The Canada Foundation for Innovation (CFI) is an independent corporation created by the Government of Canada in 1997 to fund research infrastructure. The CFI’s mandate is to strengthen the capacity of Canadian universities, colleges, research hospitals, and non-profit research institutions to carry out world-class research and technology development that benefits Canadians.
For more information on how to apply for CFI funding and how to manage these funds in accordance with prescribed CFI polices and guidelines, refer to the CFI Policy and Program Guide here.
CFI operates on the principle that its funds must be used effectively and economically. To maximize the purchasing power of its investment and ensure a fair and transparent process, the CFI requires that all purchases related to its projects follow York University’s usual tendering and purchasing policies and procedures.
To ensure that the researcher or principal investigator (PI) and Institution (York) are compliant with CFI policies and guidelines, CFI conducts regular monitoring visits at recipient institutions to assess the adequacy and effectiveness of policies, processes, and controls that are in place for the management of CFI-funded projects. This helps ensure that funds are being used for their intended purposes, and in accordance with terms and conditions of award agreements, as well as CFI policies and guidelines.
There are three (3) distinctive stages which require active collaboration between the researcher, or principal investigator (PI), the Office of Research Services (ORS), Research Accounting (RA) and Procurement Services (PS) among others such as Campus Services and Business Operations (CSBO) where physical infrastructure may also be required. Where acquisitions of goods and services (including external consultants) are required, the CFI has prescribed a number of activities that must be undertaken in each of these 3 stages: Pre-Application, Award Finalization, and Post-Award.
What does CFI consider to be eligible infrastructure projects?
An eligible infrastructure project involves the modernization, acquisition, development, or leasing of research infrastructure. The eligible infrastructure represents a new capital asset and provides new and/or improved research capability, including research tools and/or research facilities.
What are considered eligible costs for infrastructure projects?
The costs of modernizing, acquiring, developing, or leasing research infrastructure are eligible. In the case of leasing, the application must demonstrate that leasing is at least as cost-effective as purchasing, and must justify the proposed term of the lease. Leases cannot include any ongoing operating, maintenance, or financing costs.
Eligible costs include all goods and services required to bring the new infrastructure into operation, as well as warranties and service contracts included in the infrastructure purchase price. Eligible costs may include taxes (net of credits received), shipping, and installation. However, taxes must not be calculated on the in-kind portion.
Eligible and non-eligible costs are further outlined in the CFI Policy and Program Guide. PIs must be familiar with, and adhere to these requirements or risk losing funds or project cancellation.
What is the funding formula used by CFI?
CFI will usually provide funding to a maximum of 40 percent of the total eligible costs of the infrastructure projects it supports. The remainder must be provided by the institution(s) and/or eligible funding partners.
Who are considered eligible funding partners?
The definition of eligible costs also applies to funding provided by eligible partners. Only those contributions to the eligible costs of a project will be accepted as eligible partner contributions.
Eligible Partners (Canadian or foreign)
- Institutional funds, trust funds, or foundations
- Departments and agencies of the federal government
- Departments and agencies of provincial, territorial, and municipal governments (except Tri-Agency)
- Firms and corporations
- Non-profit organizations
The source of the partner contributions is not a selection criterion. Nevertheless, the presence of a specific source of funding may demonstrate commitment to the project, interest of potential users of the infrastructure, interest of beneficiaries of research results, or interest of potential employers of the highly qualified personnel.
What is the process for purchasing CFI-funded infrastructure?
The CFI defers the procurement process to the institution receiving the funds; therefore, CFI requires that all purchases related to its projects follow the institution’s usual tendering and purchasing policies and procedures.
York University’s Policy and Procedure on Procurement of Goods and Services are available at:
http://www.yorku.ca/secretariat/policies/document.php?document=27 (Policy) and, http://www.yorku.ca/univsec/policies/document.php?document=58 (Procedure).
When can infrastructure purchases be made?
Purchases can only be made once CFI approves the award and has transferred the funds to York University (post award stage). Research Accounting will notify the PI and Procurement Services that the cost centre has been established and that purchases can begin. Purchases made must match the approved line items and noted as such on the Purchasing Requisition which is prepared and signed by the PI. The Purchasing Requisition – with all required documentation – is sent to Procurement Services, Suite B, EOB. Once received, these requisitions are forwarded to Research Accounting for a review of eligibility and available funding.
Once the review by RA is completed, the requisitions are returned to Procurement Services to ensure that all applicable costs are captured (i.e. taxes, installation costs, shipping, etc.) and that any in-kind contribution is properly supported. Each requisition is compared to the one that was submitted with the finalized budget to ensure no changes are made to items, pricing or in-kind contributions; where changes are requested, PS will follow-up with the PI. Procurement Services will issue a Purchase Order to the selected vendor and send a second copy of the Purchase Order (receiving copy) to the PI.
Once a product is received and inspected, or the service(s) is rendered, the PI must sign the receiving copy of the PO, and send it to Accounts Payable (Suite B, EOB) with the invoice for vendor payment.
What if the project requires construction or renovation of physical space?
Infrastructure projects may involve the construction of a new building or the development of new space in an existing building (e.g. new floors, reconfiguration of existing space) only when the new space is essential to house and use the eligible infrastructure being acquired. Thus, instalment(s) for the equipment to be located in the constructed or renovated space will only be paid once this space is ready to house the equipment. Where there is an option to either renovate an existing building or construct a new building, the most cost-effective option must be chosen.
In cases where construction or renovation is required to accommodate a CFI-funded projects and related equipment, PIs must consult with the Planning and Renovation unit within CSBO. While ORS will assist in making this connection, it is incumbent upon PIs to ensure that costs associated with physical space requirements are estimated correctly to avoid costly consequences. The CFI policy and program guide stipulates:
“Infrastructure projects that include construction or renovations must be developed well beyond the conceptual stage at the time of submission of a grant application. The CFI expects the institution to have defined the needs for the building, explored and decided upon the most feasible option, and have reliable estimates of the construction or renovation costs (e.g. estimates by a quantity surveyor or contractor, use of industry standards, or experience with similar construction or renovation in recent years).”
When and how are vendor quotations solicited?
As part of application development, PIs are required to include an itemized equipment list with an estimated budget for each item. To provide a reasonable estimate of the cost of any item, Procurement Services assists the PI with quote solicitations. PIs can solicit quotes directly by using the Quote Solicitation Form prepared for this purpose. This form can be used to solicit quotes for goods or services up to $50,000 in estimated value. If the anticipated value exceeds $50,000, PIs must contact Procurement Services for a formal competitive bid.
A formal competitive bidding process, as per the institution’s usual tendering and purchasing policies and procedures, must take place prior to the purchase of each item. The institution should not make any purchase commitments to suppliers when soliciting pricing information at the proposal and award finalization stages, ensuring that a formal competitive bidding process can be carried out prior to the actual purchase.
In accordance with the Agreement on Internal Trade (to which both York and the CFI are obligated) purchases in excess of $100,000 must be publicly advertised by Procurement Services through an electronic tendering system. York uses MERX and/or Biddingo for this purpose.
Vendors must be given a reasonable amount of time to adequately respond to a call for competitive bids. A minimum of fifteen (15) calendar days must be provided for this purpose. Procurement Services is responsible for managing the competitive bid process and will work with the PI to ensure the process is compliant with all applicable laws and regulations.
What is an itemized list?
An itemized list is a detailed listing of the major items that will be purchased for the infrastructure. In the Itemized List, institutions must provide updated cost estimates and a timeline for the acquisition of the infrastructure, along with any changes to the original proposed infrastructure.
When submitting a proposal, institutions are required to ensure that the costs included for each budget item approximate the fair market value. At award finalization, the CFI expects institutions to update these cost estimates, as required, to ensure they reflect the expected purchase price as accurately as possible. Institutions must maintain supporting documentation for updated cost estimates and provides them upon request.
The full estimated cost of all eligible items must be presented in the Itemized List, even
if it exceeds the cost reported in the proposal to the CFI. Reporting of the partial estimated cost of an eligible item is not permitted. In addition, the cost of an item cannot be shared between CFI-funded projects.
It is important to note that, normally, new items which were not included in the proposal may not be added to the Itemized List. Changes to this list may be accepted with strong justification. The CFI may seek the advice of expert reviewers for requested changes. Modifications to proposed vendor or model (with similar functionalities) are acceptable and do not require CFI approval.
The CFI anticipates that some cost estimates may differ from those in the proposal.
However, if the revised costs of warranties or service contracts are lower than originally stated, the CFI’s contribution will be reduced.
An institution must notify the CFI if changes have been made to the construction and renovation information provided in the proposal (e.g. changes in floor plans, size and nature of the space, etc.), even if the changes result in little or no impact on the total construction or renovation cost. Revised floor plans and associated information must be forwarded to the CFI along with the Itemized List. If the CFI is not notified of any changes, the information provided in the proposal will form the basis for the Award Agreement.
What does an Itemized List look like?
The Office of Research Services prepares the Itemized List and submits it to CFI along with the grant application. A sample of the list is found at:http://www.innovation.ca/docs/forms/2009_il_ssc_e.pdf
Procurement Services will only authorize purchases that have been approved by the CFI through its confirmation of the information provided on the Itemized List. This is done to ensure that York will not have to pay for purchases which may otherwise be found to be ineligible after the fact.
What if only one vendor is able or capable of meeting specific product or service requirements?
York University, as the recipient of CFI funds, must be able to demonstrate that acquisitions are made in a competitive manner (i.e. multiple quotations or formal competitive bids).
It is recognized that in rare, specific or exceptional circumstances, competitive pricing cannot be obtained (i.e. through multiple quotations or competitive bidding) as there may be only one vendor or consultant able, or capable, of providing the goods or services. For these types of rare situations, the Sole or Single Source Certification must be completed by the PI and submitted to Procurement Services for approval prior to making any commitment to the potential vendor. In these situations, the CFI will still require evidence of fair market value.
What is meant by FAIR MARKET VALUE?
CFI defines fair market value as:
“The price that would be agreed to in an open and unrestricted market between knowledgeable and willing parties dealing at arm’s length who are fully informed and not under compulsion to transact. The fair market value is the price an institution would normally be expected to pay in such circumstances, after normal and educational discounts, but prior to consideration of any special CFI discount that may be offered as a contribution towards a CFI-funded project.”
Procurement Services will advise as to how fair market value can be assessed.
What is considered an eligible in-kind contribution?
In-kind contributions are defined as eligible non-monetary resources that external eligible partners provide to eligible projects. The CFI considers all contributions made by an eligible institution to a project to be a cash contribution.
CFI will recognize eligible infrastructure items involving in-kind contributions at fair market value. In-kind contributions must be eligible contributions in the acquisition and development of infrastructure. In-kind contributions to the operating costs of research will not be accepted. In-kind contributions may include, in whole or in part, the value of capital items (e.g. equipment and facilities) that eligible external partners donate to the eligible institution. The value, in whole or in part, of certain non-capital eligible items that are needed to bring the infrastructure into service, such as professional services and training, may also be included as in-kind contributions.
Pricing obtained through multiple quotations, competitive bid or Sole or Single Source Certification for each item must be submitted to the CFI, and once the itemized list has been compiled, ORS will include it in the application to be submitted to the CFI for consideration. Included in this submission is any in-kind contribution made by vendors.
What is meant by valuation of items involving in-kind contributions?
The valuation method depends on the nature of the item. In some cases, the fair market value of the item is known. In other cases, the value must be assessed using commonly accepted methods.
Information regarding special requirements and documentation practices for the valuation process are outlined in Section 6.5, CFI Policy and Program Guide.
What is meant by Category 1 and Category 2 in-kind contributions?
CFI describes Category 1 as:
- Individual in-kind contributions less than $100,000
- Individual in-kind contributions between $100,000 and $500,000 that represent 10% or less of total eligible product costs
CFI describes Category 2 as:
- Individual in-kind contributions between $100,000 and $500,000 that represent more than 10% of total eligible project costs
- All individual in-kind contributions larger than $500,000
In order to satisfactorily assess and support the valuation of in-kind contributions, Procurement Services requires that both educational discounts and special discounts are clearly identified on supporting documentation provided by vendors through the purchasing and tendering processes.
The only way to ensure fair market value of funds expended, is to compare values quoted by competitors and assess these for reasonableness. This is particularly important for Category 2 in-kind contributions.
How is an in-kind contribution reported?
Upon grant approval, previously solicited quotes and any in-kind contributions will be used to finalize pricing with vendors. In some cases, pricing may have changed due to currency exchange fluctuations, changes to model specifications or new products that have been introduced to the market (this is likely to occur if grant approval decisions are delayed by several months). Vendors who are offering an in-kind contribution must submit pricing information according to a prescribed CFI format in this example:
|List price if the item||$500|
|Less: Normal discount (if any)*||($20)|
|Less: Educational discount (if any)**||($80)|
|Fair market value (Eligible cost)***||$400|
|Less: Net selling price (cash consideration)****||($300)|
|Special CFI discount (eligible in-kind contribution)*****||$100|
*Normal discount - The discount that would normally be offered to the institution, taking into consideration factors such as its current volume of transactions and its location. Discounts for early settlement or for settlement in cash are considered normal discounts.
**Educational discount - The discount that would normally be offered to the institution given its educational status.
***Fair market value (eligible cost) – defined above.
****Net selling price - Cash consideration paid or payable by the institution.
*****Special CFI discount (eligible in-kind contribution) - Any discount in excess of the normal and educational discounts normally offered to the institution, and which is specifically offered as a contribution towards a CFI-funded project. The special CFI discount is equal to the fair market value of the item less the net selling price.
An overestimation of an in-kind contribution inflates the total cost of a project. York University is required to conduct a reasonability assessment of any in-kind contribution and must have this available to CFI during monitoring visits or audits.
It is important for PIs to understand that the CFI does not obligate vendors to provide in-kind support, nor does it obligate vendors to offer a deep discount. Although vendors are the logical choice as a funding partner in many of the CFI projects, partner funding – whether received in the form of a cash payment or of an in-kind contribution, is done strictly on a voluntary basis.
What documents are required to support these acquisitions?
Documentation required is dependant on the acquisition method. At a minimum, all vendor quotations solicited directly by the PI must be attached to the Purchasing Requisition (at least three (3) written quotations must be included). Procurement Services will issue the Purchase Order to the selected vendor. Where Procurement Services has completed a competitive bid, the PI is required to complete the Purchasing Requisition with reference to the competitive bid number as all relevant documents are kept by Procurement Services.
Institutions must be prepared to provide the following required supporting documentation for expenditures and contributions related to each eligible item reported in a CFI-funded project. Original documentation must be retained on file at the institution for audit purposes, and provided to the CFI upon request.
- Purchasing requisition;
- Request for bids. An example of a Request for Quotation that includes relevant information to be obtained can be found under the "Frequently Asked Questions” in the “Finance” section of the CFI website.” ( http://www.innovation.ca/en/finance). Please note that this is an example only. Other templates may also be acceptable;
- All bids received following a competitive bidding process;
- If a competitive bidding process was not undertaken, documentation justifying the exception. The exception must be permitted under the institution’s purchasing policy;
- Summary form documenting bids received, evaluation, and rationale for selection of the successful supplier or service provider;
- Purchase order or contract;
- Receiving document or statement of work;
- Proof of payment (i.e. cancelled cheque)
What is the approval process when purchasing goods or services?
The PI is responsible for authorizing expenditures from his/her grant in accordance with the Agency’s requirements and Institutional policies. Written authorization is the grant holder’s signature (or that of someone who has been given written delegated authority by the grant holder). This signature is required on any document used in support of a purchase (e.g. purchasing requisition).
What happens if the product is purchased from a non-Canadian supplier?
PIs must ensure compliance with importing rules or risk financial penalties. For information specific to the importing of goods from non-Canadian vendors, click Customs Clearance.
What documentation must be retained?
All documentation in support of expenditures from CFI funds must be retained for audit purposes. At a minimum, the PI is required to retain copies of quotations, invoices and packing slips for purchases the PI has made directly and under the $10,000 threshold. These documents must be kept for a minimum of six (6) years plus the current year (Canada Revenue Agency requirement).
Procurement Services will retain a copy of all the relevant documents for purchases in excess of $50,000 and General Accounting will retain a copy of the invoice and proof of payment for a minimum of six (6) years plus the current year. Procurement Services will also retain copies of all competitive bid submissions for an additional year post the conclusion of a project, and longer if any extended warranties apply.
What additional oversights are required?
At a minimum, the grant holder must ensure that all goods or services purchased from his/her grant are considered eligible according to the list published by each Agency (NSERC, SSHRC or CIHR). In addition, grant holders are required to indicate receipt of goods or services in accordance with stipulated terms and conditions (including pricing) by signing all invoices and reconciliation reports.
Who owns the infrastructure once purchased?
The eligible recipient of the infrastructure shall exercise de facto control over and hold a majority interest in the CFI-funded infrastructure. An eligible recipient is defined as the eligible institution — alone or as a member of a group (the majority of which are eligible institutions) — that receives and administers CFI funding as part of a proposal for an infrastructure project. Ownership, responsibility and control of CFI-funded infrastructure and equipment will, therefore, remain with York University as the recipient of CFI funds.
The infrastructure will normally be located at the eligible institution(s). The infrastructure may be located outside of the eligible institution when it is demonstrated to the CFI that the alternate location is required and of benefit to the funded project. In these cases, the eligible institution must exercise de facto control over and hold a majority interest in the CFI-funded infrastructure. The infrastructure must normally be located within Canada. Any location change must be reported to the CFI.
What happens if a product or service requested does not meet Agency or Institutional policies?
The institution has the right and the responsibility to withhold approval of expenses proposed by a PI that contravene CFI requirements or institutional policies.