Quebec's New Municipal Contracting Framework Comes Into Force

Quebec's Act respecting contracting by municipal bodies (Act) comes into force on April 1, 2026. The Act, which was assented to on March 25, 2025, is based on the legislative framework applicable to Quebec provincial public bodies set out in the Act respecting contracting by public bodies (ARCPB). It aims to simplify, modernize and standardize existing rules governing the awarding and management of municipal contracts in the province.

The following regulations, enacted under the Act, also come into force on April 1, 2026:

• The Regulation respecting the threshold and time periods applicable when awarding certain contracts of municipal bodies
• The Regulation respecting discrimination on the basis of territory allowed when awarding certain contracts of municipal bodies or during a process for certification or qualification
• The Regulation respecting discrimination on the basis of territory applicable to certain contracts of municipal bodies involving an expenditure equal to or greater than$20,000,000
• The Regulation respecting the awarding of certain contracts of municipal bodies according to a procedure by written invitation or by mutual agreement

It should be noted that the Regulation to amend the Regulation to impose conditions for the awarding of certain supply contracts by municipal bodies, which extends the original regulation's application to March 2027, provides that the amendments resulting from the coming into force of the Act will also take effect on April 1, 2026.

Overview

The Act applies to municipal bodies, metropolitan communities, intermunicipal boards, public transit authorities, as well as all bodies that meet the criteria set out in Quebec's Cities and Towns Act (CTA).

It consolidates requirements previously set out in the CTA and the Municipal Code of Québec and adopts simplified nomenclature. It also introduces new mechanisms, such as requests for quotations addressed to qualified enterprises, partnership contracts and the application of delivery order contracts to services and work.

The scope of the Act is broad, and its provisions should be carefully examined by any municipal body or stakeholder working in the municipal sector. The following highlights some of the Act's key elements in greater detail:

• Pre-tender requirements: The Act sets out pre-tender requirements, including the following:
  • A serious evaluation of the procurement requirements must be conducted prior to initiating a procedure to award a contract, and such evaluation must be documented if the contract involves an estimated expenditure equal to or greater than C$25,000.
  • For any contract to be awarded according to an open process, the expenditure must be the subject of a thorough estimate prior to the publication or transmission of the tender documents or prior to the awarding of the contract, whichever comes first.
  • The Act expressly prohibits the division of contracts (otherwise known as "contract splitting").
  • The Act sets out a strict limitation on amending contracts, whereby a contract may only be amended if such amendment is an ancillary to the contract and does not alter its nature.
• Discrimination on the basis of territory: As was the case with the CTA and other municipal statutes, the Act requires municipal bodies to implement certain measures to discriminate on the basis of territory in procurement processes for awarding certain contracts, as well as in procurement processes for certification and qualification, by regulatory means. Two additional regulations, namely the Regulation respecting discrimination on the basis of territory allowed when awarding certain contracts of municipal bodies or during a process for certification or qualification and the Regulation respecting discrimination on the basis of territory applicable to certain contracts of municipal bodies involving an expenditure equal to or greater than $20,000,000, follow through on the ongoing commitment to fostering the Canadian economy, including Quebec's.
• Contract awarding procedure:Pursuant to the Act, tender documents may now provide for the following:
  • A preferential margin not exceeding 10% of the proposed price may be granted for evaluation purposes.
  • For the purpose of determining the selected tenderer, additional costs to be assumed by the municipal body will be taken into consideration along with the price proposed in each of the tenders, in the cases and on the conditions determined by ministerial regulation.
  • A tender may be rejected if, in the two years prior to the tender closing date, the tenderer has failed to follow up on a tender or contract, or has had a contract cancelled for non-compliance with its terms. This represents a departure from the CTA and the Municipal Code of Québec, which limited the right to reject a tender to cases where the tenderer had received an unsatisfactory performance assessment in the two years prior to the tender opening date.
• ARCPB integrity requirements: The Act incorporates the ARCPB provisions on integrity and eligibility for public contracts.
• Abnormally low tenders:The Act introduces provisions on abnormally low tenders, including a detailed process for their analysis and, where necessary, their rejection. It also authorizes price negotiation where only one compliant tender is received, without requiring evidence of a significant difference between the submitted price and the municipal body's estimate.
• Prompt payment:Regarding construction work, the Act introduces a mandatory prompt payment regime and a dispute resolution mechanism before a certified third-person adjudicator, the terms of which will be set out in regulations and should be based on existing mechanisms applicable to public bodies.
• Partnership contracts:The Act includes provisions pertaining to partnership contracts that generally mirror those introduced under the ARCPB, providing flexibility in the procurement and execution of such contracts (for further details, see the "Certain Practical Considerations" section below).

Certain Practical Considerations

The implementation of the Act will necessarily result in changes to the awarding of municipal contracts. To ensure an effective transition, municipal bodies will need to train their staff, integrate new mechanisms relating to tender rejection, price analysis, prompt payment and dispute resolution, as well as update their contracting strategies. Municipal bodies will also need to adapt their contract management by-laws to take into account, among other things, the requirements of the Act pertaining to responsible procurement and discrimination on the basis of territory in favour of Quebec and Canadian goods and services.

In addition, the introduction of partnership contracts offers greater flexibility to municipal bodies and enables an awarding procedure tailored to specific equipment or infrastructure projects. This allows for municipal bodies to implement so-called "collaborative" contracts and facilitates collaboration between municipal bodies and private parties both during and after the tendering process, while promoting more effective risk sharing. It will be of interest to observe how these contractual procurement mechanisms recently implemented by Quebec public and parapublic organizations (such as progressive design-build contracts, alliance contracts and integrated project delivery) will be integrated into the delivery of complex municipal infrastructure projects.

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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.

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.