• Procurement Requirements Are Tightened Following Amendments to PWGSC's Integrity Framework
  • April 14, 2015 | Author: Anca Neacsu
  • Law Firm: Dentons Canada LLP - Montreal Office
  • This bulletin provides an overview of recent changes to the Integrity Framework of Public Works and Government Services Canada (PWGSC), regarding government procurement and real property transactions. PWGSC is the Government of Canada’s principal procuring department and is responsible for the majority of the Government’s public tenders, as well as the administration of most of Canada’s public contracts.

    The Integrity Framework is set forth in PWGSC’s Supply Manual. The important changes described below concern the addition of new offences, the time period in which a contractor is ineligible to bid on PWGSC solicitations, the expansion of the ineligibility conditions to foreign offences and the extension of the Integrity Framework to subcontractors.

    1. New offences
    The recent amendments to the Integrity Framework of the Supply Manual include additional offences that would preclude a contractor from entering into a contract administered by PWGSC. Pursuant to this expanded list of offences, a contractor must now certify that neither it nor any of its affiliates have been convicted of the following offences (or received a conditional or an absolute discharge on a conviction), unless the time period (as described below) has elapsed:
    • frauds against the Government under the Criminal Code of Canada;
    • frauds under the Financial Administration Act;
    • payment of a contingency fee to a person to whom the Lobbying Act applies;
    • corruption, collusion, bid-rigging or any other anti-competitive activity under the Competition Act;
    • money laundering;
    • participation in activities of criminal organizations;
    • income and excise tax evasion;
    • bribing a foreign public official;
    • offences in relation to drug trafficking;
    • extortion*;
    • bribery of judicial officers*;
    • bribery of officers*;
    • secret commissions*;
    • criminal breach of contracts*;
    • fraudulent manipulation of stock exchange transactions*;
    • prohibited insider trading*;
    • forgery and other offences resembling forgery*; and
    • falsification of books and documents*.
    2. Time period
    One of the most significant amendments concerns the new 10-year debarment period from Government procurements administered by PWGSC. Prior to this amendment, no debarment period was provided. The inclusion of a time period, although lengthy, has the benefit of clearly defining the applicable debarment period.

    The time period sets out the period prior to which a contractor must certify that it has not been convicted of listed offences. A company or its affiliates will therefore not be able to obtain a Government contract within 10 years from the date of conviction or from the date of conditional or absolute discharge. Furthermore, companies convicted of fraud related offences under the Financial Administration Act or under the Criminal Code of Canada must obtain a pardon or record a suspension, or must have their capacities restored by the Governor in Council in order for their bids to be admissible.

    Following the expiry of this 10-year period, a company and its affiliates must certify that compliance measures have been diligently put in place to avoid the reoccurrence of convictions.

    3. Foreign offences
    A company must also certify that neither it nor any of its affiliates have, in the last 10 years, been convicted of any foreign offence that is deemed to be of similar constitutive elements as the offences listed in the Integrity Framework. The Integrity Framework does not provide any list of similar offences nor guidance as to what kind of offences would have “similar constitutive elements”.

    The term “affiliate” is broadly defined to include parent companies, subsidiaries, as well as individuals and directors, if directly or indirectly either one controls or has the power to control the other or if a third party has the power to control both. Considering this definition, a company will need to confirm whether any of its affiliates fall within the scope of the Integrity Framework. This requirement may prove to be a difficult task for larger companies with many international affiliates.

    4. Subcontractors
    The Integrity Framework now also applies to subcontractors. Contractors must therefore ensure that subcontracts include integrity provisions no less favourable to Canada than those imposed under the principal contract entered into between the contractor and the Government, such that subcontractors will contractually be subject to the same requirements as the contractor entering into a contract administered by PWGSC.

    5. Consequences
    In addition to contractors who have been convicted in the last 10 years of a listed offence no longer being able to bid on PWGSC public tenders, contractors that are convicted of one of the listed offences may have their contracts with the Government terminated, if convicted during the execution of their contract.

    6. Exceptions

    The Government may enter into a contract with a contractor that does not meet the requirements set forth in the Integrity Framework when required to do so by law or legal proceedings or when the Government considers that it is in the public interest to do so. Such circumstances could include the following:
    • no one else is capable of performing the contract;
    • emergency;
    • national security;
    • health and safety; and
    • economic harm.
    7. Conclusion
    Considering the wide scope of the requirements set forth in the Integrity Framework, potential contractors may be debarred from participating in Government procurements for a period of 10 years if they or any of their “affiliates” have been convicted of a listed offence or a foreign offence deemed to be of similar constitutive elements to a listed offence. As such, companies who wish to contract with the Government of Canada should conduct an internal investigation to ensure conformity with the Integrity Framework by them and their affiliates.

    * New offences added pursuant to the amendments to the Integrity Framework which came into effect on March 1st, 2014.