 1 note 1 Departments require Treasury Board approval
Public Services and Procurement Canada (PSPC) Shared Services Canada (SSC) All other departments

Table 1 Notes

Table 1 Note *

Notes * Requires an emergency contracting report to Treasury Board of Canada Secretariat within 60 calendar days. CFO stands for chief financial officer.

Return to table 1 note * referrer

Table 1 Note 1

Basic and exceptional limits apply. Subject to the goods delegations, including those for emergency provisions where specified, from Public Services and Procurement Canada and Shared Services Canada, as applicable.

Return to table 1 note 1 referrer

Silence in the contract (not having a specific limitation clause) Yes Yes Yes No
Using an existing commodity grouping Yes Yes Yes No
In the absence of an existing viable commodity grouping, accepting industry standard commercial terms for low risk and low dollar value Yes Yes Yes No
Establishing a commodity grouping Yes Yes No Yes (except PSPC and SSC)
Limiting first-party liabilities Yes Yes No, except in a pressing emergency contracting situation with CFO approvaltable 1 note * Yes (except PSPC and SSC)
Limiting third-party liabilities Yes, only where there is no substantive transfer of risks Yes, only where there is no substantive transfer of risks No, except in a pressing emergency contracting situation with CFO approvaltable 1 note * Yes (including PSPC and SSC where there is a substantive transfer of risks)
Indemnifying contractors from risk within their control No, except in a pressing emergency contracting situation with CFO approvaltable 1 note * No, except in a pressing emergency contracting situation with CFO approvaltable 1 note * No, except in a pressing emergency contracting situation with CFO approvaltable 1 note * Yes (including PSPC and SSC)
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