10.2.1 Section 6 of the Government Contracts Regulations contains four exceptions that permit the contracting authority to set aside the requirement to solicit bids. These are:
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
o $25,000,
o $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
o $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 or firm is capable of performing the contract.
10.2.2 In exception (a), a pressing emergency is a situation where delay in taking action would be injurious to the public interest. Emergencies are normally unavoidable and require immediate action which would preclude the solicitation of formal bids. An emergency may be an actual or imminent life-threatening situation, a disaster which endangers the quality of life or has resulted in the loss of life, or one that may result in significant loss or damage to Crown property.
10.2.3 Exception (b) sets specific dollar limits below which a contracting authority may set aside the competitive process. However, contracting authorities are expected to call for bids whenever it is cost effective to do so. When the proposed contract is estimated to exceed the dollar limits, the contracting authority is to call for bids.
10.2.4 Exception (c) should normally be reserved for dealing with security considerations or to alleviate some significant socio-economic disparity. For example, the preservation of a certain source of supply may be necessary to ensure that future needs of government can be met. This exception should be invoked only with the approval of senior management as delegated by the contracting authority (the minister).
10.2.5 Exception (d) sets competitive bidding aside when only one person or firm can do the job. This exception is quite definitive and should be invoked only where patent or copyright requirements, or technical compatibility factors and technological expertise suggest that only one contractor exists. This exception should not be invoked simply because a proposed contractor is the only one known to management.
10.2.6 Any use of the four exceptions to the bidding requirement should be fully justified on the contract file or, where applicable, in submissions to the Treasury Board. Even if a proposed directed contract (see Appendix A) for goods and services qualifies under one of these four exceptions, the contracting authority is encouraged, whenever possible, to use the electronic bidding methodology to advertise the proposed award through an Advance Contract Award Notice (ACAN). If no statements of capabilities meeting the requirements set out in the ACAN are received within fifteen calendar days, the proposed contract is deemed to be competitive and may be awarded using the electronic bidding contracting authority.
Should the contracting authority have to seek the Treasury Board's approval to award such a contract, it should be noted that the Treasury Board cannot approve a directed contract which does not meet at least one of the four exceptions. In such cases, an exception to the Regulations by means of an Order In Council would be required.
10.2.7 As required by the North American Free Trade Agreement, the World Trade Organization - Agreement on Government Procurement, and the Agreement on Internal Trade, the contracting authority shall solicit bids before any contract over the respective agreements thresholds is entered into. Because it is not always possible to seek bids for every proposed contract, the following exceptions to bidding are permitted.
10.2.8 The North American Free Trade Agreement, the World Trade Organization - Agreement on Government Procurement, and the Agreement on Internal Trade permit the contracting authority to set aside the requirement to solicit bids under the following conditions:
1. in the absence of tenders in response to an open or selective tender, or where the tenders submitted either have resulted from collusion or do not conform to the essential requirements of the tender documentation, or where the tender submitted comes from suppliers that do not comply with the conditions for participation, on condition that the requirements of the initial procurement are not substantially modified in the contract as awarded;
2. for works of art, reasons connected with protecting patents, copyrights, other exclusive rights, or proprietary information or where there is an absence for technical reasons, the goods or services can be supplied by a particular supplier and no reasonable alternative or substitute exists;
3. in so far as is strictly necessary where, for reasons of extreme urgency brought about by events the contracting authority could not foresee, the goods or services could not be obtained in time by means of open or selective tendering procedures;
4. for additional deliveries by the original supplier that are intended either as replacement parts or continuing services for existing supplies, services or installations, or as the extension of existing supplies, services or installations, where a change of supplier would compel the contracting authority to procure equipment or services not meeting requirements of interchangeability with existing equipment or services, including software to the extent that the initial contract for the software was covered by the agreements;
5. where a contracting authority procures a prototype or a first good or service that is developed at its request in the course of and for a particular contract for research, experiment, study or original development. Original development of a first good may include limited production to incorporate the results of field testing and to demonstrate that the good is suitable for production in quantity to acceptable quality standards, but does not include quantity production to establish commercial viability or to recover research and development costs. Where such contracts have been fulfilled, subsequent procurement of goods or services shall be competed, where applicable;
6. for goods purchased on a commodity market;
7. for purchases made under exceptionally advantageous conditions that only arise in the very short term, such as unusual disposals by enterprises that are not normally suppliers, or disposal of assets of businesses in liquidation or receivership, but not routine purchases from regular suppliers;
8. for a contract to be awarded to the winner of a design contest, as long as the contest is:
1. organized in a manner consistent with the principles of openness and fairness and is publicly advertised to suitably qualified suppliers to participate in the contest (For procurements subject to NAFTA only, the design contest is specifically architectural);
2. organized so that the design contract is awarded to the winner;
3. judged by an independent jury (For procurements subject to AIT only, conditions for an independent jury are not required);
9. where a contracting authority needs to procure consulting services regarding confidential matters, the disclosure of which could reasonably be expected to compromise government confidences, cause economic disruption or similarly be contrary to the public interest (NAFTA and/or AIT only).
10.2.9 In addition to the preceding exemptions, the following are exemptions to bidding for procurement subject to WTO-AGP only:
1. when additional construction services that were not included in the initial contract but that were within the objectives of the original tender documentation have, through unforeseeable circumstances, become necessary to complete the construction services described therein, and the contracting authority needs to award contracts for the additional construction services to the contractor carrying out the construction services concerned since the separation of the additional construction services from the initial contract would be difficult for technical or economic reasons and be significantly inconvenient to the contracting authority. However, the total value of contracts awarded for the additional construction services may not exceed 50 per cent of the amount of the main contract; and
2. for new construction services involving repeating similar construction services that conform to a basic project for which an initial contract was awarded in accordance with the proper procedures for which the contracting authority has indicated in the notice of intended contracts concerning the initial construction service, that limited tendering procedures might be used in awarding contracts for such new construction services.
10.2.10 In addition to the exemptions listed in 10.2.9, the following are exemptions to bidding for procurement subject to AIT only:
1. where a contract is to be awarded under a cooperation agreement that is financed, in whole or in part, by an international cooperation organization, only to the extent that the agreement between the Party and the organization includes rules for awarding contracts that differ from the obligations set out in Chapter 5 of the AIT;
2. where construction materials are to be purchased and it can be demonstrated that transportation costs and technical considerations impose geographic limits on the available supply base, specifically in the case of sand, stone, gravel, asphalt, compound and pre-mixed concrete to build or repair roads;
3. where normal procurement procedures would interfere with a Party's ability to maintain security or order or to protect human, animal or plant life or health;
4. where only one supplier can meet the requirements of a contract, the procurement is exempt from the AIT in the following circumstances: for procuring goods or services, the supply of which is controlled by a supplier that is a statutory monopoly;
1. for work to be performed on or about a leased building or portions thereof that may be performed only by the lessor;
2. for work to be performed on property by a contractor according to provisions of a warranty or guarantee held in respect of the property or the original work;
3. for the contracts of subscriptions to newspapers, magazines or other periodicals; and
4. for procuring real property.
10.2.11 Under the AIT all services are covered except the following:
1. services that in the province issuing the tender may, by legislation or regulation, be provided only by any of the following licensed professionals: medical doctors, dentists, nurses, pharmacists, veterinarians, engineers, land surveyors, architects, chartered accountants, lawyers and notaries;
2. transportation services provided by locally-owned trucks for hauling aggregate on highway construction projects;
3. services for sporting events procured by organizations whose main purpose is to organize such events;
4. services of financial analysts or the management of investments by organizations that have such functions as a primary purpose;
5. financial services respecting the management of government financial assets and liabilities (i.e., treasury operations), including ancillary advisory and information services, whether or not delivered by a financial institution;
6. health and social services; and
7. advertising and public relation services.
10.2.12 The following are excluded from the AIT:
1. procuring goods intended for resale to the public;
2. procuring goods and services or construction purchased on behalf of an entity not covered by the AIT;
3. procuring from philanthropic institutions, prison labour or persons with disabilities;
4. procuring contracts between the federal and provincial governments;
5. procuring goods services or construction purchased for representational purposes outside the territory of a Party of the AIT;
6. procuring any goods the interprovincial movement of which is restricted by laws consistent with the AIT;
7. procuring subscriptions to newspapers or other periodicals.