As of November 2, 2015, enterprises that wish to obtain service contracts and subcontracts from public bodies in Quebec that involve expenditures of $1 million or more must hold an authorization from Quebec's Autorité des marchés financiers (AMF). This change in the monetary threshold was announced by the Quebec government by means of Order in Council 435-2015, which was published in the June 10, 2015 issue of the Gazette officielle du Québec.

In determining whether a service contract or subcontract is at or over the $1 million threshold, one must consider the expenditure that would result if all renewal options were exercised. For example, a service contract with an annual value of $200,000 and a maximum term of 5 years, including renewal options, will require the AMF's authorization.

Construction contracts are not affected by this amendment and will continue to be subject to the current $5 million threshold that was established in October 2014.

The requirement to hold an authorization before contracting with a public body in Quebec arises from the Integrity in Public Contracts Act, which was adopted in December 2012 by the Quebec National Assembly. The Act, which is commonly referred to as Bill 1, created a system to ensure the integrity of enterprises before they bid on or enter into public contracts. At first, authorization was only required for construction and service contracts and subcontracts involving expenditures of $40 million or more, but the threshold was reduced to $10 million in December 2013 and to $5 million in October 2014. The threshold will be reduced once more on November 2, 2015, to $1 million, but only for service contracts and subcontracts.

Broader discretionary powers for the AMF

An Act to ensure mainly the recovery of amounts improperly paid as a result of fraud or fraudulent tactics in connection with public contracts, commonly referred to as Bill 26, which came into force in April 2015, amends the Integrity in Public Contracts Act to allow the AMF to exercise its discretionary power in dealing with enterprises that have been found guilty of offences under the Act and that wish to obtain or maintain their authorization to contract/subcontract with public bodies. Until these major amendments were adopted, the AMF did not have any discretion and had to refuse to grant an authorization applied for or revoke an authorization already in force.

To learn more about the amendments made to the AMF's discretionary regime by Bill 26, we invite you to read our April 2015 legal update.

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