New Federal Integrity Regime: Two Steps Forward, One Step Back
July 15, 2015
On July 3, 2015, Public Works and Government Services Canada (PWGSC) announced the implementation of a new government-wide Integrity Regime for all federal government procurement, effective immediately.
- Government-Wide Application: Previously, the Integrity Framework applied only to solicitations by PWGSC and certain other government departments that adopted PWGSC’s Integrity Framework. Effective as of July 3, 2015, PWGSC will administer the regime on behalf of the Government of Canada and will apply it within the department to all new solicitations and contracts issued by PWGSC. The Integrity Regime will then be rolled out to the rest of the Government of Canada’s departments and agencies over the coming months.
- Certification: Under the Integrity Regime, a supplier certifies with their bid that they and members of their board of directors have not been charged, convicted or absolutely/conditionally discharged from one of the “listed offences” or a similar foreign offence in the past three years. A supplier will be deemed ineligible to contract with the Government of Canada for a period of 10 years if it provides false or misleading information in its certification.
- Affiliates: The former Integrity Framework provided that suppliers contracting with the Canadian government were subject to debarment if an affiliate company was charged with an integrity offence, regardless of whether or not the supplier seeking to contract with the government was in any way responsible for the offence committed by its affiliate. The most significant improvement to the integrity provisions is that the new Integrity Regime eliminates mandatory ineligibility of a supplier for the actions of an affiliate (including a parent company) unless there is evidence that the supplier/potential supplier had involvement in the wrongdoing that led to the conviction of its affiliate.
- Supplier Rehabilitation: Previously, suppliers were debarred from participating in federal government procurements for 10 years from the date when the contractor or its affiliate had been convicted of an integrity offence. The new Integrity Regime also provides that a bidder remains ineligible for 10 years when they have been convicted of a listed offence, however, the 10-year ban can be reduced by five years if the supplier has cooperated with legal authorities or addressed the causes of the misconduct that led to their ineligibility.
- Suspension: Despite the general presumption of innocence in Canadian law, the Government of Canada will now have the ability to suspend a supplier for up to 18 months if the supplier has been charged (not convicted) with a listed offence. An administrative agreement may be imposed in lieu of a suspension.
- Subcontractors: Prime contractors are required to subcontract only with eligible suppliers. A prime contractor who knowingly subcontracts with an ineligible subcontractor will be declared ineligible to contract with the Government of Canada for five years.
- Treatment of Existing Contracts after Conviction: If a conviction occurs during a contract, the government retains the right to terminate a contract or real property agreement for default. Suppliers will now, however, be afforded an opportunity to show why the termination should not be exercised and enter into an administrative agreement, setting out how the company will take corrective action to ensure ethical behaviour, as a means of preserving existing contracts.
- Exceptions: There remains a Public Interest Exception to debarment, which applies in exceptional circumstances where it is necessary to the public interest to enter into business with a supplier that has been convicted or has been conditionally or absolutely discharged of an offence under the Integrity Regime, though the available grounds for use of this exception remain narrow.
- Administrative Agreements: Suppliers and the Government of Canada can now enter into administrative agreements where:
- An ineligible supplier has had its ineligibility period reduced
- In lieu of a suspension
- The public interest exception was invoked
- When the government decides to continue with an existing contract with a supplier which has become non-compliant
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