16.8.1 As stated in article 4.2, Related requirements, contracts for the services of former public servants in receipt of a pension or of a lump sum payment (the definition of "former public servant" can be found in Appendix A) are to bear the closest public scrutiny and reflect fairness in spending public funds. Contracting authorities should exercise extreme discretion when contracting with former employees in receipt of a pension or of a lump sum payment. These contracts should be subject to the usual review and approval procedures required by the Contracts Directive and departmental policy. When negotiating the rate for the services of any former employee in receipt of a pension or of a lump sum payment, contracting authorities are expected to obtain the lowest or most cost effective rate. No contract for the services of a former public servant in receipt of a pension or of a lump sum payment may be entered into unless it is in the public interest to do so. There must be no suggestion of special favouritism or privilege.
16.8.1.1 For the purposes of this policy, the lump sum payment period is defined as the period measured in weeks of salary, for which payment has been made to facilitate the transition to retirement or to other employment for public servants whose employment would be terminated because of the down-sizing expected to result from various initiatives required to adjust government spending. The lump sum payment period does not include the period of severance pay, which is measured in a like manner. The lump sum payment period represents a transition period to secure and adjust to employment outside the public sector. If the former public servant returns to public service employment during this transition period, the balance of the lump sum payment has to be returned in the form of forfeited salary, as provided in the Work Force Adjustment Directive (WFAD).
For employees who have left the public service pursuant to one of the existing or any future early departure incentives, which involve the payment of a lump sum of money based on a number of weeks, commonly known as a "lump sum payment period", the fee limit that may be paid under any contract with such an individual, continues to be$5,000 during the lump sum payment period. This restriction applies in both competitive and non-competitive contracts. After the lump sum payment period is completed, then the one year fee abatement period begins for any non-competitive contract with an individual.
16.8.2 Electronic bidding is very effective in addressing the aforementioned sensitivity of contracting with former public servants. Because of its transparency, electronic bidding demonstrates the fairness of the contracting process, contracting authorities are encouraged to use this procedure to obtain bids or to announce, via an ACAN, proposed contract awards involving these individuals. It is also recommended in these situations that contracting authorities consider using electronic bidding even if the contract's value is below the $25,000 threshold normally associated with the use of this methodology.
16.8.3 Contracts with former public servants in receipt of a pension paid pursuant to the Public Service Superannuation Act (PSSA) as indexed by the Supplementary Retirement Benefits Act. Contracts with a former employee receiving a government pension may prompt accusations that public funds are being abused or that influence was improperly exerted in the contract award, particularly if those involved occupied more senior positions or took early retirement. Contracting authorities should therefore recognize the delicate balance between the desire to respect individuals' rights to use their knowledge and abilities for economic gain and personal development on the one hand, and, on the other, to protect the public's right to reasonable assurance that the public interest will not suffer in the process. If the contract work is substantially like that performed by the pensioner before retirement, contracting authorities should ensure that they can justify why the work is not being done by a successor.
Contracts for the services of individuals who have been retired for less than one year and who are in receipt of a pension, must include a contract fee that is abated in accordance with the formula outlined below, regardless of fee or contract value.
16.8.4 Consequential to article 4.2, the following procedures are to be followed for any contract for the services of former public servants in receipt of a pension:
1. Competitive contracts (awarded using traditional or electronic bidding procedures):
o may be awarded by any contracting authority based on the lowest or best value bid without application of the fee abatement formula; ACANs for which no valid statements of capabilities have been received within fifteen calendar days are deemed to be competitive and may be awarded the same way;
o do not require retirement waiting periods except where the provisions of the Conflict of Interest and Post Employment Code for Public Office Holders apply, or unless special retirement conditions apply to the individual;
o may be awarded even when there are fewer than two valid bids from individuals who are not former public servants;
o in which the total value, including amendments, exceeds $100,000, require the approval of the Treasury Board.
o subject to the requirements of Section 5 and Section 6 of the Government Contracts Regulations, may be negotiated and awarded by any contracting authority where the total value of the contract, including any amendments, is less than $25,000.
16.8.5 A contract with a former public servant in receipt of a pension may be considered competitive when one of the following conditions is met:
1. competitive procurement in the form of either traditional or electronic bidding has been used, and the bid offering the services of a former public servant is the lowest or best value; or
2. there have been no valid statements of capabilities received after fifteen calendar days to an electronic bidding ACAN advising of a proposed contract.
16.8.6 A description of the contracting limits with former public servants, which complements those for construction, goods, and service contracts, is also provided in Schedule V of Appendix C.
16.8.7 Amendments. When it is necessary to amend either a competitive or non-competitive contract entered into pursuant to (a) or (b) of paragraph 16.8.4,the authority to make the amendment is based primarily on the total value of the contract.
16.8.8 For a non-competitive contract with a former public servant in receipt of a pension:
• a contracting authority may amend any contract until its total value (including amendments) equals $25,000;
• Treasury Board approval is required to amend any contract whose total value (including amendments) exceeds $25,000.
16.8.9 Notwithstanding the preceding authority to amend these contracts, it is essential that departmental officials carefully review the award of non-competitive contracts with former public servants.
16.8.10 For a competitive contract (using the traditional or electronic bidding methodologies) with a former public servant:
• a contracting authority may enter into and amend a contract until its total value (including amendments) equals $100,000;
• Approval of the Treasury Board's is required to amend any contract whose total value (including amendments) exceeds $100,000.
16.8.11 Reserved
16.8.12 Abatement formula. The following procedure applies in the determination of the maximum fee for the services of a former public servant in receipt of a pension. The former maximum salary is updated to the current level, or the estimated salary for having the work done by a public servant (if a qualified public servant were available), whichever is less,
plus
30 per cent (representing a fringe
benefit factor),
minus
the total annual (gross) pension in pay,
yields
a figure that is divided by 260
(representing the number of working
days in a year),
equals
the maximum daily rate that can be negotiated.
If a rate lower than the above formula yields is negotiated and agreed to, the negotiated rate should be used. The contract amount should be adjusted appropriately where the fee is a fixed price based on a number of days of work or where the fee is paid on the basis of hourly, weekly, monthly or annual rates. The number of hours that will constitute a work day should be based on the usually accepted norm for the profession, trade or function being contracted and should be specified in the contract document.
16.8.13 A "pension" in the context of the formula is a pension or annual allowance paid under the Public Service Superannuation Act (PSSA) and any increases paid pursuant to the Supplementary Retirement Benefits Act as it affects the PSSA. It does not include pensions payable pursuant to the Canadian Forces Superannuation Act, the Defence Services Pension Continuation Act, the Royal Canadian Mounted Police Pension Continuation Act and the Royal Canadian Mounted Police Superannuation Act, the Members of Parliament Retiring Allowances Act and that portion of pension paid pursuant to the Canada Pension Plan Act.