After a competitive solicitation process to select a contractor, the ministry and the successful bidder / proponent will usually enter into a contract. Where a competitive solicitation process has included an attached form of contract, and the contract will be comprised of the information contained in the solicitation document and the bid / proposal, on the terms and conditions of the attached contract, this is referred to as contract finalization. Contract finalization is not a negotiation process, as the terms, conditions and business content of the contract are all dependent on the information provided during the solicitation process. Contract finalization should be conducted within what was stated in the original solicitation document and the successful bidder’s / proponent’s submission.
Some ministries may have specific processes for finalizing their contracts; refer to the applicable ministry links at the right or contact the ministry’s Procurement Specialist.
Contract finalization is not the same as contract negotiation; the negotiation process usually allows for more changes than what would be acceptable in contract finalization. Contract negotiations apply only to direct awards and to certain forms of solicitation process, including Joint Solutions Requests for Proposals and Negotiated Request for Proposals. Contract negotiations also may apply where only select contract clauses were appended to the solicitation document, if the solicitation document did not set out or fully describe the remaining clauses of the agreement.
- Clarification vs. Finalization vs. Negotiation
- Finalization Process and Guidance
- What Happens if Changes are Needed During Contract Finalization?
- Planning for Contract Finalization and Negotiations
- Additional Contract Requirements
Clarification occurs at two stages during the solicitation process: (i) when the solicitation is open, clarification refers to the process whereby interested vendors may seek additional information and further explanation about the opportunity described in the solicitation, and (ii) after the solicitation has closed, clarification refers to the process whereby a ministry seeks to clarify information in a submission. A clarification is an explanation of some existing aspect of a proposal that does not amount to a substantive revision or modification of the proposal.
During the open phase of a solicitation process, clarification is a process available to all interested vendors. It entails the sharing of information between the Province and the interested vendor(s) to ensure that both have a shared understanding of the requirements of the opportunity in order to reduce confusion or misunderstanding. This may include clarification of contract content. Clarification should not result in changes to the intended scope of the solicitation. More information on clarifications during an open solicitation can be found in Strategies to Receive Quality Submissions, specific to answering vendor questions.
After the solicitation process has closed, clarifications may be made by written inquiry or during the shortlist process (if the solicitation contemplates clarifications during the shortlist process). Clarifications only form part of a shortlist process if this is built into the solicitation. In these cases, the clarifications are to the content of the submission, rather than the solicitation. Although clarification can occur after the solicitation has closed, care should be taken not to consider information that has been submitted outside the described process. Ministries cannot consider any information received after closing, unless the process allows for this (e.g. a shortlist process); therefore, a bidder / proponent cannot submit new information when responding the ministry’s clarification question(s). The Province can ask a bidder / proponent:
- To identify where specific information can be found in their submission (this can be particularly important if the clarification is being used to determine whether or not a mandatory requirement has been met); and
- To explain some existing aspect of a proposal, including resolving an ambiguity, that does not amount to a substantive revision or modification of the proposal.
Contract finalization occurs when a solicitation has attached a draft form of contract, and involves completing the schedules to the contract and any additional clauses to reflect the terms set out in the solicitation and submission. It includes discussion between the Province and the successful bidder / proponent to ensure that prices, delivery of works or services and associated terms of the contract are understood and agreed upon by both parties. For most solicitation processes, finalization may result in minor changes but should not result in changes to the intended scope of the solicitation. The final, signed contract should have no material changes from the original solicitation document and the successful submission. If in doubt whether or not a contemplated change would be considered material, consult with the ministry’s Procurement Specialist or Legal Services.
Negotiations – where changes to the scope of the services, specific contractual clauses, and/or the proposed methodology are contemplated – are not part of most solicitation processes used by the Province. The standard corporate procurement templates available for ministry use do not contemplate negotiations, except in the limited situations where the select contract clauses option is used, and then only the specific contractual language for clauses other than those set out in the solicitation are subject to negotiation. The terms and conditions are based upon the information set out in the solicitation and submission, and scope and methodology are not negotiated. Where the select contract clauses approach has been chosen, Legal Services must be involved in contract drafting and review. Exceptions to this include where the Province uses Negotiated Requests for Proposals (NRFPs) and Joint Solutions Requests for Proposals (JSRFPs), or specialized procurement approaches developed in conjunction with Legal Services and procurement specialists. Ministries are required to work with Procurement Services Branch for JSRFPs (see the Core Policy and Procedures Manual (CPPM) section 6.3.2.c.3), and should do the same for NRFPs.
Contract negotiations will be required for direct awards, where the ministry and vendor can discuss and agree upon any provision within the contract. However, changes to approved contract templates or using alternate contract formats (e.g. a vendor’s contract form) require approval by Legal Services (see CPPM section 6.3.3.e items 4, 5 and 7), as do any contracts valued at over $250,000.
Inexperienced staff and those who have not regularly and actively been involved with the process of finalizing or negotiating contracts should not undertake these activities with large or high dollar-value contracts without assistance from more experienced ministry staff, the ministry’s Procurement Specialist, Procurement Services, and/or Legal Services.
Formal training in negotiation techniques and strategies is recommended, either through courses offered by the Province or through outside training organizations. For information on the Province’s negotiation training, go to the list of courses available through the Public Service Agency, and search for the Procurement and Contract Management Program course PCMP 305: Negotiation Skills. Taking such courses can assist in understanding the basic concepts of contract finalization and negotiation, but staff should not assume that training alone is sufficient to gain the needed expertise for large or high-dollar contracts.
When finalizing a contract resulting from a competitive process, keep in mind the following:
- Very little should need to change in an Invitation to Tender (ITT) or Invitation to Quote for Services (ITQS) procurement process, as the specifications should have been clear, concise and well defined while the opportunity was open. More changes may be required for Requests for Proposals or Short-form Requests for Proposals, as proponents had more flexibility in describing how they would deliver services.
- All bidders / proponents must be treated fairly and equally in the solicitation process. Contract finalization should be conducted with the successful bidder / proponent who has met all mandatory requirements and specifications / minimum scores (as applicable).
- 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. Before commencing with any discussions about the contract with the successful bidder / proponent, review the terms and conditions of the solicitation and any attached contract format.
- In order to ensure a fair process for all bidders / proponents, any details that need to be worked out between the ministry and the successful bidder / proponent should be minor and must not substantially alter what was proposed. If it appears that material changes may be contemplated during contract finalization, contact the ministry’s Procurement Specialist or Legal Services for advice.
- Most corporate solicitation templates include language that binds the bidders / proponents to the terms and conditions of the solicitation. This means that by submitting a bid or proposal, all bidders / proponents have already agreed to the contract terms and conditions that were attached to the solicitation. Keep this in mind if the successful bidder / proponent requests changes to those contract terms during contract finalization. Minor changes may be permitted (with advice or approval from the ministry’s Procurement Specialist, the Risk Management Branch and Government Security Office, or Legal Services).
- Any services contract with a value exceeding $250,000, any services contract (of any value) that is not using one of the Province’s corporate service agreement templates, and any solicitation that incorporates only select contract clauses is to be reviewed by Legal Services. Where ministries plan to use a corporate service agreement template such as the General Services Agreement for services contracts above $250,000 in value, ministries should contact Legal Services prior to posting the solicitation for review and approval.
- Contract finalization may fail, meaning that the parties cannot agree on how to incorporate any final text required from the procurement and lead proposal into the contract provisions that were published with the procurement. Should this occur, ministries have the option to move on to the next highest scoring proponent / low bidder, if the timeframe for the acceptance of proposals remains open. Alternately, the ministry could decide to cancel the opportunity and may repost at a later date with a change in scope to the procurement or revisions to the procurement intended to any provisions that may have caused unintended procurement issues.
Ideally, everything from the successful submission can be written into the government contract form that was attached to the solicitation document. However, occasionally some details will need to be worked out with the successful bidder / proponent.
If the highest-scoring proposal / lowest bid would be unacceptable without significant change, the ministry should contact the ministry’s Procurement Specialist and Legal Services for advice. Sometimes, significant changes may indicate that the cost estimate, specifications or scope of services was inaccurate. In these cases, careful consideration should be given to the balance of risk between cancelling the opportunity, revising and reissuing, and awarding based upon the original solicitation.
If, however, the details that need to be worked out are relatively minor and do not substantially alter what was proposed or how the award was made, the Province should proceed to finalize the contract with the highest scoring proponent / lowest bidder.
In planning for contract finalization, ministries may want to
- review the document: “Preparing RFPs: A Ministry Guide to the Request for Proposals Process” for further information on contract finalization and how to develop an appropriate strategy (see section 11 The Contract); and/or
- Contact the ministry’s Procurement Specialist who is experienced with contract finalization.
Following are additional elements that should be considered before a ministry signs a contract, for both those contracts resulting from a competitive solicitation and those from direct awards. Remember that any contract for services that will not use the Province’s corporate service agreement templates (such as the General Services Agreement) requires review and approval by Legal Services, as does any services contract (notwithstanding the form of agreement) that exceeds $250,000 in value (see the Core Policy and Procedures Manual, section 6.3.3.e.4).
Be sure that the contractor’s name on the contract document is their 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 name.
Confirm the legal name with the successful bidder / proponent prior to signing the contract. Some ministries may have standard practices for confirming legal names; check the ministry links at the right for more information. If the applicable ministry is not listed, the following guidance may help:
- If the contract will be with an individual, verify that his/her full legal name is on the contract document via government-issued identification (e.g. driver’s license, birth certificate); or
- If the contract will be with a company, check with the Corporate Registry available through BC Online.
If in doubt on how to proceed, check with the ministry’s Procurement Specialist to ensure the appropriate process is followed to confirm the legal name before signing the contract.
Effective January 1, 2020, unless certain exceptions apply, all vendors must provide a Tax Verification Letter to demonstrate they met certain tax obligations before the Province may sign, extend or renew a contract valued at equal to or above $100,000 (including all fees, expenses and all options to extend or renew) with the vendor.
Most service contracts include one or more insurances that the contractor must maintain for the term of the contract. Proof of this insurance is usually managed through the Province of British Columbia Certificate of Insurance (form FIN 173). This form should be renewed each year of the contract, to ensure that the contractor’s insurance is current and adequate.
Refer to Insurance for more information, or contact Risk Management Branch and Government Security Office. Note that some ministries may have specific procedures regarding insurance; this information can be found through the link above to the Insurance page.
BC vendors with employees must be in good standing with WorkSafeBC in order to become contractors of the Province. Letters of good standing are available on-line, and should be checked annually to ensure ongoing eligibility. Vendors from other jurisdictions are required to be in good standing with the equivalent applicable entity to WorkSafeBC.
Vendors without employees (e.g. sole proprietors) may be eligible for WorkSafeBC’s Personal Optional Protection.
Refer to WorkSafeBC for more information, or contact Risk Management Branch and Government Security Office. More basic information is available in the article “WorkSafeBC Contractor Basics” in Volume 20, Issue 2 of the At Risk newsletter.
If the contractor will have custody of personal and/or confidential information, specific privacy language is required as part of the contract document. An example of this is the privacy schedule found in Schedule E of the General Service Agreement, noting that ministries may have their own contract templates that include similar terms and conditions.
A privacy impact assessment (or “PIA”) needs to be initiated as part of the planning of all new and existing enactments, systems, programs, projects and activities. A PIA should still be completed even if the ministry determines that there is no personal information being collected, used or disclosed. When there is no personal information involved the PIA process is significantly shorter and easier. If the PIA indicates that personal information will be involved, specific contractual clauses are to be included in the contract, and a privacy protection schedule will generally be required.