Canada: Canada Implements New Integrity Regime For Public Procurement

On July 3, 2015, the Government of Canada took further steps to overhaul the integrity provisions of its procurement process. Public Works and Government Services Canada, the body which conducts most public procurements for Canadian government departments, announced a new government-wide "Integrity Regime" for procurement and real property transactions. The Integrity Regime is intended to replace the Integrity Framework previously put in place in 2012. Among the most significant changes are the elimination of automatic debarment for affiliate conduct and the reduction of the debarment period from 10 years to five years where suppliers can demonstrate that they have cooperated with law enforcement or undertaken remedial actions.

The Government previously made "enhancements" to the Integrity Framework in March 2014. Those enhancements created a system that was among the most restrictive in the world. It quickly became apparent that the revised Integrity Framework would lead to intractable complications due to its overly draconian nature. For example, as we have discussed previously, the Integrity Framework risked debarring the Government's largest computer hardware supplier for the actions of a distant corporate relative over which the Canadian supplier had no control or authority.

Claiming to reflect the input of stakeholders in the procurement process, the new Integrity Regime attempts to strike a careful balance between the need to ensure ethical conduct among suppliers and maintaining flexibility for the Government and its suppliers.

What Will Debar a Supplier?

Under the Integrity Regime, a supplier is ineligible to do business with the Government if it, or any members of its board of directors, have been convicted or discharged (either absolutely or conditionally) in the last three years of any of the following offences under Canadian law or a similar foreign offence:

  • payment of a contingency fee to a person to whom the Lobbying Act applies;
  • corruption, collusion, bid-rigging or any other anti-competitive activity under the Competition Act;
  • money laundering;
  • participation in activities of criminal organizations;
  • income and excise tax evasion;
  • bribing a foreign public official;
  • offences in relation to drug trafficking;
  • extortion;
  • bribery of judicial officers;
  • bribery of officers;
  • secret commissions;
  • criminal breach of contracts;
  • fraudulent manipulation of stock exchange transactions;
  • prohibited insider trading;
  • forgery and other offences resembling forgery; and
  • falsification of books and documents.

All suppliers are required to provide a certification on bidding that the company, its directors, and its affiliates have not been charged, convicted, or absolutely/conditionally discharged of the above offences or similar foreign offences in the past three years. Providing false or misleading certifications is, in and of itself, cause for debarment.

Length of Debarment

The ineligibility period will extend for 10 years from the date of conviction or discharge. However, if a debarred supplier addresses the root cause of the offence and cooperates with Government authorities fully, it can obtain a reduction in this debarment time. The length of the debarment may be reduced by up to five years, but will also require an administrative agreement whereby law enforcement may monitor the supplier's ongoing behaviour.

The debarment period runs in perpetuity for those suppliers that are convicted of committing frauds against the Government under either the Criminal Code or the Financial Administration Act. All such suppliers will be permanently debarred until a record suspension is obtained. In addition, unlike a regularly debarred supplier, no public interest exception or administrative agreement is possible for a company subject to permanent debarment.

These changes considerably mitigate the formerly draconian debarment periods. Providing for the ability of a company to shorten its debarment period by up to five years gives considerable incentives for cooperation and remediation. This places the focus of the rules on achieving ethical conduct going forward, and preserving market forces in the public procurement space, and away from principles of retribution.

Suspension Provisions

The Government has the ability to suspend a supplier for up to 18 months immediately upon that supplier being charged with or admitting guilt to any of the above listed offences. There is no requirement that the supplier or one of its affiliates actually be convicted of the offence in question and, at this stage, there does not appear to be any sort of compensation mechanism if the supplier is ultimately vindicated. The Regime does not explicitly extend this suspension provision to violations by affiliates of the supplier, yet the Regime also requires suppliers to certify that neither they nor any affiliates have been charged with a listed offence or foreign equivalent.

The changes also allow for suppliers that have been charged to request an immediately determination of their debarment status. While this may result in immediate debarment, this will at least "start the clock" on the debarment period. Otherwise, such companies may be subject to a full 18 month suspension pending charges and investigation, and then only begin a 5-10 year debarment at that point.

Termination of Existing Contracts

The Government also took steps to close off any potential holes in the Regime for companies that are convicted during the course of an ongoing supply contract. If a supplier is convicted of a listed offense, the Government is entitled to terminate the contract.

Three key issues exist in regards to the termination provision. First, it only applies in situations where there is a conviction, and not simply a charge.

Second, termination is permissive but not mandatory – the Government allows suppliers to submit argument as to why the contract should not be terminated.

Third, if the Government chooses not to terminate the contract, it must put in place an administrative agreement for the contract. The agreement must include provisions for third party monitoring of the contract.

Administrative Agreements

As noted above, there are certain circumstances where the Government mandates an administrative agreement be put in place with a supplier. These agreements are meant to cover situations which require caution and additional monitoring. Agreements will generally be conditional and require suppliers to engage in remedial action and take further compliance measures.

There are four instances where such administrative agreements are mandatory:

  • an ineligible supplier has had their ineligibility period reduced;
  • in lieu of suspending a supplier;
  • a public interest exception was invoked with a ineligible supplier; or
  • a decision is made to continue with an existing contract with a supplier which has become non-compliant with the regime.

These agreements must have provisions for monitoring by qualified independent third parties paid for and retained by the supplier. Given this, it will likely behoove a supplier that is seeking some form of leniency to enter into negotiations with a draft agreement to try and set parameters of the monitoring to the extent possible. Having a third party monitor already waiting to begin work, and a rigorous plan in place for how the monitoring will be done, may save considerable time and money negotiating with the Government on these points.

Affiliate Enterprise Conduct & Sub-Contractors

Under the new system, suppliers will no longer be penalized simply because an affiliate violated one of the listed offences. Instead, the Integrity Regime requires that the affiliate be assessed by an independent third party retained by the supplier to determine whether the supplier had any participation of involvement in the underlying offence. If the supplier can show that they had no such involvement, they will not be debarred.

This is a major departure from the previous Integrity Framework. Under the Integrity Framework, a supplier would be debarred for 10 years for actions by affiliated foreign companies over whom the supplier had no control and for conduct in which the supplier had no participation. The old framework could result in sweeping debarments of legitimate companies causing large scale economic damage and lead to significant inefficiencies in the procurement system undermining the ability of the Government to procure market price solutions.

The new Integrity Regime is also binding on the subcontractors of any supplier. Suppliers are required to refrain from entering into a subcontract with a debarred entity. Knowingly entering into such a subcontract will debar the supplier for five years. This is likely to be assessed on the basis of strict liability, and as such all contractors should implement due diligence procedures specifically directed at the compliance of any potential subcontractor with the Integrity Regime.


The Government will retain the ability to grant limited Public Interest Exceptions. These will only be granted where a debarred supplier must be retained and no other reasonable options exist. Factors that will influence the granting of a Public Interest Exception include where no other supplier can actually perform the contract, there are emergent circumstances or national security concerns, or potential exists for material injury to the financial interests of the Government if the exception is not granted. This does not apply to any supplier that is permanently debarred.

Considering that the new Integrity Regime significantly ameliorates the draconian nature of the former debarment rules, it is likely the Government will be hesitant to grant any Public Interest Exceptions.

Moving Forward

The former Integrity Framework created a great deal of concern and confusion among stakeholders in the procurement process. The new Regime attempts to clarify and ease the burden on suppliers.

Suppliers must give serious thought to conducting internal investigations to determine if they have any potential reason to disclose to the Government. This method can be advantageous for two reasons. First, it demonstrates cooperation with authorities which is required for the amelioration period of five years. Second, it allows companies an opportunity to present the actions of foreign affiliates that may give rise to potential debarment as actions in which they had no control or involvement. By being proactive, suppliers can head off potential debarment issues before they arise.

Given that offences under the Corruption of Foreign Public Officials Act are also listed offences, such an investigation can and should dovetail with any investigations into potential foreign corruption concerns under either the CFPOA or the US Foreign Corrupt Practices Act. Conducting thorough reviews of corruption concerns is now more important than ever, as international corruption may debar Canadian suppliers from Government contracts. Conducting a comprehensive independent investigation gives support to any arguments that corrupt practices, which would otherwise debar a company, were isolated to foreign affiliates without direct involvement of the Canadian entity. This is even more crucial in the Canadian context where mechanisms that enable companies to voluntarily disclose anti-corruption violations and avoid a criminal conviction, such as deferred or non-prosecution agreements used in the United States and now the United Kingdom, are not currently available. The Government has reiterated that these mechanisms are outside the scope of the Integrity Regime.

Suppliers should also create careful due diligence processes to screen the conduct of any potential subcontractor involved in a procurement bid. Contracting with such an ineligible subcontractor can create serious liability for a supplier, and the only defence will be demonstrating that serious and careful due diligence was undertaken.

The International Trade and Investment Group at McCarthy Tétrault has considerable experience with anti-corruption, government procurement, internal investigations, and other related matters.

To view the original article please click here.

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

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.