Vendor Information: Contract Negotiations / Finalization for Solicitations and Direct Awards
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As part of a competitive solicitation process or direct award, the Province and the selected vendor(s) will usually enter into a contract. Depending on how the vendor was selected, this may involve contract finalization and/or negotiations.
Contract finalization or negotiation occurs as part of the solicitation process.
Contract negotiations are usually part of direct awarding a contract without competition, but may also be part of Request for Proposals and some other solicitations.
The distinction being made between contract finalization and contract negotiation is not intended as a black-and-white or legal distinction, but rather to help illustrate usual government practices and the level of variation expected and allowed.
For the purposes of this illustration, contract finalization does not typically involve contract negotiation; the negotiation process usually allows for more changes than what would be acceptable in contract finalization. Although some solicitations may vary from this approach, contract negotiations generally only apply to direct awards and to certain forms of solicitation processes which specially allow this process to occur, including certain RFPs, Joint Solutions Request for Proposals and Negotiated Request for Proposals. See Types of Solicitations and Other Opportunities for more information.
The distinction is made between finalization and negotiation to help illustrate usual government practices, but is not intended as a legal distinction. Some solicitations may vary from this approach.
Contract Finalization for Solicitations
Contract finalization follows a competitive solicitation that includes a form of contract and language binding the participating vendors to their submissions, where the successful vendor(s) is determined by highest score or lowest price, as described in the solicitation.
Usually, these solicitations state that submissions received are irrevocable for a specific time (e.g. 30, 90 or 120 days) after the solicitation closes. When you submit a bid or proposal to one of these solicitations, you are bound for the specified period of time to all the statements made in your submission about how you intend to deliver the goods, services or construction (including anything related to key personnel, staffing, equipment, facilities, etc.) and the price.
These solicitations usually include either the full format of the contract that the successful vendor will be expected to sign, or selected clauses that will be included in the resulting contract. By submitting your bid or proposal, you agree to enter into a contract that is substantially the same with the full format contract or selected clauses, as the case may be. You have very little ability, if any, to make changes after the solicitation closes. Refer to Contract Formats in Solicitations for more information.
Contract finalization usually involves completing the contract by filling in the solicitation’s contract format by:
- The Province and the successful vendor meeting to discuss the draft contract in order to ensure that prices, delivery of works or services, and associated terms of the contract are understood and agreed upon by both parties
- Drafting the services schedule (often referred to as Schedule A), using any contractor responsibilities stated in the solicitation, and statements made in the successful submission
- Drafting the fees and expenses schedule (usually known as Schedule B), using any restrictions identified in the solicitation and the pricing proposed by the successful vendor
- Making minor changes that both parties agree to that do not change the scope of what is being purchased or the pricing proposed, but that may include additional contract clauses, particularly if the solicitation did not include the full contract format (see the discussion regarding negotiation within solicitations below), provided that these additional clauses do not affect those included in the solicitation
- Signing the contract (usually the contractor signs first, then the Province)
Negotiations Related to Direct Awards
The Province can award a contract to a vendor without a competition under certain circumstances. Refer to Direct Awards for information on when direct awards are appropriate. Note that a Notice of Intent (NOI) may be required for some direct awards.
Contract negotiations are expected when a contract is direct awarded to a vendor without competition. These negotiations can apply to anything, including the scope of the services, specific contractual clauses, pricing, and/or the proposed methodology. However, the following applies to these negotiations for direct awards:
1. The final contract cannot materially differ from what was stated in the NOI, if one was issued.
2. Changes to the standard legal clauses in ministry contract formats require approvals outside of the ministry making the purchase, which will take additional time and aren’t always possible.
Negotiations Within Solicitations
Negotiations are not part of most solicitation processes used by the Province as the standard corporate procurement templates do not contemplate negotiations, except where the full format of contract is not included and in this sense the “finalization” of certain remaining terms involves some level of negotiation. If the solicitation did not include the full contract format but instead included certain selected clauses, the parties can negotiate those contract terms that were not part of the solicitation, but those additional contract clauses cannot override, contradict or interfere with the terms and conditions of the solicitation or those selected clauses that are expressly included in the solicitation. Alternately, some solicitations (e.g. certain RFPs, the Joint Solutions Request for Proposals (JSRFP) and Negotiated Request for Proposals (NRFP)) specifically allow for negotiations. Typically, these solicitations do not allow negotiations on everything, but rather identify what can be negotiated and the process that applies.
Refer to Award to Highest Score for guidance provided to ministries on the JSRFP and NRFP.
When finalizing a contract resulting from most government competitive processes where participating vendors are bound to their submissions (i.e. negotiation areas are not expressly allowed), keep in mind the following:
- Contract finalization may only be conducted within the framework allowed by the conditions of the solicitation in order for the process to be considered fair.
- In order to ensure a fair process for all participating vendors, any details that need to be worked out between the Province and the successful vendor should be minor and not substantially alter what was included in the solicitation or what was proposed by the successful vendor.
- By submitting a bid or proposal, you have already agreed to the contract terms and conditions that were attached to the solicitation; don’t expect to make changes after closing if you’re offered the contract.
- Contract finalization may fail if both parties cannot agree on the final contract language. Should this occur, the Province has the option to move on to the vendor with the next highest scoring / lowest price, if the timeframe for acceptance of a proposal is still open. In some solicitations, including those that require bid bonds or bid deposits, withdrawing your submission after being offered the contract may have financial consequences. In some cases, the Province may decide to cancel the opportunity and may or may not repost at a later date with revisions.
- A contract may not be signed until any documents that the successful proponent is expected to provide have been received. Alternately, the contract might be signed with an express time period for the contractor to provide the required documents, so long as the contract includes specific recourse if the conditions are not satisfied. The solicitation will usually state what documents are required, including for example the proof of insurance, performance bonds, labour and material bonds, proof of certification, completion certificate of privacy training, etc.
- In some cases, once the contract is signed, certain solicitation financial instruments, such as bid bonds or bid deposits, will be returned to the participating vendors.
- The successful vendor may not begin work on a contract until the contract is fully executed by both parties.
For guidance that is provided to government staff, refer to Contract Finalization.
Before the Province signs a contract with a vendor (whether a competitive solicitation or a direct award applies), the following elements are typically considered: legal names, insurance documentation, WorkSafe BC requirements, and security and privacy protection. Some contracts may include additional requirements.
Ensure that your name on the contract document is your full legal business name, rather than a “doing business as” name. For example, a contractor’s legal name may be “BC 1234567 Ltd.”, but they are commonly known as “Acme Consulting Services”. In this case, the legal name is required on the contract, but a statement may also be included that identifies the doing business as (dba) name. If your company is registered in BC, your legal name on the contract needs to match the Corporate Registry on BC Online.
If you are entering into a contract as an individual rather than a company, the government buyer may ask to verify your full legal name on the contract document via government-issued identification (e.g. driver’s license, birth certificate).
All contracts must be signed by both the contractor and the Province. The person signing on behalf of the contractor needs to have the authority to bind their organization to their contractual obligations. The person signing on behalf of the Province will be an expense authority for the applicable government office, whose spending approval limit is at or above the overall value of the contract.
Some government offices require original signatures to their contracts. Others will allow the contractor to sign first, send the signed contract to the government office via email or fax, then the Province signs the emailed or faxed copy, and emails or faxes the fully executed copy back to the contractor. Check what the contract requires with the government buyer as to what process is acceptable to them to execute the contract.
Most service contracts include one or more types of insurance coverage that the contractor is required to maintain for the term of the contract. For ministries, proof of this insurance is managed through the Province of British Columbia Certificate of Insurance (a copy can be found on the Risk Management Branch’s forms site). This form should be renewed each year of the contract and delivered to the Province so that there is a record that your insurance is current and providing the coverage required by your contract with the Province.
B.C. vendors with employees must be in good standing with WorkSafeBC in order to become contractors of the Province. The Province may check annually on WorkSafeBC’s website, to ensure ongoing eligibility. If you are from another jurisdiction, you are required to be in good standing with the equivalent organization in your jurisdiction.
If you don’t have any employees, you may be eligible for WorkSafeBC’s Personal Optional Protection. Refer to WorkSafeBC for more information.
Effective January 1, 2020, unless certain exceptions apply, all vendors must provide a Tax Verification Letter to demonstrate they meet certain tax obligations before the Province may sign, extend or renew a contract valued at equal to above $100,000 (including all fees, expenses and all options to extend or renew).
Although the Tax Verification Letter is not required in order to participate in a competitive procurement, where a solicitation relates to a contract subject to the Tax Verification Letter requirement, obtaining such a letter will be a condition of contract finalization. In other words, if a lead proponent in a competitive procurement is unable to provide the Province with a required Tax Verification Letter within the contract finalization period established by the solicitation, the Province will have the right to reject that proponent and move on to contract finalization efforts with that solicitation’s next ranked proponent.
Obtaining a Tax Verification Letter is easy and free. For more information on the tax verification requirement click here.
Contracts usually include privacy language if the contractor will have custody of personal and/or confidential information. Refer to Personal Information for more information about privacy requirements, including the training that you and/or your employees/subcontractors and their employees may be required to take.
Depending on the nature of the contract, it may include security provisions that the contractor must meet. These provisions often address requirements related to confidentiality, security screening, activity logging, access to the contractor’s facilities and equipment, access to sensitive information, integrity of information, and reporting security breaches. Before signing a contract with security protection clauses, be sure that you have processes in place to fully comply with these requirements.