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FINANCIAL AFFAIRS

Canadian Foundation for Innovation (CFI) Purchases

The Canadian Foundation for Innovation (CFI) is a government organization which makes financial contributions to Canadian universities, colleges, research hospitals and non-profit research organizations. Many researchers and projects at McMaster University benefit from CFI funding, and there are specific guidelines to follow when making purchases using CFI funds.

The CFI Program and Policy Guide provides a detailed explanation of the eligibility requirements, policies, and procedures to follow when using and managing CFI funds.

 

Expandable List

The CFI recognizes eligible items involving in-kind contributions at fair market value.

Fair market value is the price that an institution would typically pay, after educational or other discounts, but before any additional discount applied as a contribution towards a CFI funded project.

RESEARCHERS/REQUESTERS*:

Researchers are required to provide Strategic Procurement with the information below for all CFI quotations requiring Fair Market Value assessment.  Researcher are to ensure required backup attached to requisition to address Assessment methods with exception of the purchases requiring CFI decision (a) In-kind above $500K (b) In-kind above 45% (c) high-risk project based on RMM.

For All Purchases researchers are required to provide information to address the topics below, and identify any areas that are not applicable, or where information is not available:

  1. Price Comparison- describe discount, educational discount, etc.
  2. Technical Differences- features, specifications, strengths or weaknesses
  3. Performance Differences- features, specifications, strengths or weaknesses
  4. Supplier Reputation- long standing to McMaster, no issues, specialty products, responsiveness, reputation, experience in field
  5. Service Reputation- quick response with researchers, dedicated resources, history on campus, can met service deadlines

*This process will be reviewed on a yearly basis based on project experience and CFI requirements

 

CFI Quote Format (as per CFI Policy and program guide)

Items involving in-kind contributions must be reported at the fair market value, which consists of the list price less normal or educational discounts.  If the list price and the normal educational prices are the same, the supplier must provide a statement in their response to explain the rationale behind their pricing strategy such as “We do not have educational price policy.”

    List price
   – Educational Discount
   – Normal Discounts (i.e. purchase volume)
   = Fair market Value (FMV)
   – Eligible In-kind contribution for CFI project
   = Net Selling Price

 

Market Comparison (RFX or Competitive Quotes)

A comparison of other quotes/proposals received through a competitive RFx process that provide useful market comparisons.  Competitive quotes from multiple vendors must be received.

Note: Consider the differences in technical features, performance or other relevant factors (e.g. supplier reputation, service history) when performing the assessment.

Similar Discount– The discounts (Educational and others (CFI 6.5.1)) is consistent indicating reasonable fair market value.

Differing Justified Discounts– The discounts (Educational and others (CFI 6.5.1)) differ.  We ask the preferred vendor and/or researchers questions to determine whether their pricing and in-kind are justified.  If the preferred vendors and/or researchers response is reasonable, we use their pricing and assess reasonable fair market value.

Differing Unjustified Discounts– The discounts(Educational and others (CFI 6.5.1)) differs.  We ask the preferred vendor and/or researchers questions to determine whether their pricing and in-kind are justified.  The preferred vendor pricing and in-kind are not justified, or reflective of FMV.  We then use pricing (lowering the in-kind contribution) more reflective of FMV based upon the other competing quotes.

Previous Purchases

When there is no competitive pricing information and when the information is available, a comparison will be completed based on  previous purchases of the same or similar infrastructure item where the purchase was not related to a CFI-fund project and did not involve an in-kind contribution (i.e. redacted invoices).

Experience with a Supplier

Review quotes from the supplier to determine their previous normal and education discounts, and in-kind contribution percentages.

$10,001 to $50,000

Strategic Procurement Senior Manager will review documentation to purchase order and will sign-off purchase order.  Signed Purchase Order to remain on-file in SP.

$50,001 to $99,999

Fair Market Value Assessment Form will be completed by Strategic Procurement using the Assessment Methods with supporting backup documentation.

The FMVAF assessment must be reviewed and approved by the Director of Procurement Services and forwarded to Research Finance.

$100,000 and > with In-Kind < $500,000

Fair Market Value Assessment Form will be completed by Strategic Procurement using the Assessment Methods with supporting backup documentation.

The FMVAF must be reviewed and approved by the Director of Procurement Services and forwarded to Research Finance.

$100,000 and > with In-Kind > $500,000

For purchase above $100K with $500K or more of In-kind contributions, we will complete a formal letter to CFI including all sources of information available to complete the FMV/In-Kind evaluation regardless of the number of quotations.  This letter is signed by the Director of Procurement.  The University will not issue a purchase order until the CFI has provided feedback and that the senior management agreed to proceed ex. 3rd party appraisal

The University will issue a FMV document package to CFI for their review.


Request a 3rd Party Appraisal

Contact CFI to coordinate and pay for the appraisal if no alternative valuation method is available. .Refer to Section 6.5 of the CFI Policy and Program Guide for additional clarification.

Fair Market Documentation

The following documentation may be included in the Fair Market Assessment documentation for CFI audit purposes (will vary based on Market Comparison method):

  • Signed Fair Market Value Assessment Form
  • Purchase Order
  • Quote/Bid Submission
  • Competitive quotes
  • Redacted Invoices
  • Sole Source Form (signed and completed)
  • Statement of Technical Requirements
  • RFX Documents