11.2.1 Treasury Board approval. The establishment of dollar limits above which Treasury Board authority is required is based on the premise that, at some level of size or complexity, the collective judgement of ministers should be brought to bear upon a decision to award a contract. The Financial Administration Act envisages prescribed ceilings (see sub-section 41(1)) to provide a central mechanism that ensures that appropriated money is spent effectively.
11.2.2 The powers of the Governor in Council to establish contract ceilings have been delegated to the Treasury Board under P.C. 1986-2746, Dec. 4,1986.
11.2.3 The Treasury Board has established and periodically revises the contract dollar levels. These levels reflect the desire to permit contracting authorities to carry out their responsibilities while taking contracting risks and the overall interests of the government into account. Appendix C contains the Treasury Board Contracts Directive which specifies the approved levels above which Treasury Board authority is required before entering into a contract. See Appendix H for how to prepare requests for contract approvals, including submissions to the Treasury Board and applications to internal departmental authorities. For the inclusion in submissions of foreseeable amendments to contracts, see article 12.9.3. The total value of any contract should include all related costs e.g., profit, overhead, administration, travel, taxes, etc.
11.2.4 The Treasury Board Contracts Directive distinguishes between competitive and non-competitive contracts for determining the contract approval levels delegated to contracting authorities. It also differentiates between the traditional and electronic bidding processes for competitive procurement of goods (where authority has been delegated by the Minister of Public Works and Government Services) and services. By using electronic bidding methodology, a contracting authority increases its authority to enter into and amend a contract. For contracts that do not fall within the definition of competitive contracts, the non-competitive dollar levels of authority apply.
11.2.5 In many cases, prior approval of the program and related funding is sufficient for departments to proceed to contract. However, program approval does not carry with it implicit authority to enter into contract and, when significant risks and issues are involved, specific review and approval by Treasury Board should be obtained, even though the value of the contract is below the established limit. Treasury Board approval may also be requested for contracts that involve a substantial expenditure or unusual circumstances of general public interest. In addition, Treasury Board participation may be advisable in certain situations where interdepartmental responsibilities are being co-ordinated, when large follow-on contracts may be required, or where other national policies and objectives are related.
11.2.6 Most contracts handled by the common service agencies and departments with major contracting activities are recognized in the Treasury Board Contracts Directive by the higher levels of authority granted. The various dollar levels are reviewed periodically and adjusted to serve the best interests of the government. Special dollar levels may be prescribed by the Treasury Board for specific projects or programs for unique operational needs. The performance of contracting authorities in the above situations will influence decisions on levels of authority.
11.2.7 Contract splitting. Contracting authorities must not split contracts or contract amendments in order to avoid obtaining either the approval required by statute, the Treasury Board Contracts Directive or appropriate management approval within the department or agency.
11.2.8 Requirements for specific Treasury Board approval. As specified in Section 4.1.6, Treasury Board approval is required prior to entering into a contract or an amendment with a dollar value that exceeds the limits prescribed in the Treasury Board Contracts Directive. Other situations where prior Treasury Board approval should be sought includes, but is not limited to:
1. making advance payments if the contract or amendment requires Treasury Board approval (see section 8(2) of the Government Contracts Regulations, Appendix B)
2. entering into a contract with a former public servant in receipt of a pension where the total fee exceeds $5,000 during the lump sum payment period;
3. entering into a non-competitive contract with a former public servant in receipt of a pension where the total value of the contract exceeds $25,000;
4. entering into a competitive contract with a former public servant in receipt of a pension where the total value of the contract exceeds $100,000
5. for departments other than Public Works and Government Services Canada, entering into a contract containing provisions that limit the proposed contractor's liability;
6. entering into an initial contract that is within the department's contracting limits but where large follow-on contracts and/or amendments are planned;
7. entering into a contract where unusual circumstances of general public interest exist or where significant issues and risks are involved, even if the contract is within the department's contracting limits;
8. entering into a contract involving significant national policies and/or objectives, even if the contract is within the department's contracting limits;
9. requests for increased contracting authority or exceptional contracting authority; and
10. derogations from Treasury Board policies.
11.2.9 Emergency contracting. Contracting authorities may enter into contracts in response to a pressing emergency situation, as provided for in Part III of the Treasury Board Contracts Directive (see Appendix C). In circumstances deemed as a pressing emergency as defined in Appendix A, contract proposals that would normally require prior Treasury Board approval may be awarded and amended without the approval of the Treasury Board up to a total value (including any amendments) of $1,000,000. The amending authority offers contracting authorities the possibility of entering immediately into lower dollar value contracts to address the emergency situation and then amending them if necessary, once the scope of work involved is better defined. If time permits, the authorization of the Treasury Board should always be sought if the proposed contract expenditure exceeds the approved contracting authority level.
As suggested in paragraph 11.2.10, exercise of emergency contract authority should be limited to the most senior delegated official available.
As stated in the Policy requirements, use of the emergency contracting authority is to be explained in a report to the Treasury Board Secretariat within60 days of the work being authorized or initiated. This report should detail the circumstances, the type and value of the contract awarded, whether it was possible to seek bids, and the delegation level at which the use of the emergency authority was approved. Contracting authorities should institute appropriate internal guidelines to ensure that the emergency authority is not abused.
11.2.10 Delegation of contracting authority. Contracting authorities should establish some differentiation of authority levels within the internal delegation of authority. Higher expenditures, complex situations, or very sensitive contracts should receive approval by a more senior level.
11.2.11 Once the contract proposal is approved by the appropriate authority, the actual contract documents may be executed.
11.2.12 Ratification of contracts. It is recognized that a contracting authority may have inadvertently entered into a contract without previously having obtained the required authority from the Treasury Board as a result of
• an administrative error; or
• a pressing emergency (Article 11.2.9), but where the emergency authority to contract has not been used and reported to the Treasury Board within 60 days.
In either of the preceding circumstances, if a contracting authority enters into a contract without obtaining the authority of the Treasury Board when such authority should have been obtained, a submission seeking ratification by the Treasury Board of the contracting or administrative action is to be made as soon as possible (preferably within 60 days of the work being authorized or initiated by the contracting authority). This submission for ratification of the contracting action should
• indicate that the minister (the Contracting Authority) of the department has been informed of the intended action, and has agreed to the commencement of work prior to seeking Treasury Board's ratification;
• explain the circumstances, the type and value of the contract awarded, and whether it was possible to seek bids; and
• where applicable, outline what corrective measures have been taken to minimize administrative oversights with respect to the awarding of contracts that require Treasury Board approval.