Tendering Policy on Federally Funded Capital Projects for First Nations on Reserve

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Table of Contents


1.0 Purpose

1.1 This directive states the policy of the Department of Indian Affairs and Northern Development (DIAND) regarding the tendering policy on federally funded capital projects (excluding housing) for First Nations on reserve.






2.0 Scope

2.1 This directive is applicable to DIAND staff involved in the funding of and assisting with the planning, development and implementation of capital projects by First Nations.






3.0 Authorities

3.1 Letter from the Minister of IAND to all First Nations Chiefs and Councils, on Accountability and Financial Transfer Arrangements, in particular, the competitive process in contracting for on-reserve capital works, dated June 4, 1996.

3.2 Increased Ministerial Authority and Accountability, 1990.

3.3 1984-1989 Five-year Capital Plan.






4.0 Issuing Authority

4.1 This directive is issued under the authority of the Assistant Deputy Minister, Socio- Economic Policy and Programs.






5.0 Definitions (in alphabetical order)

5.1 Aboriginal Contractor/Supplier:(as defined by the Procurement Strategy for Aboriginal Business (PSAB)) a sole proprietorship, limited company, cooperative, partnership, or not-for-profit organization where: ! at least 51 percent of the firm is owned and controlled by Aboriginal people; and ! at least one third of the firm's employees, if it has six or more full-time staff, must be Aboriginal.

If a firm is operating under a joint venture or consortium: ! at least 51 percent of the joint venture or consortium must be controlled and owned by an Aboriginal business or businesses, as defined above. A firm must certify that it meets the above criteria, and it must provide proof of eligibility upon request.

5.2 Invited Tender: the tender is limited to a selected list of contractors who are invited to submit a bid on the project. Industry standard normally requires that at least three qualified firms be invited to bid to ensure an adequate level of competition.

5.3 Open or Public Tender: open tenders, sometimes referred to as public tenders, are publicly advertised, usually through newspapers, postings in local Construction Association offices and/or a public electronic bidding service. Open tenders must allow all qualified and interested contractors an opportunity to bid on the project. Once advertised, some individual contractors may be contacted to ensure that they are aware of the project being tendered, should they wish to participate in the tender process. Public advertisement or notification of a project must be wide enough to ensure a sufficient number of qualified and interested contractors are available, so that a competitive tendering process is achieved. Bids submitted by qualified and interested contractors who may have become aware of the project and whose place of business may be outside the geographical area of advertisement cannot be refused.

5.4 Tendering Process: the procedure by which tender documents, or specifications describing the requirements and qualifications necessary under a project, are put in the hands of contractors/suppliers who will be interested in preparing and submitting bids to undertake the project. Under a competitive process there are two different methods used for carrying out a tendering process. The first method is an invited tender and the second, an open tender.

5.5 Value for money: normally, the lowest valid bid price, which incorporates specified provisions for local content, committed to by the contractor/supplier in carrying out the project. It is important that these factors be clearly identified and incorporated in the tender documents and the evaluation criteria. Tender documents may include basic requirements with respect to areas such as the use or availability of local materials, services, contractors and labour, as well as skill enhancements under apprenticeship or facilities operator programs. Bidders will have to incorporate these requirements within the contract and their bid price to ensure a valid bid. Specific training and economic development initiatives should be co-ordinated with planned capital works, but would not generally be a part of the contracting process.

For example, training to provide an individual with the basic skill sets needed should be planned and carried out in advance of a capital project. The project would then provide job opportunities and on-the-job experience for the trained individual. This could be done as part of an apprenticeship program.






6.0 Policy

6.1 Projects administered by First Nations under all Funding Arrangements

Federally funded capital projects administered by First Nations must be supported by the First Nations' own tendering policies which should recognize the requirements as stated below. The policies should encompass the key principles and mechanisms applied by the public and private sectors in tendering projects, while allowing for opportunities to incorporate local socio-economic benefits.

The following is a list of principles that must be included in First Nations tendering policies:

  • a commitment to deal with all potential bidders on an equitable basis;

  • a commitment to establish specific criteria within which an open tendering process

  • will be followed based on good contracting principles which take into consideration the dollar value, the complexity of the work to be undertaken and the number of firms within the area of competition who are able to meet the level of expertise and qualifications necessary;

  • all tender documents will be treated confidentially;

  • all tenders will be opened in public with appropriate safeguards; and

  • all tenders will be assessed on the basis of a clear, consistent, predefined evaluation criteria.

In addition, First Nations may also want to consider outlining the following within their tendering policies:

  • a commitment to maximize the use and development of available First Nation resources or skills;

  • a commitment to develop and review annually a source list of qualified local and Aboriginal suppliers from which to invite bids for projects under $500,000; and

  • a discussion of the different approaches to deliver projects (ie. Day Labour, Construction Management and General Contractor).

The First Nation's tender and contract procedures for a given project must include designation of the “Prime Contractor” in relation to Health and Safety regulations. Depending on the construction approach selected for the capital project, either the General Contracting Management firm or the Construction Management firm would normally assume these Health and Safety responsibilities.

6.2 General Contracting Approach

For federally funded capital projects using the General Contracting Approach, the “Framework to Guide the Development of a First Nation Tendering Policy” applies. The tendering requirements are as follows:

6.2.1 Projects where construction cost is over $500,000 - For capital projects excluding Housing, which are funded in whole or in part by federal government contributions, open tenders must be called and publicly advertised (see advertising area coverage in open tenders, section 5.0, Definitions) to allow interested contractors an opportunity to bid on the project.

6.2.2 Projects where construction cost is between $100,000 and $500,000 - The tendering process must have considered the two competitive tendering options:

  1. an open tender through public advertisement; and/or

  2. an invited tender where bids are invited from a selected list of at least three qualified contractors, which could be qualified Aboriginal contractors or suppliers.

6.2.3 Projects where construction cost is under $100,000 - Contracts must be awarded in a manner that ensures value for money.

6.3 Construction Management Approach Where a First Nation intends to implement a capital project using the Construction Management Approach, (i.e., a First Nation/Construction Manager assumes the role of a general contractor for the project), the “Operational Parameters for the Review and Evaluation of Construction Management Projects” apply. The First Nation must clearly demonstrate that the approach is more cost effective than general contracting. In addition, the First Nation must have demonstrated adequate financial, technical and management capacities, and it must also engage the services of a fully qualified construction manager.

If a First Nation requires approval for a project by the Regional Office and they want to use construction management, then the project must be assessed and approved by DIAND regional office according to the “Operational Parameters for the Review and Evaluation of Construction Management Projects” based on a project specific business plan, prepared and submitted by the First Nation in accordance with the parameters.

6.3.1 Establishing Resource Levels Should First Nations wish to use Construction Management Approach, the resourcing package for projects funded by DIAND can be broken down into two components:

Component 1 - Competitively Awarded Procurement:

The maximum eligible funding for the Competitively Awarded Procurement portion of a construction management project will be the sum total of all competitively awarded works, plus limited agreed-to contingencies. Appropriate justification will be required when establishing a contingency amount. For all projects, a minimum of 90% of the Competitively Awarded Procurement works must be competitively tendered before the resourcing level is finalized and work begins. For multi-year projects, at least 90% of the Competitively Awarded Procurement works to be completed in the current fiscal year must be competitively tendered before the resourcing level is finalized and work begins.

The results of the competitive award process must be reviewed by DIAND against the “Class B” estimates that were submitted at the time of effective approval. Approval of final resource level (project budget) will be subject to the satisfactory review of this information.

The contract limits for the Competitively Awarded Procurement portion of the construction management projects are:

  • for contracts over $100,000, open public tender;

  • for contracts between $25,000 and $100,000, invited or public tender;

  • for contracts under $25,000, in a manner that ensures value for money.

Component 2 - Own-Forces Procurement:

This component allows for the procurement of goods and services directly utilizing the First Nation's local labour, equipment and materials, excluding private and band-owned business enterprises. To be eligible to use their own forces, the proponent First Nation must demonstrate its capacity to fully complete all aspects of the sub-trade work in accordance with the standards and specifications contained within the approved project submission, in providing skilled labour, appropriate equipment or the required material.

In order to establish a market value to the work being undertaken using Own-Forces Procurement, an independent evaluation is required. In the absence of a competitive process for this type of work, the evaluation is a check to ensure that value for money is being achieved.

Where the value of the sub-trade work is under $100,000, which is the threshold established for public tendering in the Competitively Awarded Procurement, the architect / engineer, the department using the expertise of Public Works and Government Services Canada, and the First Nations must agree to the value of work identified for that sub-trade based on industry standards and market value.

Where the value of the sub-trade work is over $100,000, the services of a Professional Quantity Surveyor are to be retained. An independent Professional Quantity Surveyor is a person who, by training and experience, is capable of giving advice on construction cost planning, preparing cost estimates and value analysis, setting up cost control systems and acting as an expert witness. Both the proponent First Nation and DIAND must agree in advance on the Professional Quantity Surveyor credentials and services to be provided.






7.0 Responsibilities

7.1 DIAND Headquarters:

  1. Establishes and updates policies and procedures for the effective and efficient management of the tendering policies for federally funded capital projects for First Nations on reserve;

  2. Provides advice and assistance to regional staff on tendering policies for federally funded capital projects for First Nations on reserve.

7.2 DIAND Regions:

  • Ensure that each Band Council develops and adopts a local tendering policy, and that each policy is submitted to DIAND regional offices for review and acceptance in order to confirm that the minimum departmental requirements outlined in the documents “Framework to Guide the Development of a First Nation Tendering Policy” and “Operational Parameters for the Review and Evaluation of Construction Management Projects”(see Appendix A) have been met;

  • Review and approve business plans for construction management projects submitted by First Nations;

  • Ensure First Nations - Chief and Council

    1. manage the project according to their tendering policy, if on general contracting; or, follow the Operational Parameters for the Review and Evaluation of Construction Management Projects, if that management approach is more cost effective and appropriate; and

    2. has identified the “Prime Contractor” in the tender and contract documents for health and safety requirements.



  • Where a First Nation has not adopted a tendering policy, the Region is responsible to ensure that the capital projects undertaken by the First Nation meet the requirements of the departmental tendering policy.

7.3 Real Property Services for INAC, Headquarters and Regions: Subject to the terms specified in the Memorandum of Understanding (April 1, 1987) between DIAND and Public Works and Government Services Canada and subsequent regional and headquarters annual specific services agreements, Real Property Services for INAC will provide knowledgeable advice to DIAND on tendering policies for federally funded capital projects administered by First Nations.

7.4 Real Property Services for INAC, Regions: Work closely with regional DIAND staff and First Nations to develop capital project related terms and conditions that will empower First Nations to implement projects while assuring effective management and accountability regimes are in place.






8.0 Enquiries

8.1 Matters related to the interpretation of this directive are to be referred to the Director, Infrastructure and Housing, at DIAND Headquarters.

8.2 Requests for additional copies of this Directive should be addressed to the Director, Corporate Information Management, DIAND Headquarters.






9.0 References

Appendix A - List of reference material

  1. Framework to Guide the Development of a First Nation Tendering Policy.

  2. Operational Parameters for the Review and Evaluation of Construction Management Projects

  3. Construction Contracting Guidelines for First Nations and Aboriginal Communities (CN1)

  4. Contracting for Professional Services by First Nations and Aboriginal Communities (CN2)

  5. Contracting for Non-Professional Services by First Nations and Aboriginal Communities (CN3)

  6. First Nations and Aboriginal Communities Project Management Manual
    (TID-PM-01)

This policy and documents 1 to 5 are available for downloading from the Internet site Infrastructure and Housing page. Document 6 can be obtained from regional offices.

Also, samples of Tendering Policies are available from DIAND regional offices.