EFFECTIVE DATE: April 1, 2009
LAST VERSION: January 1, 2023
The Procurement Policy (the “Policy”) is established by the Executive and Legal Services (ELS) Department to provide direction on the governance for Bank of Canada (the “Bank”) purchases of goods and services. As Canada’s central bank, the Bank operates independently from government to meet its mandate and business objectives including its procurement function. Accordingly, strict adherence to this policy is required by all Bank departments and its employees.
The Bank’s Procurement Guidelines (the “Guidelines”) shall be read in conjunction with this Policy. In cases where guidelines and/or procedures are not consistent, this Policy shall take precedence.
It is the Bank's policy that commercial goods and services are to be procured fairly and openly (in the interest of vendors) as well as in a transparent and economical manner (to ensure efficiencies and value for money for Canadian taxpayers)
The Bank is also committed to integrating best practices, tools and resources that will help guide us in assessing and making choices that address Environmental, Social, and Governance (ESG) factors in the Bank’s procurements. Specifically, the Bank will implement measures within its procurements that support broader enterprise-level initiatives in Greening the Bank, Reconciliation with Indigenous Peoples, Diversity and Inclusion (D&I).
Together with the Guidelines, related procedures and controls, this policy serves the following guiding principles:
- Transactions must comply with applicable laws and Bank policies
- The Bank’s policy is best achieved through competitive “best value” procurement processes - any exceptions to must have appropriate justification and approval subject to allowable standards within the Policy and/or the Guidelines;
- Appropriate due diligence, oversight, and documentation shall be undertaken in order to demonstrate accountability and transparency in decision-making and the management of public funds;
- Third party, legal, financial, cyber, security and privacy risks shall be suitably assessed, identified and managed within the Bank’s procurement and contracting processes;
- Contract terms and conditions are negotiated with vendors that ensure the successful delivery of goods and services; and
- Guidelines, procedures and controls shall be based on best practices.
This is a Bank-wide policy that applies to all Bank locations, departments, employees and operations. Other than as noted as Out of Scope below, this policy applies to the procurement of all goods and services for the Bank.
OUT OF SCOPE:
Items contained on the Bank’s Exempt Goods and Services List in Section 3 of the Guidelines.
As per Section 1 of the Guidelines, the Bank uses a centre-led / risk-based procurement model which integrates centralized and decentralized functions as part of its enterprise framework. A Three Lines of Defence approach is used to define accountabilities:
The First Line of Defence
Bank Departments, Contract Owners, Steering Groups
(Business function, not ELS-Procurement Services)
- Plans, defines, initiates procurements, ensures appropriate funding to meet business requirements
- Participates in bid evaluations, provides business and technical expertise
- Makes go/no-go decision based on procurement process results
- Owns/manages agreements as per the Bank’s Contract Management Framework
The Second Line of Defence
ELS - Procurement Services
- Owner/stewards of the Procurement Policy and Guidelines
- Sets and monitors enterprise standards, guidelines, and controls to mitigate policy risks while meeting business objectives
- Oversees, facilitates, and executes Bank strategic and complex procurements to ensure sound decision-making, governance, policy integrity and compliance
- Facilitates and monitors integrated third party risk processes as per the Bank’s Third Party Risk Management (TPRM) Policy
- Supports enterprise level reporting, metrics, KPIs as part of oversight function
- Owns/manages procurement and vendor databases
ELS - Legal Services
- Advises on legal aspects of procurements and contracts
- Mitigates legal risks in Bank contracts
- Reviews, advises, negotiates contract terms and conditions with stakeholders
- Develops / updates / approves standard contract templates with ELS-Procurement Services.
- Supports financial aspects related to bid evaluations, contracts, reporting, and disclosure (where required)
- Oversees effective financial management and oversees the approval and funding of initiatives
- Processes vendor invoices and payments and addresses inconsistencies with appropriate stakeholders
Third Party Risk Owners
- Assesses and advises on risks involving financial, technical, cyber, security, and privacy aspects of procurements as per the Bank’s TPRM Policy
The Third Line of Defence
- Provides independent and objective advice on this Policy
- Conducts periodic audit related processes, controls, risks, and mitigation strategies
Finance and Contracts Committee (FCC) and Senior Management Council (SMC)
- Reviews, recommends, approves sole source justifications and/or significant transactions as well as advice on related risks per the FCC Terms of Reference
- Promotes adherence to related policies and guidelines
Audit and Finance Committee (AFC)
- Advises on risks related to the Bank’s external auditors
- Delivers goods and services in accordance with applicable contract terms and conditions (i.e. delivery/service requirements, information and cyber security, use of sub-contractors, billing, and contract close-out procedures)
Except for Departmental Purchasing in Section 3 of the Guidelines, the procurement process commences upon the approval of a formal purchase requisition by ELS-Procurement Services submitted by Departments (with required support and documentation as per this Policy and Guidelines) and ends upon the execution and transfer of a contract to a Contract Owner.
The procurement lifecycle is comprised of six (6) main phases subject to provisions under this Policy and related Guidelines as well as other Bank policies:
- Requisition/Sourcing Method
- TPRM Risk Tiering/Vendor Screening
- Procurement Process
- TPRM Vendor Due Diligence/Contract Controls
- Contract Negotiations/Development
- Contract Award and File Transfer Process
Sourcing and Requisition Provisions
All Bank procurements shall be competed except where there is appropriate justification and/or exceptions to source one vendor per Section 3 and 4 of the Guidelines:
Section 3.1 Exempt Goods and Services
Section 3.2 Departmental Purchase Order
Section 3.3 Purchasing Card
Section 4.2 Single Source Purchasing
Section 4.3 Sole Source Purchasing
Bank Departments may obtain estimates from vendors for budgetary planning and/or market research purposes only. Once a business requirement has been established, Bank Departments and their employees must have an approved sourcing method and/or agreed procurement strategy in place with ELS-Procurement Services prior to engaging vendors on Bank requirements (including informal trials, demos, solicited/unsolicited proposals and/or the purchase or delivery of goods or services).
All goods and services must be procured by way of an approved procurement method as per the Sourcing Method Approval Framework and the Bank’s Financial Authorities Framework (FAF).
Third Party Risk Management Provisions
Where applicable, Bank procurements are subject to third party risk management processes (Steps 1 to 11) as per the Bank’s Third Party Risk Management (TPRM) Policy and Framework.
- Criticality & Exposure Filter
- Third Party Screening
Risk Assessment & Due Diligence
- TPRM Stand Up Meeting
- Due Diligence Questionnaire
- Controls Evaluations/Ratings
- Site Visit
- Contract Controls
- Risk Acceptance & Approval
- Arrangement Management
- Health Check & Compliance
- Continuous Monitoring
- Termination & Offboarding
The provision of goods and/or services shall not commence until a contract or agreement has been approved and signed by all parties. All procurements and contracting transactions must be approved, signed and executed as per the Bank’s Financial Authorities Framework (FAF).
Contracts and amendments resulting from Section 4 of the Guidelines – Strategic Procurement & Contracting via ELS, shall be approved, signed and executed by the appropriate Contract Authority within the FAF Financial Authorities Matrix and the ELS-Contract Authority Framework.
All transactions resulting from Section 3 of the Guidelines – Departmental Purchasing shall be approved and executed by the appropriate Bank Department Requisition Authority in the FAF Financial Authorities Matrix.
Contract Management Lifecycle
All contracts and vendor relationships shall be owned and managed by Departments upon contract execution and file transfer from ELS-Procurement Services to Contract Owners as per the Contract File Transfer process in section 4.5 of the Guidelines. Contract Owners are to refer to the Bank’s Contract Management Framework for accountabilities and guidelines to manage their contracts.
Contract Lifecycle Requirements
All contracts and vendor relationships shall be owned and managed by Departments upon contract execution and file transfer from ELS-Procurement Services to Contract Owners as per the Contract File Transfer process in section 4.5 of the Guidelines, and the Bank’s Contract Management Policy.
As per Section 3.2 of the Bank’s Contract Management Guidelines, Contract Owners must engage with ELS-Procurement Services during the contract lifecycle under the following circumstances:
- Amendments to Agreements
- Performance and Terminations
- Contract Close-outs
- Vendor (3rd party) Ownership Change
- Terms and Condition Interpretation
- Vendor References
Documentation and Records
All records related to the Bank’s procurements shall be maintained as per the Bank’s Records Management Directive and Managing Corporate Record Guidelines and Section 5.4 of the Guidelines - Records Management.
Other Related Provisions
- Contracting Provisions and Authorities
All potential purchases must be assessed and approved as per sourcing and requisition provisions under this Policy. Bank Departments and employees shall not engage or accept commitments on behalf of the Bank, verbally or in writing, without appropriate procurement and/or financial authorities in place. This includes (but is not limited to) new contracts and amendments, solicited/unsolicited proposals, limited time or explosive offers that provide expiring cost savings from vendors and/or may influence or impact the outcomes of Bank procurements. Bank employees are to refer to the Bank’s Procurement Guidelines, FAF and/or contact Procurement to assess policy provisions prior to engagement with vendors on Bank requirements.
- Contract Splitting
Intentional division of business requirements into smaller quantities over a number of contracts with the same vendor for the same purpose to avoid competitive, sourcing, and/or governance provisions is strictly prohibited under this Policy.
- Vendor Disputes
Any disputes regarding the results of a procurement process shall be directed to the Director, Procurement Services for resolution. The Assistant General Counsel shall be engaged in the event if the dispute cannot be resolved by the Director.
- Emergency Purchases
Emergency Purchases may be necessary as part an Incident Management event under the Bank’s Continuity of Operations (COOP) Program office. Purchases should be limited to only those goods and services necessary to meet the emergency requirements. Insufficient time alone does not constitute an exception to compete goods/services. Emergency purchases shall be tracked/documented by ELS-Procurement in partnership with Financial Services along with retention of related procurement and contract documents.
Employees must perform their responsibilities in compliance with the standards set out in the Bank’s Code of Business Conduct and Ethics, this Policy and any other relevant policy. In particular, they must procure goods and services in an open, fair and ethical manner with the proper authorizations and without real, potential, or perceived conflicts of interest in accordance with Bank policies. Furthermore, Bank employees may not communicate with individuals employed or engaged by vendors involved in an active competitive process unless authorized by ELS-Procurement Services.
Situations of non-compliance will be addressed on a case-by-case basis and/or escalated to Bank Managing Directors and may be subject to corrective or disciplinary measures up to and including termination of employment.
Corrective measures can include requiring additional training, management action response and disciplinary measures include verbal or written warnings, suspension without pay or termination, depending on the nature and extent of the breach.
Any updates, amendments and/or exceptions to this Policy or related Guidelines shall be recommended in writing by the Director, Procurement Services and approved by the General Counsel or Assistant General Counsel, from Executive and Legal Services (ELS).
The Assistant General Counsel may:
- Approve different procurement approaches which are not consistent with the Procurement Policy if required under exceptional circumstances
- Prohibit any person from undertaking procurement activities if deemed appropriate to safeguard the Bank’s interests and reputation
- Approve administrative and substantive changes to the Policy or Guidelines
- Approve goods and services to be included on the Bank’s Exempt Goods and Services List
Updated versions of the Policy and Guidelines shall be posted on Banque Centrale and the Bank’s external website.