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Do we or don’t we will we or won’t we…
compete for Standing offers

by Celeste Mackenzie

The federal government may deal with “standing offers” while Ontario establishes “vendors of record,” but across the country, governments use similar procedures to evaluate and arrange terms and conditions for the purchase of goods and services by their ministries, departments and agencies before any contracts with suppliers are signed.

Standing offers, as they are more commonly known, are offers from would-be providers to supply materials and/or services during a set period – often one to three years. There is no actual contract until the government issues an order or “call-up” against the standing offer, thus suppliers with these offers have no guarantee of government purchases.

“What is unknown is who is going to order, when they are going to order, and how much they are going to order. But everything has been put in place so that the actual buying process is about as quick and painless as it could possibly be,” says John Read, director of risk management and quality assurance at Public Works and Government Services Canada (PWGSC), and president of the Canadian Public Procurement Council.

Dave Collison, executive director of the British Columbia Purchasing Commission maintains standing offers rationalize the contracting process. “It’s a way of pre-qualifying that reduces administrative costs,” he says.

Read says although standing offers save the government time in the long run, most of the time, when a purchase is actually made, the standing offer price is not today’s best price. Rather, a company’s price will reflect the risk taken in offering a price for purchases to be made in the future. “For a company to give you an open offer that they will do business with you, they are taking a chance as to what will happen between the day of the deal, and the deal of the day you actually do it,” he says.

According to Read, in the case of commodities whose prices may fluctuate widely, “We’ll build in a flexible approach to pricing – people can change their prices every so many months, even weeks in the volatile food business. This is in everyone’s best interest.” He adds that provisions also are place to reflect technical and other innovations in certain commodities.

Office equipment, stationery, food, automobile parts and information technology are examples of commodities needed on an ongoing basis for which standing offers are frequently arranged. These items can be easily defined, thus enabling vendors to make informed offers. “When you get into the services business, it is slightly more complicated. The less tangible whatever you buy is, the more interesting the whole process of standing offer gets,” Read states.

Often, a central entity like PWGSC sets up standing offers for the whole government on a national or regional basis, while in other cases, departments or ministries may also establish their own. According to Read, standing offers can also be used to provide the government with lists of anywhere from one, to several suppliers. Sometimes the processes are competitive, while when a large pool of suppliers is needed, any company that fulfills basic requirements can be included. To aid buyers in the process of mulling through the choices presented by different companies with standing offers in the same field, in some cases, online catalogues of products and services are available via intranet sites.

Putting a standing offer in place includes following regular contracting policies and procedures, including internal and international trade regulations. Many requests are posted on MERX, although some jurisdictions, like British Columbia and Nova Scotia, have their own free websites. Publications are also used in some instances. In Ontario, even if a supplier misses out on responding to a standing offer, he or she is not always relegated to waiting until the current period is over, as frequently there is flexibility built into the process, often known as a “refresh provision,” according to Neil Sentance of Procurement Policy and Information Technology at Ontario’s Management Board Secretariat.

While successfully landing a standing offer is no guarantee work will follow, some vendors respond to requests whenever they feel they are qualified, seeing it as an important marketing tool. “We always bid on standing offers when we feel we are qualified,” says Barry Benevoy, manager of Cohen’s New Office Furniture, in Ottawa, which has won federal government standing offers. “Even if we aren’t successful, it’s a way of getting our name out there,” he says.

Others see the process as a waste of time and resources, given the paperwork involved. And some perceive it as a closed shop if you don’t have friends among the right decision-making bureaucrats. “It’s a farce,” says an Ottawa computer dealer who prefers to remain anonymous, saying he has never bothered responding to a standing offer request. “It’s almost impossible for local suppliers both because of the connections you need, and the bureaucracy involved.”

Xerox’s Des Smith, government programs manager for the office printing business, maintains that responding to requests for standing offers is well worth it. He currently manages standing offers both at the federal and provincial levels. Smith says that to be successful in actually landing a contract, ongoing communication with buyers is important to make sure they know about new products and their capabilities. “It’s really incumbent on the vendors to understand a market and be in constant contact with buyers,” he states.

Celeste Mackenzie is an Ottawa-based freelance journalist.

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