Canada: Major Changes To Public Sector Procurement In Québec

Last Updated: January 19 2018
Article by Claire R. Durocher and Lampros Stougiannos

On December 1, 2017, the National Assembly unanimously approved the Act to facilitate oversight of public bodies' contracts and to establish the Autorité des marchés publics (the "Act"). This law represents the most significant change to Quebec's public procurement regime since the establishment of the authorization system under the purview of the Autorité des marchés financiers ("AMF") following the work of the Commission of Inquiry on the Awarding and Management of Contracts in the Construction Industry ("Charbonneau Commission"). It is the culmination of years of effort to overhaul the contract tendering and award process of Québec's public sector bodies.

The first recommendation in the Charbonneau Commission's final report, which was tabled on November 24, 2015, was for the creation of a public sector procurement governance authority to oversee the award and management of public contracts. Although it stems from this inquiry into the construction industry, the Autorité des marchés public's ("AMP") mandate is not limited to that industry. As was the case with AMF, the AMP's oversight powers also extend to supply agreements, service agreements and public-private partnership agreements, within the meaning of the Act respecting contracting by public bodies, as amended.

In addition to addressing certain recommendations of the Charbonneau Commission report, including the creation of the AMP, many of the changes are also intended to align Québec's public procurement regime with the requirements of the Canadian Free Trade Agreement ("CFTA"), which came into force on July 1, 2017. This agreement requires that parties to the CFTA set up an impartial administrative or judicial authority to receive and review complaints filed by bidders.

Going forward, the administration and audit roles contemplated by the Act respecting contracting by public bodies, which had previously been delegated to the AMF pursuant to the Integrity in Public Contracts Act adopted in 2012, as well as the authorization process provided for therein, will be exercised by the AMP.

We have highlighted below some of the many changes contemplated by the Act:

The AMP's Enforcement Powers

The AMP now has an increased role and greater authority to audit and investigate the tendering and award process relating to public contracts, as well as contract performance. The AMP may intervene of its own accord, at the request of the President of the Québec Treasury Board, or of the Minister responsible for municipal affairs, in order to examine the tender, award or performance of a public contract. Decisions of public bodies in relation to public tenders may be the subject of orders issued by the AMP to modify tender documents if the AMP considers that these do not ensure the fair and equitable treatment of bidders.

When it comes to municipal bodies, the AMP's power to issue orders varies slightly in that the AMP's decisions are rendered in the form of recommendations to the municipal council. Furthermore, with regards to the City of Montréal and its entities, the AMP's functions and powers are performed by the City's Inspector General, although the AMP retains the right to review contract management. The AMP can still make recommendations to the Inspector General and the government may, by order in council, repeal this exception and render the City of Montréal or any of its entities subject to the AMP's authority.

Authorization to contract with a public body

The requirement to hold an authorization prior to obtaining a public contract remains unchanged subject to certain amendments and clarifications. The application process and conditions for approval remain virtually the same. However it should be noted that:

  • The calculation of the threshold which is established by decree and which determines whether a public contract is subject to the authorization regime now clearly includes any expenditures stemming from options provided for in the contract;
  • Despite these thresholds, the government may determine that authorization is required for public contracts even if they involve an expenditure below the threshold; and
  • A company that withdraws an application for authorization which is in progress cannot resubmit another for 12 months, unless it receives the AMP's express permission.

Complaint Mechanism

The Act also provides for an administrative complaint mechanism whereby an interested person may submit to the AMP and the relevant public contracting body a complaint regarding a public contract's tendering or award process. This new complaint mechanism is also aligned with relevant CFTA provisions.

After having previously filed a complaint with the public body in question, a competitor or bidder has three days to file its complaint with the AMP. This "double complaint" mechanism appears intended to promote the rendering of decisions, keeping in mind the requirement to treat bidders fairly and equally. Bidders and interested parties therefore have a new way to seek to enforce the competitive process.

This double complaint procedure is however not final and a complainant may still take an action before the courts, based on the same facts, regardless of whether it used the AMP complaint mechanism.

Contracts by Mutual Agreement

Where a public body wishes to avail itself of the option to enter into a contract by way of mutual agreement because it believes that a public call for tenders would not be in the public interest, the Act now requires the organization to publish a notice of intent in this regard. This notice of intent must specify the name of the company with which the public body intends to enter into a contract and allows other companies to express their interest in the contract. The public body's decision to enter into a contract by mutual agreement must refer potential bidders to the AMP's complaint mechanism which, as we saw in the previous paragraph, does not preclude instituting proceedings before the courts.

It is therefore now possible to challenge the awards of contracts by mutual agreement in advance of their execution. As such, it will be interesting to see if this encourages more injunctive proceedings by bidders.

Penalties

The Act introduces new penal provisions and increases the applicable penalties, notably for:

  • obstructing an audit or investigation ($4,000 to $20,000 for a company);
  • communicating false or misleading information ($10,000 to $250,000 for a company);
  • communicating with a selection committee member in order to influence them in regards to a call for tenders ($15,000 to $100,000 for a company).

Although the Act came into force on December 1, 2017, several of the provisions regarding the AMP and its functions and powers will come into effect progressively during 2018.

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.

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Claire R. Durocher
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