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Changes to the government of Canada’s procurement policies

procurementOn July 3, 2015, Public Works and Government Services Canada (PWGSC) announced a new government-wide integrity regime for procurement and real property transactions. While the spirit of PWGSC’s “Ineligibility and Suspension Policy” is consistent with previous iterations of the federal government’s procurement practices, the contents of this policy are notably different.

Indeed, in an effort to ensure that the Government of Canada conducts business with ethical suppliers in Canada and beyond, the following key features have been introduced:

  • 10-year ineligibility to contract with the Government of Canada for suppliers who have been convicted or absolutely/conditionally discharged of a listed offence in Canada or abroad;
  • Up to 5-year reduction of ineligibility period if the supplier addresses the causes of conduct leading to ineligibility;
  • No automatic penalty for a supplier based on the actions of an affiliate in which they had no involvement; and
  • Up to 18-month ineligibility to contract with the Government of Canada for suppliers who have been charged with a listed offence or have admitted guilt.

Among other things, collusion, bid-rigging, and many other ant-competitive activities under the Competition Act (the “Act”) are considered listed offences.

What does this mean for suppliers?

In addition to the stiff penalties provided for bid-rigging, for example, under the Act, i.e. up to 14-year jail terms and unlimited fines (at the discretion of the Court), companies may also be barred from carrying on business with the federal government. Such action can have devastating, long-term implications for businesses.

What is more, the Ineligibility and Suspension Policy means that businesses must conduct themselves as scrupulously overseas as they do in Canada. A charge or conviction registered in another jurisdiction may have the same lasting consequences as a charge or conviction registered at home.

Finally, deviation from the Ineligibility and Suspension Policy places a company’s good will at risk. For example, PWGSC compiles and publishes a list of suppliers that have been debarred from contracting with the federal government. Of course, that is in addition to any negative publicity in the media and other similar sources.

By Grant LoPatriello, Fasken Martineau

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In addition to our regular guest bloggers, Inside Internal Controls blog published by First Reference, provides occasional guest post opportunities from various subject matter experts on the topics of risk management and best practices in finance and accounting, information technology, environmental issues, corporate governance, sales/marketing and operations, not-for-profits and business related issues in Canada. If you are a subject matter expert and would like to become an occasional blogger, please contact Yosie Saint-Cyr at editor@firstreference.com. If you liked this post and would like to subscribe to Inside Internal Controls blog click here.
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