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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