Integrity in Canadian public procurement: What should companies know about Canada's Integrity Regime?

Canada’s Integrity Regime and Ineligibility and Suspension Policy together aim to reduce the likelihood that the Canadian government will do business with suppliers and their affiliates that have been convicted of, or charged with, an offense related to unethical business conduct, whether in Canada or abroad.

 For corporate entities, the Integrity Regime and the Policy impose ongoing disclosure requirements on current or potential suppliers that wish to qualify or remain qualified to contract with the federal departments and agencies that adhere to the Integrity Regime, a list of which is provided on the Government of Canada’s website.

Failure to comply with these disclosure requirements may have serious repercussions: an ongoing contract may be terminated; a company’s bid may be deemed ineligible; and the company itself may be declared ineligible to bid for any future procurement contract for a period of up to ten years.

It is therefore essential for any current or potential business partners of the Government of Canada to fully understand their obligations under Canadian’s Integrity Regime.

The following is a practical overview of the various disclosure requirements that companies should be aware of under Canada’s Integrity Regime.

Circumstances leading to a determination of ineligibility

Some entities may ultimately decide to refrain from participating in a Government of Canada contracting process in the first place, simply because their unique circumstances could trigger a determination of ineligibility. The fact that a company has been declared ineligible to contract with the Government of Canada could have reputational consequences and trigger additional disclosure requirements when engaging with other corporate stakeholders.

A corporate entity which has in the past three years been convicted of an offense in the Canadian ‎Criminal Code (such as fraud, bribery, extortion, forgery, falsification of books, or bid rigging) or violating legislation (such as the Competition Act, ‎Corruption of Foreign Public Officials Act, Excise Tax Act, Income Tax Act or Lobbying Act), may automatically be declared ineligible by Public Services and Procurement Canada (PSPC), the government agency responsible for administering the Integrity Regime. A determination of ineligibility will also be automatic in cases where the corporation has provided a false or misleading certification or statement to PSPC in relation with the Policy or has contracted with a first-tier subcontractor that is ineligible.

Ineligibility is at PSPC’s discretion when a company or its affiliate is charged with or convicted of an ‎offence abroad. In such cases, PSPC will compare the severity of the conviction or offence committed ‎abroad with Canada’s Criminal Code or legislative equivalent to determine the length of ineligibility. The ‎term affiliate encompasses senior officers of the business entity, as well as any associated entity such as ‎a parent company or subsidiary.

A determination of ineligibility will bar a corporation from contracting with the Government of Canada for a period generally ranging from 5 to 10 years. There are avenues to contest or reduce a period of ineligibility, such as by way of an administrative agreement.

Disclosure and certification requirements when bidding, contracting or entering into a real property agreement

Federal departments and agencies that adopt the Integrity Regime are required to include specific Integrity Provisions in their bid documents. These require, among other things, that bidders certify that they, as well as their affiliates and proposed first-tier subcontractors, have not been found guilty of a Canadian offense that may lead to a determination of ineligibility or suspension pursuant to the Policy, and have provided with their bid a list of criminal charges and convictions from other jurisdictions which may be similar to any of the offenses mentioned in the Policy. If the company is unable to provide such a certification, it must submit an Integrity declaration by filing the requested form.

The requirement to disclose criminal offenses or potential criminal offenses committed in Canada or abroad by a company, an affiliate or a first-tier subcontractor continues following the contract award. Within 10 days of occurrence, the supplier must disclose, in writing, to the Registrar of Ineligibility and Suspension “any charge, conviction or other circumstance relevant to the policy” (s. 17c of the Policy).

In addition to disclosures related to offenses, and subject to the bid being rendered non-responsive or the entity being otherwise disqualified, when an entity bids on a contract or a real property agreement with the Government of Canada, the entity needs to disclose, within the time provided by the contracting authority, a complete list of all current directors or the names of shareholders of the entity, if it is a privately owned corporation.

Moreover, at all times during the evaluation of bids, a bidding entity must inform the contracting authority, within 10 days, of any changes that may affect the list of names submitted. This disclosure obligation continues following contract award.

To learn more about the implications of these requirements, please contact the authors or your usual DLA Piper attorney.