Policy on Annual Fee and Salary Increases Under Multi-Year Service Contracts and Contribution Agreements (Effective August 1st, 2008)

The Canadian International Development Agency (CIDA)'s Policy on Annual Fee and Salary Increases under Multi-Year Service Contracts and Contribution Agreements is based on a Treasury Board decision (TBD 811734) made on July 26, 1989, and the Treasury Board Policy on Transfer Payments, whose objective is to ensure sound management and responsible spending of public funds.

I. Service contracts

CIDA has the authority to determine the rate of fee increases for consultants under a service contract. These increases are determined in accordance with the following principles:

1. The annual rate of increase is established in accordance with the lower of:
   1. the Consumer Price Index (CPI) for the past 12 months, as determined by Statistics Canada; or
   2. the average annual increase for the Public Service salary levels for the same period, as determined by Treasury Board.
2. The applicable rate of increase is determined by the Contracting Management Division on August 1 of each year and posted on CIDA's website.

For the consultant to trigger a fee increase, the revised rate (based on the percentage of increase established by CIDA) must be submitted to the CIDA representative for confirmation prior to submitting an invoice at the revised rate.

The rate specified in a multi-year service contract may be increased annually, on the contract anniversary date. After having obtained CIDA's confirmation of the revised rate, the consultant will be authorized to apply the revised rate to his invoices. However, this new rate can only be applied to workdays that have not already been invoiced. CIDA will not accept a payment request at a revised rate for workdays previously billed at a former rate.

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II. Contribution agreements

CIDA recognizes as potential allowable expenses salary increases paid to employees of an organization with which CIDA has signed a contribution agreement to support the implementation of a project or program.

Where there is a collective agreement in force, or where the board of directors of the organization has authorized a salary increase applicable to all of the organization's employees, salaries may be increased in accordance with the collective agreement or the board of directors' decision. Where the board of directors approves an increase for all employees, increases shall be reasonable, comparable to market working conditions, and approved by CIDA before they can be applied.

In the absence of a collective agreement, or of a document approved by the board of directors of the organization and indicating a salary increase applicable to all of the organization's employees, the rate defined by CIDA in accordance with the above section I. Service contracts and the terms and conditions prescribed therein shall apply. Any other salary increase above this rate will not be deemed allowable under the contribution agreement.

Where an organization must obtain CIDA's approval of salary increases, the organization shall submit its request in writing as soon as the collective agreement or the board of directors' decision comes into effect.

In no case shall salary increases be used to justify a request to increase the financial limitation of the contribution agreement.

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III. Service contracts signed overseas

The salary of locally engaged staff, paid in local currency, may be increased annually on the agreement anniversary date up to the Consumer Price Index of the recipient country for the past 12 months. The application of this rate shall be justified and documented. The organization shall have previously identified the impact on salaries and have received CIDA's approval of salary increases.

CIDA will not accept a payment request at a revised rate for workdays previously billed at a former rate.