Contract splitting

Contract splitting is dividing a requirement into pieces to stay under approval or trade-agreement thresholds - expressly prohibited in federal procurement.

What it is

Contract splitting is dividing a requirement - or its amendments - into pieces so that each piece stays below an approval threshold, trade-agreement value threshold, or internal signing limit. It is prohibited in Canadian federal procurement: PSPC's own procurement approval documentation quotes Treasury Board Contracting Policy subsection 11.2.7 and Supply Manual 6A.001: "Contracting authorities must not split contracts or contract amendments in order to avoid obtaining either the approval required by statute, the Treasury Board Contracts Directive or appropriate management approval within the department or agency."

The trade-agreement layer

The same rule continues: contracts must not be split to avoid obligations under national or international trade agreements (CFTA, CETA, WTO GPA) or the application of procurement policies. Value for threshold purposes is assessed on the whole requirement - estimated maximum value including options, extensions and amendments - not on the size of the piece being awarded today.

How it is policed

PSPC's Procurement Process Approval Form includes an explicit contract-splitting attestation: the signer confirms the supplier was selected such that no instance of contract splitting occurred, including where a supplier was previously contracted on the same project - continuing work with the same supplier requires justification showing no splitting took place.

Common questions

Is splitting ever allowed?

Breaking a large project into separate contracts can be legitimate when it reflects real operational structure and is not designed to dodge thresholds or approvals - the prohibition targets avoidance, not all multi-contract structures.

What can suppliers do about suspected splitting?

A supplier that loses work to what looks like engineered below-threshold buys can raise it with the buying department, file a complaint with the Office of the Procurement Ombud, or pursue a CITT bid-challenge where a designated contract is involved.

Related definitions

CFTA thresholds - CFTA procurement valuation - Contract ceiling - Procurement Ombud - CITT bid challenge