Vendor Performance Management policy

Pilot version for vendor performance Management (VPM) testing period.

1. Effective date

1.1 The policy takes effect on August 1, 2023.

2. Context

2.1 Federal government procurement is required to be fair, open, and transparent, while providing value for money and demonstrating sound stewardship in support of the delivery of programs and services to Canadians.

2.2 Public Services and Procurement Canada (PSPC) is the Government of Canada's common service provider for procurement services, offering federal organizations a broad range of procurement solutions.

2.3 The policy establishes a vendor performance management approach for PSPC and its client departments to assess vendor performance and use vendor past performance information in awarding contracts.

3. Policy statement

3.1 Objective

3.1.1 To support acquisitions by using vendor past performance information to improve transparency, promote innovation, and ensure best value.

3.2 Expected results

An approach to vendor performance management that:

3.2.1 supports the Government of Canada’s overarching procurement and contracting objectives of best value, openness, fairness, and transparency;
3.2.2 enables the Government of Canada to incentivize good vendor performance while strengthening the means through which it can hold inadequate performers accountable;
3.2.3 strengthens the Government of Canada’s ability to manage vendor performance by proactively addressing performance issues;
3.2.4 provides a methodology to ensure consistent approaches to performance evaluations;
3.2.5 considers past performance when awarding contracts, giving vendors an incentive to improve performance throughout the contract lifecycle; and
3.2.6 provides for the appropriate recording, tracking, and Management of past performance information.

4. Application

4.1 The policy applies to contracts under PSPC's authority.

4.2 Vendors will be informed in bid solicitation documents if the contract is subject to the policy under the pilot.

4.3 Exceptions to the above may be made with the approval of the Assistant Deputy Minister (or equivalent) of the contracting authority, provided that at least one of the following justifications applies and is documented on file:

4.3.1 a pressing emergency prevents the application of the policy. A pressing emergency may be an actual or imminent life-threatening situation, a disaster which endangers the quality of life or has resulted in the loss of life, or one that may result in significant loss or damage to Crown property;
4.3.2 it would not be in the public interest to apply the policy. This exception is available only for purchases in jurisdictions or with industries where it is not feasible to apply the provisions of the policy.

4.4 This policy does not apply to contracts entered into before the effective date of the policy, unless the contract is amended to incorporate the policy.

5. Definitions

5.1 See Annex A: Definitions.

6. General requirements

6.1 Solicitations and contracts subject to the policy must contain standard clauses to inform vendors that their performance will be evaluated.

6.2 Scorecards for each Commodity Group will be used to determine vendor performance scores. These include key performance indicators which are generally grouped into the performance categories of cost, schedule, quality, and management.

6.3 Vendor performance scores gathered during the pilots will be used for testing and verification purposes, to inform the development of the vendor performance Management policy. A minimum of 90 days advance notice will be provided to the vendor, informing them of a decision to retain and use finalized evaluation results. Evaluation results will be used in future bid evaluation in accordance with Section 8.

6.4 Vendor performance scores and vendor performance ratings will be treated by Canada as commercially confidential information, subject to:

6.4.1 situations such as joint ventures, because each party of the joint venture or equivalent may be able to determine the vendor performance scores or vendor performance ratings of the other parties as part of the bid evaluation;
6.4.2 the Access to Information Act; and
6.4.3 the Library and Archives of Canada Act.

6.5 PSPC may determine that a successor entity to a vendor with an existing history of performance is the same vendor as that original vendor for the purposes of this policy. If PSPC is considering making such a determination, it must provide the successor entity an opportunity to make written submissions on the issue.

6.6 The determination of whether the conditions required to certify payment to a vendor under section 34 of the Financial Administration Act are met is made independently of vendor performance Scores.

7. Performance evaluations

7.1 Performance evaluations must take place at least every six months during the contract (interim performance evaluation), and once at the end of the contract (final performance evaluation). For contracts where the first milestone or deliverable is to be provided after a period longer than six months, the first performance evaluation must be completed at the time of the first milestone or deliverable. For contracts of less than twelve months, only a final performance evaluation must be completed.

7.1.1 Vendor performance scores can be revised if, during the warranty period, information becomes available to the contracting authority that would change the results of the related performance evaluation, in which case the normal performance evaluation process (described below) applies.
7.1.2 For standing offers, for ease of administration, each vendor must be provided with vendor performance scores that reflect the vendor’s overall performance under call-ups made against that standing offer. performance under individual call-ups will be scored through surveys sent to clients. The contracting authority will use the overall survey data to inform the draft vendor performance scores. performance evaluations will apply at the level of the vendor’s entire standing offer, as per the normal performance evaluation process (described below), and will be led by the contracting authority.

7.2 At the start of the contract, The client, together with the contracting authority, must discuss with vendors the performance expectations associated with the key performance indicators. They must also discuss the planned performance evaluation dates.

7.3 The client, together with the contracting authority, must have ongoing communications with vendors about performance and proactively raise issues as they occur. Clients must inform contracting authorities of vendor performance issues promptly during the life of a contract. Clients must give vendors feedback on their performance against the key performance indicators at regular intervals, either as part of ongoing discussions about contract work or (if there are no such discussions) in clear written communications specific to performance.

7.4 The client, together with the contracting authority, must undertake performance evaluations. They must substantiate vendor performance scores with metrics, narratives or supporting documentation that is appropriate to the type of key performance indicators in question.

7.5 Performance evaluations use the scorecards, including the vendor performance evaluation scale, and the key performance indicators of the applicable Commodity Group.

7.5.1 Vendor performance scores of 1 and 5 must be approved by the level of Management 2 levels above the contracting authority
7.5.2 Narratives are mandatory to support vendor performance scores other than 3. Narratives must be factual, accurate, and fair, while being as objective as possible. They must not contain personal information as defined by the Privacy Act, and must reflect discussions with the vendor
7.5.3 Following the completion of a performance evaluation, vendors must be invited to provide feedback. Discussions should take place within a reasonable time frame and outcomes should be documented
7.5.4 Final performance evaluations, and the resulting vendor performance scores, are to reflect the vendor’s overall performance during the life of the contract. The vendor performance scores from all previous performance evaluations under the same contract may be referred to during the final performance evaluation, but no particular formula or approach to integrating these previous Evaluations applies
7.5.5 If a contract includes more than one Commodity Group, by default performance evaluations will be completed only for the main Commodity Group being purchased. Contracting authorities may decide to evaluate performance for multiple Commodity Groups if justified by the deliverables being purchased. If so, the contracting authority must indicate this decision to evaluate performance for multiple Commodity Groups in the contract documents
7.5.6 A partnership or non-incorporated joint venture undergoes performance evaluations as if it were a single vendor. The resulting vendor performance scores will be assigned to each member of the non-incorporated joint venture and each partner within a partnership

7.6 The client, together with the contracting authority, must discuss the draft vendor performance scores with vendors. vendors may request to meet with the client and the contracting authority to discuss the draft vendor performance scores.

7.7 The client has 10 business days from the applicable milestone or interval to send the results of the performance evaluation (the draft vendor performance scores) to the contracting authority. The contracting authority then has 10 business days to review the draft vendor performance scores, and send them to the vendor.

7.8 If a vendor’s concerns about a vendor performance score cannot be resolved in discussions between the original parties, the matter will be escalated to the senior management up to the director(s) general or regional director(s) general (or equivalents) responsible for the procurement.

7.9 Further dispute or appeal mechanisms are not available for the testing period, as the vendor performance scores and vendor performance ratings will only be used to inform the development of the vendor performance policy. A minimum of 90 days advance notice will be provided to the vendor informing them of a decision to begin the retention and use of finalized evaluation results. At that time, instructions will be provided on dispute mechanisms available for use if, required.

8. Vendor performance ratings

8.1 Vendor performance ratings must be calculated as follows:

8.1.1 Individually for each Commodity Group.
8.1.2 Using the most recent vendor performance score from each contract. If the contract has ended, this will be the vendor performance score from the final performance evaluation.
8.1.3 Using the following formula to calculate a rolling average of the most recent vendor performance scores (see 8.1.2), where scores from the current year (the 365 days preceding the bid evaluation date, or “year 5”) are given the most weight and the scores from 4 years ago (“year 1”) are given the least weight:

Vendor Performance Rating =
(average Y1 vendor performance score x # of contracts in Y1 x 1)
+ (average Y2 vendor performance score x # of contracts in Y2 x 2)
+ (average Y3 vendor performance score x # of contracts in Y3 x 3)
+ (average Y4 vendor performance score x # of contracts in Y4 x 4)
+ (average Y5 vendor performance score x # of contracts in Y5 x 5)

(# of contracts in Y1 to Y5 x 15)
8.1.4 Using the same formula when no applicable vendor performance scores exist in one or more years, reducing the denominator accordingly.

8.2 Vendor performance ratings are determined differently in the following cases:

8.2.1 For complex or high-value contracts, vendor performance ratings may be calculated using vendor performance scores from only contracts of similarly high complexity or value, but only upon the contracting authority’s request and subject to the review and recommendation of the vendor performance Management centre of expertise.
8.2.2 For contracts where performance evaluations will include multiple Commodity Groups (see 7.5.5), vendor performance ratings must be calculated using the same formula as in 8.1.3, but using the most recent vendor performance score from each contract in all applicable Commodity Groups.
8.2.3 The vendor performance scores resulting from contracts held by partnerships and non-incorporated joint ventures will be assigned to each constituent vendor and will form part of its vendor performance rating.
8.2.4 In the case of an acquisition of one company or entity by another company or entity, the vendor performance scores of the acquiring company or entity will become the vendor performance scores of the resulting single company or entity, and thus determine the vendor performance ratings of the resulting single company or entity.

9. General responsibilities

9.1 The vendor performance Management centre of expertise is responsible to:

9.1.1 maintain, interpret, and administer the policy and provide oversight and guidance to PSPC and its client departments
9.1.2 ensure the successful input, storage, and use of performance information
9.1.3 develop standard vendor performance Management clauses for inclusion in procurement documents, contracts, and other legal agreements
9.1.4 provide communications and training to support the implementation of the policy
9.1.5 track, analyze, and report on trends and systemic issues related to the policy

9.2 Clients are responsible to:

9.2.1 evaluate and report on vendor performance, in collaboration with contracting authorities
9.2.2 provide feedback and comments to the vendor on performance at regular intervals, and discuss options to correct inadequate performance with the vendor in a timely manner
9.2.3 communicate feedback on vendor performance and the results of performance evaluations to contracting authorities in a timely manner
9.2.4 maintain open lines of communication with vendors, including serving as the first recourse for vendors challenging vendor performance scores
9.2.5 record and substantiate the results of all performance evaluations and related discussions

9.3 Contracting authorities are responsible to:

9.3.1 work closely with clients to evaluate the performance of vendors over the course of contracts
9.3.2 communicate the results of performance evaluations to vendors in a timely manner
9.3.3 oversee and validate vendor performance scores, and ensure they are entered into the electronic procurement solution
9.3.4 maintain open lines of communication with vendors
9.3.5 incorporate information in requests for proposals (and equivalents) on how vendor performance ratings will be used during the selection process
9.3.6 incorporate standard vendor performance Management clauses in procurement documents, contracts and legal agreements

9.4 vendors are responsible to:

9.4.1 respond to communications about performance over the course of the contract, including communications about performance evaluations and vendor performance scores

10. Monitoring and compliance

10.1 PSPC will monitor the application of the policy to assess adherence and interpretation. This may include periodic audits or reviews in order to verify that the policy is appropriately implemented.

11. References

Acts

11.1 Access to Information Act
11.2 Privacy Act
11.3 Financial Administration Act
11.4 Department of Public Works and Government Services Act

Related publications

11.5 Treasury Board Secretariat Contracting policy
11.6 Treasury Board Secretariat policy on Access to Information
11.7 PSPC Ineligibility and Suspension policy

12. Enquiries

Please direct enquiries about this policy to the Vendor Performance Management Centre of Expertise.

Email: tpsgc.gestrendementfournisseur-supplierperfmgmt.pwgsc@tpsgc-pwgsc.gc.ca

Annex A: Definitions

Client:

The official who initiates a procurement based on operational needs, and who is responsible for matters concerning the technical content of a procurement. This term may be equivalent to the technical authority or project authority.

Commodity Group:

A good, service, service related to goods, or construction. Each group has a Goods and Services Identification Number (GSIN) or United Nations Standard Products and Services Code (UNSPSC). For the purposes of this policy, PSPC determines whether the GSIN or the UNSPSC will be used during the federal GSIN to UNSPSC transition process.

Complexity:

As per the definitions of levels of complexity in the Supply Manual, Annex: Characteristics of Acquisitions Program Procurement Complexity Levels, as amended from time to time.

Contracting authority:

The PSPC procurement official who holds or reports to the official who holds contract signing authority for the procurement. (For general information only, see the definition of “Contract signing authority” in the Supply Manual.)

Department:

For the purpose of this policy, department has the same meaning as in section 2 of the Financial Administration Act.

Key Performance Indicators (KPIs):

The set of measures used during Performance Evaluations and throughout the contract lifecycle. KPIs fall generally under the following performance categories: cost, quality, schedule, and Management.

Performance Evaluation:

An evaluation by clients and contracting authorities using PSPC scorecards, including key performance indicators, to determine a vendor’s level of performance in delivering upon their contractual obligations. Results of performance evaluations are called vendor performance scores.

Vendor:

A legal entity with a unique business number that has or previously had a contract with, or has submitted a bid for a contract to, one or more contracting authorities.

Vendor Performance Evaluation Scale:

A 1 to 5 scale used to evaluate Vendor performance, according to the Commodity Grouping scorecard and key performance indicators. A general definition of the levels follows.

5. Exceptional: The Vendor’s performance greatly exceeds the expected performance
4. Surpassed: The Vendor’s performance exceeds the expected performance
3. Achieved: The Vendor’s performance meets the expected performance
2. Moderate improvement needed: The Vendor’s performance is below the expected performance
1. Significant improvement needed: The Vendor’s performance is significantly below the expected performance

VPM Centre of Expertise:

An office in PSPC dedicated to vendor Performance Management.

Vendor Performance Ratings:

An overall rating for a vendor in a Commodity Group, based on the Vendor’s Vendor Performance Scores under that Commodity Group. This rating is calculated using a formula contained in this Policy, which takes as input the Vendor Performance Scores and calculates as output a single Vendor Performance Rating. A Vendor may have more than one Vendor Performance Rating if they contract under different Commodity Groups.

Vendor Performance Score:

Score assigned through a Performance Evaluation.

date modified:: 2024-04-12

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