On March 3, 2014, the federal department of Public Works and
Government Services introduced significant amendments to its
Integrity Provisions, which govern all government procurement.
These amendments will have significant impacts on the way companies
involved in government procurement manage their global risk.
The Amended Integrity Provisions
The amended Integrity Provisions now render bidders for
government contracts ineligible where that bidder has been
convicted of certain actions. Indeed, section two of the Integrity Provisions reads
The Bidder and any of the
Bidder's Affiliates will also be required to remain free and
clear of any acts or convictions and any conditional or absolute
discharges specified in these Integrity Provisions during the
period of any contract resulting from this bid solicitation.
What is particularly important to note is that unlike the
analogous American or European Union legislation, the Canadian
Integrity Provisions stipulate that a bidder's eligibility for
government contracts depends on both it, as well as any of its
Affiliates, being free and clear of convictions for certain acts.
Moreover, not only do these provisions apply to affiliates of
Canadian entities, but the impugned actions need not occur on
Canadian soil in order for the bidder to face the 10-year automatic
ban from awards of government contracts. That is to say, an
affiliate who has been convicted of a those actions listed in the
Integrity Provisions in another state can still render the bidding
entity ineligible for a government contract.
The actions stipulated in the Integrity Provisions
and leading to this automatic ban include offences under the
Criminal Code, the Competition Act, the Financial Administration
Act, the Income Tax Act, and the Corruption of Foreign Public
Officials Act, such as:
Bribery of officers or bribery of a
foreign public official;
Fraudulent manipulation of stock
exchange transactions; and
Corruption, collusion, bid-rigging or
any other anti-competitive activity.
HP to Test New Integrity Provisions
Hewlett-Packard, one of the leading technological suppliers to
the Government of Canada, is positioned to be the first company to
test the reach of these new Integrity Provisions. An HP Russian
subsidiary recently pleaded guilty to bribery of a
foreign official under the US Foreign Corruption Practices Act and
was fined $58.7 million USD. Under the Integrity Provisions, this
means that HP faces an automatic ban of 10 years for any
procurement contract with the Canadian government. It remains to be
seen how the Integrity Provisions will impact HP's government
contracts; officials from Public Works and Government Services
Canada have indicated that they need more time to determine the status of the
other companies with the foreign convictions and how this will
impact HP's ability to supply the Government of Canada. What is
clear, however, is that the government does not plan to soften these integrity
provisions, for instance, by allowing disbarred companies to
win reinstatement for good behaviour.
While the Canadian Government has yet to ban HP from bidding on
government contracts, it is clear that these Integrity Provisions
create yet another facet to risk management for companies engaged
in government procurement. Not only must these corporations be free
and clear of any convictions in Canada, but they must ensure that
any subsidiaries or affiliates are also free and clear of
any convictions, in any
jurisdiction. The implications of these Integrity
Provisions remain to be seen as they play out for HP, but the
writing is on the wall: corporations could face much greater
difficulty regarding government procurement should the actions of
their affiliates lead to convictions for bribery, fraud or
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).