The Integrity in Public Contracts Act, assented to by
the Quebec legislature on December 7, 2012, amended, inter alia,
the Act respecting contracting by public bodies so that
authorization from Quebec's financial markets regulator, the
Autorité des marchés financiers (the
"AMF"), must now be obtained by any business enterprise
seeking to enter into a public contract or subcontract, for an
amount determined by the government. Such authorization effectively
certifies that the enterprise in question satisfies the high
standards of integrity that the public has the right to expect from
them. These new provisions apply to the entire public sector,
including Crown corporations and municipalities.
As the number of private-sector businesses potentially affected
is quite substantial, the new provisions will be phased in
gradually. Eventually, all public contracts worth more than
$100,000 will require AMF authorization.
The month of September 2014 was a key transitional period in
this revised authorization regime.
On September 10, the government issued decrees 793‑2014
and 796-2014 so that the threshold for public services and
construction contracts and public-private partnership contracts
will drop from $10 million to $5 million. The new threshold takes
effect on October 24, 2014 and will affect some 850 additional
businesses. The government also issued on September 10th
decree 795-2014 effectively expanding the list of contracts awarded
by the City of Montreal that require AMF authorization. That change
took effect on September 24.
On September 11, the Treasury Board Secretariat published an
interpretation bulletin on the meaning of the word
"subcontract" to be used in determining whether or not a
subcontractor under a public contract must obtain AMF
Then, on September 17, the government issued decree 815-2014
and, in virtue of section 87 of the Integrity in Public
Contracts Act, demand that firm Informatique EBR Inc.
obtain AMF authorization within 21 days in order to continue to
perform certain supply contracts with the public entity Centre
de services partagés du Québec.
Finally, on September 25, the commission of inquiry into the
awarding and management of public contracts in the construction
industry (the Charbonneau Commission) heard from representatives of
the AMF, the Quebec provincial police force's permanent
anti-corruption unit (UPAC) and the Treasury Board Secretariat.
During that day's hearing, Commissioner Renaud Lachance made
the observation that Quebec businesses are subject to greater
scrutiny than those from outside the province, as the latter's
tax status outside Quebec is not checked when they apply for AMF
authorization. Commissioner Lachance also expressed concern over
the authorization criterion of being in good standing with the tax
authorities, given that a dispute with Revenue Quebec does not
necessarily affect the integrity of the business enterprise
The AMF authorization regime will increasingly be under the
spotlight. Currently, several business enterprises have been
proactive on seeking early authorization from the AMF, perhaps on
account of the inherent administrative delays in processing an
authorization application, and because businesses must already be
so authorized on the day submissions are tendered, unless the call
for tenders specifies a different date prior to the awarding of the
contract. Moreover, a refusal of authorization by the AMF has
serious consequences for a business: the latter becomes ineligible
to perform ongoing contracts as well as all subsequent public
contracts, even those below the threshold amount for AMF
In addition, on May 15, 2014, the Quebec Superior Court rendered
its first decision regarding the legality of the AMF's refusal
to authorize an enterprise to enter into a public contract
(9129-2201 Québec Inc. v. Autorité des
marchés financiers, 2014 QCCS 2070, motion for leave to
appeal denied in 2014 QCCA 1383). That decision points out the
the concept of "high integrity" is to be broadly
a business enterprise must disclose all relevant facts
before the AMF makes its decision;
a judicial review hearing is not the time to bolster your
a business enterprise has a heavy burden to discharge in order
to prevail at the Superior Court on judicial review.
In sum, AMF authorization is rapidly becoming the norm rather
than the exception. As a result, being awarded a public contract
has become a privilege more than a right. The authorization process
is rigorous and requires a well prepared and exhaustive file, an
exercise which should perhaps begin even if your business is not
currently subject to AMF authorization. It may be in your
business's best interest to start preparing now for the
broadening of the scope of contracts that require AMF
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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