Canada: Government Of Canada Announces New Integrity Regime For Federal Contractors

Last Updated: July 13 2015
Article by Gerry Stobo

Most Read Contributor in Canada, November 2017

On Friday, July 3, 2015, the Government of Canada ("GoC") issued its long-awaited changes to the federal integrity regime. The Ineligibility and Suspension Policy establishes a new ethical framework for bidders/contractors (hereinafter referred to as "suppliers") doing business with the federal government. This memo summarises the key points in the recently-issued policy statement.

With these changes, the GoC addresses some of the harsher and more intransigent provisions that Canada's business community railed against in previous versions of the integrity regime. However, there is real concern that the changes do not go far enough to mitigate the tough consequences  that can potentially arise from the application of the federal integrity provisions. Moreover, in view of additional grounds for debarment in this revised policy, there is also concern that companies may face debarment without first having been convicted by any court of any of the enumerated offenses.

Before looking at the new policy, it is worth remembering that earlier integrity provisions issued by Canada's procurement department – Public Works and Government Services Canada ("PWGSC") – created an immovable 10-year period of debarment for suppliers who were convicted of particular itemised offenses. And then in 2014, PWGSC ramped up the reach of the integrity regime to include the actions of world- wide affiliates and directors if convicted of the enumerated offenses in Canada, or of similar offenses, in a foreign jurisdiction. The 2014 changes crystallised the business community's opposition to the unforgiving and harsh effects of Canada's integrity regime, long-considered to be the toughest among our trading partners.

To give one example: under the previous integrity regime, it was virtually impossible for companies to avoid the 10-year period of debarment even if they had taken proactive steps  to "clean up" the misconduct by way of voluntary disclosure and cooperation with government authorities, or by putting in place measures to avoid future ethical breaches. Moreover, Canadian businesses did not want to be held accountable for the ethical breaches committed by related companies in foreign jurisdictions.

Over the past year, Canada's business community has  lobbied the GoC long and hard for changes to the integrity regime, ones that would not have such devastating effects on companies doing business with the federal government. The recently-announced changes to the GoC's integrity regime respond in part to that lobbying effort, but still allow the government to maintain its stance that it is tough on those who break the law, which remains one of this government's foundational pillars.

a) Scope of Application

The Ineligibility and Suspension Policy applies to virtually all government solicitations and resulting contracts and comes into effect immediately. However, because these new provisions are forward-looking, they do not affect current contracts or solicitations. Although the Ineligibility and Suspension Policy applies to most government contracts, some contracts are exempted, such as work to be performed outside Canada, insurance contracts, financial contracts, lease-to-own contracts for real property, contracts in existence before the new policy came into effect last week etc. In order to give effect to these new provisions, all solicitations and contracts undertaken after the changes were announced will contain contractual terms and conditions reflecting the form and substance of the policy.

b) Permanent or Temporary Debarment, and the Implications Arising from the Actions of Affiliates

The Ineligibility and Suspension Policy imposes permanent debarment of suppliers for certain offences, such as fraud against the GoC, and certain frauds committed in respect   of election funding. In respect of other offenses like bribery of judicial officers; extortion; laundering proceeds of crime; bid rigging; false or deceptive statements under the Income Tax Act or Excise Tax Act; bribing a foreign public official; if convicted within the past 3 years, a supplier will be ineligible for a contract award for 10 years. If a bidder has obtained a pardon, or was given an absolute or conditional discharge, they may still be eligible to receive federal contracts.

If a supplier is convicted of an offense in a foreign jurisdiction that is similar to the ones enumerated in  the Ineligibility and Suspension Policy, it may also be debarred, assuming that the prosecution process in the foreign country was not motivated by improper means and that the supplier had the right to mount a full defense to the allegations. These foreign-prosecution qualifications are intended to respond to concerns voiced about unfair prosecutions initiated abroad which were initiated for political or retaliatory reasons.

A supplier can also be debarred permanently or for a prescribed period of time, if any of its affiliates have been convicted of one of the enumerated offenses if there is evidence showing that the supplier somehow directed, influenced, authorized or assented to the unauthorized behavior of the affiliate. Requiring the supplier to have some involvement in the actions of the affiliate is an important change with these revised provisions.

Under the previous integrity regime, if an affiliate was convicted in Canada or abroad, the supplier would face debarment, even if it had nothing to do with the acts committed by the affiliate. Now, if the supplier can show it was in no way involved in the actions of the affiliate, it may avoid a period of debarment altogether.

This is a welcome change, particularly because the definition of affiliate is so broad. The term "affiliates" is defined in the Ineligibility and Suspension Policy to include a person, (including, but not limited to, organizations, bodies corporate, societies, companies, firms, partnerships, associations of persons, parent companies or subsidiaries, whether partly or wholly-owned), as well as individuals, directors, officers and key employees if: one controls or  has the power to control the other, or a third party has the power to control both. It is apparent therefore that these integrity provisions take into account the actions of the company and affiliates, but also the actions of individuals who lead the company. So, if a director of a supplier is convicted of bribery or corruption, this may result in the supplier becoming ineligible to receive a contract.

This wide-reaching definition is a carryover from the previous iterations of the integrity regime and is one of the areas of most concern to Canadian businesses who have claimed, with some justification, that they ought not be punished for the wrongs committed by a related company over whom they had no control.

c) Right to Request a Redetermination for Actions of Affiliate

Another important change in the Ineligibility and Suspension Policy is the provisions which will allow for what is termed a Limited Review. In this process, a supplier can ask the Minister to reconsider a declaration of ineligibility based on a conviction of an affiliate. Upon receipt of a request, the Minister will consider whether the supplier directed, influenced, authorized, assented to, or acquiesced in the affiliate's illegal conduct. If the supplier can demonstrate that none of those factors apply, the supplier will again be eligible to receive contracts.

d) Potential Reduction to the Period of Debarment

The Ineligibility and Suspension Policy includes some interesting changes regarding the potential reduction of the period of debarment. First, suppliers may request a reduction of up to 5 years if the Minister approves of an Administrative Agreement. Second, as we noted above, a period of debarment may not be imposed or maintained if the supplier has been granted an absolute or conditional discharge or granted a pardon in Canada, or in the country where the conviction was entered. This change will be welcome news to companies who, through their cooperation with authorities, will remain eligible for GoC contracts even though they have committed one of the enumerated  offenses.

Unfortunately though, because Canada's justice system does not permit deferred or non-prosecution agreements for companies, suppliers in Canada cannot avoid debarment by voluntarily disclosing and remediating the ethical conduct. That said, a supplier might be able to  avoid debarment if it does cooperate with authorities and, in consequence of that cooperation, it receives an absolute or conditional discharge which, as we noted earlier, may  be a reason for avoiding debarment altogether. However, unlike other integrity regimes where suppliers can avoid prosecution altogether, a supplier in Canada accused of misconduct will have to endure the criminal prosecution process and hope that, at the end of that process, it receives a discharge.

e) Suspensions from Procurement Process Participation

In a significant departure from the previous integrity provisions, under the new regime, the Minister may suspend a supplier from participating in a procurement process for up to 18 months if the supplier has admitted  to, or been charged with, any of the enumerated offenses. This period may be extended if the court proceedings continue beyond the 18-month period. However, this section also allows the Minister to abridge or suspend the period of suspension and allow a supplier the opportunity to compete for future government contracts if it enters into an Administrative Agreement. If a supplier does not have  an Administrative Agreement in place when a particular procurement process is initiated, the supplier will be ineligible to receive a contract if it is suspended under this provision.

The suspension provision is an important change arising from the Ineligibility and Suspension Policy. Concern has been expressed that a suspension, without first having a conviction, runs counter to Canada's justice system which presumes everyone to be innocent until proven guilty. That (important) point noted, the revised integrity regime provides that suppliers who have been charged (but not convicted) with an enumerated offense, and who have been suspended, may have that suspension revoked by the Minister if the supplier enters into an Administrative  Agreement.

f) Ineligible Subcontractors

In another noteworthy change, suppliers face a 5-year debarment if they engage a subcontractor, or an affiliate of the subcontractor, who has been convicted of one of the enumerated offenses. This provision is of particular importance for general contractors who must now ensure that their subcontractors or their affiliates have not been convicted of the enumerated offenses.

g) Advance Determinations

A supplier may request an advance determination about whether or not it is ineligible to receive a contract from the GoC. A supplier can submit information to show why  it should not be declared ineligible notwithstanding the charges or convictions. The Minister may request further information, or retain a Third Party Monitor, to validate the information provided. If the Minister determines that a supplier is ineligible, the supplier's only recourse is to the Federal Court of Canada by way of judicial review.  In other words, there is no appeal process to review the Minister's decision.

h) Advanced Warning of Ineligibility or Suspension

If the Minister believes that a supplier is ineligible to receive a contract, he can issue a Notice of Intention  to Declare Ineligible/Suspend. Upon receiving this Notice, a supplier will then have 30 days to respond to this Notice, setting out why the supplier should not be declared ineligible. Suppliers who are declared ineligible or suspended will be included on a list that will be made public.

i) Administrative Agreements

As we noted above, the Ineligibility and Suspension Policy permits a supplier to enter into an Administrative Agreement, the effect of which is to lessen the period of certain debarment and suspension. Under an Administrative Agreement, the supplier will generally agree to a separation of employees from management or programs; implementation or extension of compliance programs; employee training and information; outside auditing; access to contractor records; or some other form of remedial or compliance measure.

If an ineligible supplier wants to participate in a procurement process that is underway, but does not yet have an Administrative Agreement in place, it will not be permitted to receive a contract in that solicitation.

Another important change in the Ineligibility and Suspension Policy grants contract authorities some flexibility to permit the supplier to carry on with an ongoing contract, rather than automatically terminating the contract in the event the supplier is convicted of an enumerated offense.

j) Public Interest Exemption

Like the earlier integrity provisions, the Ineligibility and Suspension Policy permits the GoC to enter into contracts with a supplier even if it has been convicted of one of the enumerated offenses where to do so is in  the public interest. This is known as the Public Interest Exemption ("PIE") and it allows an otherwise ineligible supplier to receive contracts in cases where there is a pressing emergency, the supplier is the only party capable of performing the work, the contract is necessary to ensure sufficient stockpiles or where not entering into the contract would adversely impact the health, national security, safety, or economic or financial well-being of  the people of Canada, or the functioning of the public service. If the PIE is invoked, the supplier will be required to enter into an Administrative Agreement. This exemption will apply only to the urgently undertaken contract in question and will not constitute a waiver of debarment or suspension for other contracts.

k) Registrar of the Ineligibility and Suspension List

The Ineligibility and Suspension Policy will create a position within PWGSC to act as Registrar of the Ineligibility and Suspension List. The Registrar will include on the List the names of all persons and companies who are ineligible to receive government contracts. Importantly, if a supplier intends to use a subcontractor, the supplier is required to make enquiries of the Registrar to ensure  it is not dealing with an ineligible party. This requirement is very important, and one that must be followed by all general contractors, to ensure they do not become ineligible through the inadvertent hiring or an ineligible person or contractor.

The List can be accessed at: Currently, there are no company names on the List.

If the subcontractor is a person, the supplier must get the person's consent permitting disclosure of information to the supplier about whether the person is ineligible to receive a contract.

Concluding Remarks

These changes require the attention of all federal contractors. The new provisions in some ways mitigate the harshness of the previous integrity regime, but in other ways impose new obstacles for companies selling to the federal government. Knowing how these provisions can affect your company is crucial. Adherence to high ethical standards is important not only to ensure compliance with the law, but also to ensure suppliers are not cut off from federal contracts, which for some suppliers is the blood that keeps them alive.

The Ineligibility and Suspension Policy and associated documents can be found at:

About BLG

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
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 you may opt out by clicking here

    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.

    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.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    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.

    By clicking Register you state you have read and agree to our Terms and Conditions