Contracting with Canadian suppliers

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1. The Canadian Commercial Corporation as prime

Defense contracts with companies in Canada usually run through a Canadian government corporation. Under the Defense Federal Acquisition Regulation Supplement (DFARS), the Canadian government guarantees to the U.S. Government all commitments, obligations and covenants of the Canadian Commercial Corporation (CCC) (DFARS 225.870-1(a)). The guarantee covers any contract or order issued to the CCC by a U.S. contracting office (DFARS 225.870-1(a)). The Canadian government has waived notice of any change or modification that may be made in those commitments. For production planning purposes, Canada is part of the defense industrial base (DFARS 225.870-1(b)).

The CCC will award and administer contracts with contractors located in Canada, with four exceptions (DFARS 225.870-1(c)). The first is negotiated acquisitions for experimental, developmental or research work under projects other than the Defense Development Sharing Program. The second is acquisitions of unusual or compelling urgency. The third is acquisitions at or below the simplified acquisition threshold, and the fourth is acquisitions made by Defense Department activities located in Canada. Further information on production rights, data, CCC services, audit and inspection is in the Procedures, Guidance and Information (PGI) at 225.870-1(d) (DFARS 225.870-1(d)).

2. Soliciting Canadian firms

If requested, contracting officers furnish a solicitation to the CCC even if no Canadian firm is solicited (DFARS 225.870-2(a)). Acquisitions at or below the simplified acquisition threshold are handled directly with Canadian firms and not through the CCC (DFARS 225.870-2(b)).

3. How offers are submitted

The CCC is the prime contractor (DFARS 225.870-3(a)). To show acceptance of an offer by an individual Canadian company, it issues a letter supporting the offer. The letter gives the name of the Canadian offeror and confirms and endorses the offer in the CCC’s name. It also states that the Corporation shall subcontract 100 percent with the offeror.

When an offer cannot be processed through the CCC in time to meet the date for receipt of offers, the Corporation may permit Canadian firms to submit offers directly (DFARS 225.870-3(b)). The contracting officer must, however, receive the CCC’s endorsement before contract award.

4. Currency

The CCC submits all sealed bids in terms of U.S. currency, and contracts awarded under sealed bidding are not adjusted for losses or gains from fluctuation in exchange rates (DFARS 225.870-3(c)). For other offers and quotations, the Corporation normally submits in Canadian currency (DFARS 225.870-3(d)). It may, when submitting an offer, elect to quote and receive payment in U.S. currency, in which case the contract provides for payment in U.S. currency without adjustment for exchange rate changes.

The contract identifies the type of currency, U.S. or Canadian (DFARS 225.870-4(d)). Contracts paying in Canadian currency quote the price in Canadian dollars identified by the initials CN, for example $1,647.23CN (DFARS 225.870-4(d)(1)). They show clearly on their face the U.S./Canadian conversion rate at the time of award and the U.S. dollar equivalent of the contract amount (DFARS 225.870-4(d)(2)).

5. Award and communication

Except for the four excepted kinds of contract, individual contracts covering purchases from suppliers located in Canada are awarded to the CCC at its offices in Ottawa (DFARS 225.870-4(a)). Direct communication with the Canadian supplier is authorized and encouraged on all technical aspects of the contract, provided the Corporation’s approval is obtained on any matters involving changes to the contract (DFARS 225.870-4(b)).

6. Pricing data

The Defense Department has waived the requirement for submission of certified cost or pricing data for the CCC and its subcontractors (DFARS 225.870-4(c)(1)). The CCC is not exempt from submitting data other than certified cost or pricing data, and the contracting officer shall require such data to the extent necessary to determine a fair and reasonable price (DFARS 225.870-4(c)(2)).

No further approval is needed to request that data in four cases (DFARS 225.870-4(c)(2)(i)). They are a sole source solicitation for a cost-reimbursement contract expected to exceed $700,000, or a fixed-price contract expected to exceed $500 million. They also include a competitive solicitation meeting those thresholds in which the CCC submits the only offer, and modifications exceeding $150,000 in such contracts. The fourth is a competitive solicitation in which the data are required from all offerors. In any other case, the data may be required only if the head of the contracting activity, or a designee no lower than two levels above the contracting officer, determines they are needed (DFARS 225.870-4(c)(2)(ii)).

The contracting officer uses the provision at 252.215-7003 and the clause at 252.215-7004 for these data requirements (DFARS 225.870-4(c)(3)). Except for the excepted contracts, Canadian suppliers provide required data exclusively through the CCC (DFARS 225.870-4(c)(4)). The rule on missing data follows Federal Acquisition Regulation (FAR) 15.403-3(a)(4). An offeror that withholds data the contracting officer deemed necessary for price reasonableness or cost realism is ineligible for award, unless the head of the contracting activity finds that award is in the Government’s best interest (DFARS 225.870-4(c)(5)). That determination considers the effort made to obtain the data, the need for the item or service, and increased cost or significant harm if award is not made.

7. Administration, termination and security

Contract administration follows the procedures at PGI 225.870-5 (DFARS 225.870-5). Terminations follow the procedures at 249.7000 (DFARS 225.870-6). Acceptance of Canadian supplies is addressed at PGI 225.870-7 (DFARS 225.870-7). Industrial security follows the U.S.-Canada Industrial Security Agreement of March 31, 1952, as amended (DFARS 225.870-8). Subject to stated exceptions, a contract with a foreign entity also needs a certification on the secondary Arab boycott of Israel (DFARS 225.7601). For CCC contracts, the CCC submits its proposed subcontractor’s certification (DFARS 225.7602). Other qualifying country rules are covered in contracting with qualifying country sources.

8. Related Canadian provisions elsewhere in DFARS

Canada also appears in other parts of the DFARS. It is on the list of qualifying countries whose end products are relieved from the Buy American statute and the Balance of Payments Program (DFARS 225.872-1(a)). Under the qualifying country rules, Canadian sources are solicited through the CCC (DFARS 225.872-3(b)). The mobilization base restriction on qualifying country purchases does not apply to Canadian planned producers (DFARS 225.872-2(a)(2)). The duty to report intended performance abroad also treats Canada like the United States, since it covers work outside both countries (DFARS 225.7201).

Key terms

CCC	The Canadian Commercial Corporation, which acts as prime contractor for Canadian suppliers.
Supporting letter	The CCC letter endorsing a Canadian offer and committing to a 100 percent subcontract.
CN	The initials that identify a price stated in Canadian dollars.
Data other than certified cost or pricing data	Pricing information the CCC must still provide where needed.
1952 Agreement	The U.S.-Canada Industrial Security Agreement that governs security.

Every statement above links to the document behind it. The full source list for this piece is on the sources page.

This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

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