The Act Respecting Contracting By Public Bodies ("Contracting By Public Bodies Act") (Bill 17, 2006, chapter 29), assented to by the Quebec National Assembly on 15th of June 2006, comes into effect on the 1st of October 2008 along with its associated regulations. The aim of the Contracting By Public Bodies Act is to standardize and harmonize the rules and conditions for awarding contracts between public bodies and private contractors, including public-private partnerships ("PPPs"), in order to achieve transparency in the contracting processes, the honest and fair treatment of tenderers and accountability of the chief executive officers of public bodies to verify the proper use of public funds. The Contracting By Public Bodies Act prevails over any contrary prior or subsequent law unless that law expressly states otherwise.
The Act Respecting the Agence des partenariats public-privé du Québec (PPP Act) (SRQ c 7.002), in force since 2005, created the Agence des partenariats public-privé du Québec (the "Agency") and gave it the fairly broad mandate of advising the government on all matters relating to PPPs and providing public bodies with expertise relating to the feasibility, awarding and management of PPP contracts. The law contains no rules of conduct, ethical rules, or guidelines with regard to the contract awarding process. The Contracting By Public Bodies Act fills this legislative void.
Transparency Through A Public Call For Tenders
The fundamental rule established by the Contracting By Public Bodies Act is that a public body must make a public call for tenders by publishing a notice on the electronic tendering system approved by the government, which is the Système électronique d'appels d'offres (www.seao.ca) when the amount of the contract exceeds the minimum threshold, which ranges from $25,000 to $100,000, depending on the type of contract (supply, service, construction or mixed). A PPP contract will always involve sums of money superior to the minimum threshold and, therefore, a PPP contract can only be awarded through a public call for tenders. The PPP Act and framework policy, although it champions fairness, transparency and competition, does not explicitly insist upon a public call for tenders in the awarding of PPP contracts. This has the potential to create great disparities in the award of one contract to the next. The Contracting By Public Bodies Act, therefore, attempts to standardize the process for the awarding of contracts and, thereby, make it more transparent.
Exceptions To A Public Call For Tenders
The Contracting By Public Bodies Act allows public bodies to bypass the public call for tenders and conclude a contract by mutual agreement in certain limited circumstances, such as, when there is an emergency threatening human safety or property, when there is only one possible contractor because of the existence of a guarantee or an exclusive ownership right such as a copyright, exclusive license or patent, when the contract involves confidential or protected information which would be compromised through disclosure in a public call for tenders, or because of the artistic, heritage or museological value of the required property or service. The Conseil du Trésor can also authorize a public body to enter into a contract without requiring a public call for tenders.
Scope Of The Acts
The PPP Act encourages public bodies, including government departments, general and vocational colleges, the Comité de gestion de la taxe scolaire de l'île de Montréal, school boards, university establishments, public health and social services agencies as well as municipal bodies, to avail themselves of the advice and expertise of the Agency concerning PPPs. The Contracting By Public Bodies Act and its associated regulations establish the rules by which these public bodies must call for tenders in order to choose a private partner in the context of a PPP. It is important to note that the Contracting By Public Bodies Act excludes municipal bodies from its scope, the justification being that municipalities are already governed by the City and Towns Act, the Municipal Code, the charter, etc., which have rules similar to the ones codified in the Contracting By Public Bodies Act and its associated regulations.
The Unique Case Of PPPs
Generally, a public body is required to accept the lowest bid. However, this may not be the optimal choice when awarding a PPP contract to a private body. The Agency, in its policy framework, states that it is the added value for the public funds invested that is the determining criterion when evaluating bids. Price is certainly an important factor in this determination but quality also plays a critical role. Consequently, the legislature has recognized the important interplay between price and quality in the Contracting By Public Bodies Act and its associated regulations, which allow a public call for tenders to proceed in stages according to the complexity of the project and the number of potentially interested tenderers. However, it requires that the stages be defined in the tender documents.
The Regulation respecting construction contracts of public bodies and revoking the Regulation respecting grants for the purposes of construction ("Regulations") contains special provisions for contracts consisting of a mix of construction and professional services as is the case with PPPs. According to the Regulations, the award of such contracts must proceed in two separate stages. At the first stage, the public body selects contractors by soliciting only a quality demonstration. The tender documents must indicate whether every selected contractor or only a limited number of them will be invited to take part in the second stage. The selection committee of the public body then evaluates the quality of tenders according to the provisions of the Regulations. At the second stage, the public body invites the selected contractors to separately submit a price and a quality demonstration in conformity with the evaluation conditions set out in the Regulations.
This process is intended to allow the public body to determine which submission provides the most added value.
Modifications To The Stages Of The Tender Process
The Contracting By Public Bodies Act provides that, during the tender process, a stage in the process for awarding a PPP contract may be amended if the majority agrees to the amendment. This particular point generated much heated debate in the National Assembly as it left open the possibility that a majority of the parties could collude with the intention to exclude other parties; however, as it is only the public body that can propose changes, parties cannot collude on their own initiative.
The utilization of private partners for infrastructure or service delivery projects does not change public bodies' accountability requirements since they are responsible for these projects at all times. The Contracting By Public Bodies Act, therefore, requires tender documents to include provisions that allow the public body to ensure compliance with its legislative requirements, particularly with regard to access to documents held by public bodies, the protection of personal information and reporting requirements.
The Contracting By Public Bodies Act also provides that tender documents must include conflict of interest rules. These rules, among other things, would prohibit a private company involved in the development of a business plan for a public body, as per the recommendations of the Agency, from submitting a bid for the project, thereby, avoiding a situation where the private company would structure the business plan to ensure its own success in the bidding process.
Application To Current Contract Award Procedures
Contract award procedures begun before the 1st of October 2008 are to be continued in accordance with the provisions in force on the date of the beginning of the procedures. Any contract in progress on the 1st of October must be continued in accordance with the Contracting By Public Bodies Act. If a provision of the Contracting By Public Bodies Act is incompatible with a provision of the contract, the latter provision prevails.
The Contracting By Public Bodies Act along with the PPP Act create greater transparency and clarity regarding public-private partnerships and as such is a first step towards creating more accountability and more value for the use of public funds.
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.