There is no standard contract format that would satisfy the range of procurement situations encountered by CIDA. Chapter 7 on Bid Solicitation provides most of the standard and optional conditions used in bid solicitations. These conditions would also apply to any resulting contract.
Generally, the following contract conditions should be included:
1) Specifications and related standards;
2) Price, INCOTERMS 2000 and related terms and conditions for payment;
3) Delivery requirements and schedules;
4) Inspection requirements;
5) Acceptance procedures;
6) Quality assurance requirements;
7) Warranty conditions;
8) Notice of consignee and agent's particulars;
9) Packing and marking details;
10) Required documentation; and 11) Methods of payment.
Standard contract conditions governing the execution of the contract should be included as required.
These may include the following:
1) Conditions of contract confirmation;
2) Financial security;
3) Termination and delays;
4) Assignment and subcontracting;
5) Indemnification;
6) Publicity;
7) Records and audit requirements; and 8) Force Majeure.
9.4 Purchase Order Confirmation (POC)
Where CIDA will be making payments directly to suppliers, each contract (purchase order, call-up against a SOA) is subject to confirmation by CIDA. This confirmation would be in the form of a Purchase Order Confirmation (POC).
In these cases, suppliers must be informed (as a term of the contract) that contracts become valid only after CIDA has issued POCs. Any work, therefore, that is performed by suppliers prior to receiving POCs is at the suppliers' own risk.
9.5 Standing Offer Agreements (SOAs)
Under a SOA, a supplier commits to provide a purchaser a supply of goods and related services "as and when" required and on a pricing basis and under terms and conditions stated in the SOA. A SOA is not a contract. Any call-up made against a SOA is an acceptance by a purchaser of the terms and conditions of the SOA. It is therefore the call-up that forms the contract.
Appendix 6A of this chapter contains a sample of an RFP for a SOA. Appendix 6B of this chapter shows a sample call-up against a SOA. Note that these samples are for illustrative purposes only, and in the case of the RFP, are not completed.
9.5.1 Use of SOAs
SOAs should be used when the overall requirements for a project are known, but the specific quantity and delivery date of any particular good may not be known. In this situation, bids may be solicited to select a supplier to provide the necessary goods as and when they are required.
The bid solicitation must state that the purchaser does not necessarily intend to immediately or ever enter into a contract. Rather, the intention is merely to establish the best source of a future supply, based upon firm prices and predetermined conditions over a specified validity period.
Note that care must be taken when providing the supplier(s) with an estimated quantity of goods and related services. In general, suppliers will quote lower prices if there is a reasonable possibility that a firm amount will be ordered. Ideally, the bid solicitation should provide suppliers with the minimum estimated quantity that may be ordered. Until an actual call-up document is issued, no guarantee should be given that any amount will be ordered.
Should a SOA be so worded, the supplier may remain free to withdraw from the SOA under certain predetermined conditions. The supplier would then have no further obligation to fill orders which are issued after the agreed withdrawal date.
9.5.2 Criteria
One should normally satisfy the following criteria in order to justify establishing a SOA:
1) the repetitive requisitioning technique will result in reduced administrative costs;
2) the goods and related services are clearly identified;
3) the goods and related services are commercially available;
4) the use of existing industry distribution facilities will eliminate the need to warehouse large inventories; and
5) the prices can be predetermined and are firm.
9.5.3 General Characteristics
SOAs should have the following characteristics:
1) SOAs should be used to supply off-the-shelf, readily available products. Only quantities, delivery dates and logistics cannot be determined in advance;
2) Unit prices should be established as a result of a competitive bid solicitation or negotiation;
3) Delivery dates should be stipulated in terms of a time period from the date of the call-up;
4) A SOA need not be funded. Only individual call-ups must be funded;
5) The SOA and call-up should stipulate whether the supplier will be paid by CIDA or by the EA (acting on behalf of CIDA and under its "Direction and Control");
6) If CIDA is to pay the supplier, the SOA should stipulate that CIDA will issue a Purchase Order Confirmation (POC) for each call-up or amendment to a call-up. If the EA is to pay, the SOA may stipulate the type of payment guarantee that may be required by the supplier;
7) A limit on total expenditure should be stipulated in the SOA . Suppliers must notify the purchaser when a percentage of the limit on total expenditures (usually 75%) has been used;
8) Limits on individual call-up expenditures should be stipulated in the SOA;
9) The SOA validity period must be stipulated in the SOA. Generally it is desirable that the SOA be valid over the duration of the project itself. Usually, SOAs are valid for at least 12 months. The period of validity should be the expiry date or when the limit on total expenditures is reached, whichever comes first;
10) For multi-year SOAs, there may be a clause allowing for a price increase due to inflation; and 11) All terms and conditions of supply are pre-negotiated and agreed to except for the quantity or extent of work. A list of typical conditions is shown in the sample call-up in appendix 6B. As in the case of contracts, a standing offer agreement must confirm the conditions of the bid as submitted by the selected supplier.
9.5.4 Call-Up Against a SOA
Refer to appendix 6B for a sample call-up.
When an EA is acting as the contracting authority, on CIDA's behalf, the following actions are normally required when issuing a call-up:
1) obtain CIDA's (and the RC's, if appropriate) concurrence before issuance of the call-up;
2) ensure that the call-up shows the exact quantity and description of the required goods and related services, the packing and routing instructions, the delivery points and dates, and confirm the unit price and total price of the call-up, including freight; and
3) issue the original call-up to the supplier, with a copy to CIDA. Where appropriate, CIDA should be requested to issue a POC to the supplier.
The supplier should be requested to acknowledge receipt of the call-up.