Business to Government in Canada | Types of contracts an SME can have – Part 2

Types of contracts an SME can have | Government of Canada - Part 2Supply Arrangement

We left off last time at the work required once you have successfully received a Supply Arrangement.

Looked at objectively, all a Supply Arrangement does is get you in the door, along with several or many other suppliers of equivalent goods and services.  You have tendered on a range of goods, or more usually on a range of services, which is where the supply arrangement is more useful, since it can be tailored for specific work requirements.  You as a supplier are not guaranteed to get a contract – you are simply one supplier of a number on a list of potential sources.

Departments and agencies will solicit bids from suppliers based on a specific scope of work.  This means that it will be necessary to prepare a bid for that work in addition to the one you already prepared to get on the list.  However, it is possible for departments simply to negotiate with a given supplier from the list, although typically the negotiations will be aimed at lowering the price from the ceiling price you have already quoted.  As an example, say you are providing professional audit services and have quoted a rate of $1500 per day for a specific type of auditor/audit work.  If a department opted for your services because it had a need for the skills and experience you can provide, then it may ask for the rate to be reduced.  It is up to you to decide if a lower rate is acceptable.  If it is not, you are not obliged to provide the service.

A supply arrangement is normally used when there is variability in the nature and scope of work, or such things as differing bases of payment.  There are basic terms and conditions to which all successful bidders would need to adhere, but other than that the field is open.

This is where it gets complicated.  If you are a provider of goods and services that are not subject to one of the many trade agreements, then bids will only be solicited from suppliers who are part of a supply arrangement. If, however, the requirement does fall under a trade agreement, then the whole thing falls to pieces.  A notice of Proposed Procurement will be posted on MERX, so that anyone who is interested but does not have a supply arrangement can participate.  The usual process of Request for Proposal (RFP), proposal evaluation, and selection of the winning supplier is followed.  The pre-arranged terms and conditions of the supply arrangement are used.

It seems like a lot of work for the potential reward, and each supplier has to determine whether spending the resources to participate in a supply arrangement is worth while, or whether, given the typical size and nature of their normal contracts for goods or services it might be as useful simply to wait for the RFP to come out.

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