Frequently asked questions
- Updated version of the Ineligibility and Suspension policy and integrity clauses
- Principles of the integrity regime
- Ineligibility time limit
- Advance determinations
- International convictions
- Public list
- Due process (appeal/reinstatement)
- Administrative agreements
- Public interest exception
- Contract termination
- International alignment
- Market competition
Updated version of the Ineligibility and Suspension policy and integrity clauses
1. Why was a revised Ineligibility and Suspension Policy and integrity clauses released on April 4, 2016? What has changed?
While there have been no changes to the Integrity Regime itself, the policy and clauses have been simplified in response to feedback from client departments and agencies, as well as the supplier community. The clauses now incorporate the policy by reference into the solicitation documents and resulting contracts and real property agreements.
Principles of the Integrity Regime
2. What is the objective of the Integrity Regime?
The Integrity Regime protects the integrity of contracts and real property agreements by ensuring that these transactions are carried out with ethical suppliers.
The regime is transparent, rigorous and consistent with best practices in Canada and abroad. It will also foster ethical business practices, ensure due process and uphold the public trust.
3. Who will administer the government-wide Integrity Regime?
Public Works and Government Services Canada (PWGSC) is responsible for administering the Integrity Regime on behalf of Canada, making ineligibility and suspension determinations, and entering into Administrative Agreements.
4. Who does the Integrity Regime apply to?
The Integrity Regime will apply to all departments and agencies (as per Schedule I, I.1, and II of the Financial Administration Act – FAA). PWGSC will administer the regime through Memoranda of Understandings (MoU) with each department and agency.
The intent is to apply the new Regime on a government-wide basis. As such, other federal organizations, including Crown Corporations, are encouraged to adopt and apply the Regime by entering into an MoU with PWGSC.
5. Were consultations held to develop and design the Integrity Regime?
The department consulted broadly with industry associations prior to its introduction and has continued to consult on the development and implementation of the Integrity Regime as its usual practice. Furthermore, independent procurement ethics experts were also consulted in order to inform options that would allow the federal government to achieve its objective of strengthening integrity government-wide.
6. Will this cause delays in the issuance of contracts?
No. The Integrity Regime does not cause delays in competitive processes for contracts and real property agreements. The majority of current verifications are carried out in short turn-around time. Officials continue to ensure the efficient processing of these verifications.
7. What happened to previously ineligible suppliers under PWGSC’s former Integrity Framework?
PWGSC reached out to suppliers who were ineligible in order to inform them of the new Integrity Provisions and to reassess their ineligibility under the Integrity Regime.
8. How does the Integrity Regime address industry concerns?
The Integrity Regime addresses the primary concerns of industry. Specifically, the Regime:
- Eliminates automatic ineligibility for a supplier for the actions of an affiliate (including the parent company), unless it can be demonstrated that the supplier had a degree of control over the convicted affiliate. The degree of control would be determined by assessing whether the supplier directed, influenced, authorized, assented to, acquiesced in or participated in the commission or omission of acts or offences that led to its ineligibility.
- Encourages suppliers to proactively disclose misconduct as soon as they become aware of it, as the ineligibility period could start as soon as an ethical breach was disclosed, rather than being tied to a bidding process;
- Recognizes remedial actions on the part of suppliers with the possibility of a reduced period of ineligibility.
Ineligibility time limit
9. What is the ineligibility period? What occurs after the ineligibility period elapses?
A supplier will be ineligible for ten years from the date of the determination of their ineligibility to contract with the Government of Canada. Ineligibility will apply to convictions received within the past three years.
The ineligibility period can be reduced by up to 5 years if a supplier is able to demonstrate that it has:
- co-operated with law enforcement authorities; or
- has undertaken remedial action(s) to address the wrongdoing that led to its ineligibility.
At the end of the ten year ineligibility period, suppliers will be required to obtain third party certification at their own expense confirming that they have addressed the actions and behaviour that led to their conviction. Failure to do so would render them ineligible until such a time as they provide this certification.
However, a supplier convicted of offences that result in a loss of capacity to contract with Her Majesty or to receive any benefit under a contract between Her Majesty and any other person under the Financial Administration Act and the Criminal Code results in permanent ineligibility unless a pardon is granted.
10. What is a suspension?
A suspension may occur when a supplier is charged in Canada or abroad of a listed offence or has admitted to wrongdoing. A supplier will be suspended for 18 months from the date of PWGSC’s determination, subject to extension pending final disposition of the charges, at which time PWGSC will make a determination of ineligibility if the supplier is convicted.
An Administrative Agreement could be imposed in lieu of a suspension, which would allow the Government of Canada to have assurances and third party monitoring of suppliers that have been charged as their case proceeds through the courts. A third party would be engaged at the supplier's expense to monitor and report on compliance. This would be considered where a supplier has taken remedial measures and cooperates with law enforcement, thereby posing a lower risk to the integrity of the public procurement system.
If a supplier is convicted of a listed offence during a suspension period, the supplier will be ineligible for ten years from the date of the determination. The period of time under suspension will not count as part of the ineligibility period.
11. Can a supplier or potential supplier request an advanced determination of ineligibility?
Yes. A supplier may, at any time, request an advanced determination of ineligibility from PWGSC. In doing so, the supplier must describe any adverse information in their request and submission.
In particular, suppliers may decide to disclose ethics violations as the ineligibility period could start earlier, at the date of determination.
12. How are affiliates treated under the regime?
The regime eliminates automatic ineligibility for a supplier for the actions of an affiliate (including the parent company), unless it can be demonstrated that the supplier had a degree of control over the convicted affiliate. The degree of control would be determined by assessing whether the supplier directed, influenced, authorized, assented to, acquiesced in or participated in the commission or omission of acts or offences that led to the conviction.
13. How are foreign convictions treated under the Regime?
If the bidder is convicted of any of the listed offences in Canada or similar offences in foreign jurisdictions in the last three years, they will be ineligible for ten years.
To determine the similarity of the foreign conviction to a listed offence in Canada, an assessment of the constitutive elements of the foreign offence would be undertaken.
Additionally, determinations of the similarity of foreign convictions will be taken into account the following factors:
- in the case of a conviction, whether the court acted within its jurisdiction;
- whether the supplier was afforded the right to appear during the court’s proceedings or to submit to the court’s jurisdiction;
- whether the court’s decision was obtained by fraud; or
- whether the supplier was entitled to present to the court every defence that the supplier would have been entitled to present had the proceeding been tried in Canada.
Independent third parties would be hired by the bidder to provide information on the foreign conviction, however the Government of Canada makes the final decision.
14. Is there a public list of ineligible suppliers?
Yes, PWGSC has published a public Ineligibility and suspension list. This will allow prime contractors to ensure that they enter into contracts only with eligible sub-contractors and that they hold sub-contractors to the same terms and conditions as those that appear in their own contracts.
15. Does the regime apply to sub-contractors?
The regime applies to all suppliers. A prime contractor cannot subcontract with an ineligible supplier. A prime contractor is required to verify the status of their prospective first-tier subcontractors prior to bid submission. This may be done by verifying the ineligibility of companies through the Integrity Regime’s Ineligibility and Suspension List. In cases where a subcontractor is an individual, prime contractors must follow the procedures outlined in the Information Bulletin: Application of the Integrity Regime to Subcontractors.
Should a supplier require the services of a suspended or ineligible subcontractor, they will require written consent by the contracting authority.
Any supplier that enters into a contract with an ineligible sub-contractor without written consent, in circumstances where information about that subcontractor’s ineligibility or suspension was reasonably available to the supplier, will be ineligible for five years.
Due process (appeal/reinstatement)
16. Can a supplier appeal a determination of ineligibility?
A determination of ineligibility of a supplier is final. Suppliers that are ineligible on the basis of their involvement in the wrongdoing that led to the conviction of an affiliate will be able to request a review of the determination by the Minister of PWGSC.
17. Can a supplier demonstrate that they have addressed wrongdoing and be reinstated?
The Regime does not allow for reinstatement but suppliers that have taken positive steps to address the causes of the conduct that lead to the ineligibility may be able to have their ineligibility periods reduced by up to 5 years. Suppliers will be able to apply for this reduction at any time (i.e., prior to bidding or when in contract).
In determining whether to grant a reduction, consideration will be given to a supplier that has demonstrated that:
- it has cooperated with law enforcement authorities; or
- has undertaken remedial action(s) to address the wrongdoing that led to its ineligibility.
Suppliers with reduced ineligibility periods will be required to enter into an Administrative Agreement with the Government and comply with its terms and conditions. A third party would be engaged at the supplier’s expense to monitor and report on compliance.
If the supplier does not abide by the terms and conditions of their Administrative Agreement, they would face a lengthened ineligibility period.
A supplier cannot be reinstated through the payment of fines.
18. What are Administrative Agreements and when will they be used?
Administrative Agreements are used in cases where it is determined necessary to obtain assurances and exercise additional caution to further mitigate the risk of contracting with a particular supplier. They include conditions and compliance measures that the supplier must meet to contract with the Government of Canada.
An Administrative Agreement may be required:
- to reduce the period of a supplier’s ineligibility pursuant to the Policy;
- to enter into a contract or real property agreement further to a Public Interest Exception where time is not of the essence;
- in lieu of, or to stay, a suspension; or
- in lieu of terminating an existing contract or real property agreement due to a determination of ineligibility or suspension.
Suppliers would be required to obtain the services of a qualified independent third party, at their own expense, to monitor and report to the Government of Canada, on its progress and compliance to the terms and conditions of the Agreement.. The failure of a supplier to meet the terms of an administrative agreement would result in a lengthened ineligibility period.
Public interest exception
19. Are there any exceptions for those convicted of a listed offense?
The Public Interest Exception (PIE) may be invoked, on a case-by-case basis, to allow the Government of Canada to enter into a contract/lease with a supplier that has been determined ineligible or suspended, where it is in the public interest. Possible circumstances necessary to the public interest could include:
- the need to respond to an emergency where delay would be injurious to the public interest;
- the supplier is the only person capable of performing the contract or providing the real property agreement;
- the contract is essential to maintain sufficient emergency stocks in order to safeguard against possible shortages; and
- not entering into the contract or real property agreement with the supplier would have a significant adverse impact on the health, national security, safety, public security or economic or financial well-being of the people of Canada or the functioning of any portion of the federal public administration.
In these cases, an administrative agreement between the supplier and the Government of Canada would be required, with compliance monitoring and reporting by a third party at the supplier's expense. Failure to comply with the terms of the agreement would see the ineligibility period extended.
A PIE cannot be invoked in cases where a supplier is convicted of frauds under the Financial Administration Act and the Criminal Code, unless a pardon has been granted.
20. How does the new Integrity Regime impact existing contracts?
The new clauses in the Integrity Regime will be adopted on a go forward basis and will not impact existing contracts.
21. When can a termination of a contract occur?
If a supplier is determined to be ineligible during the life of a contract or real property agreement, the Government of Canada may terminate for default. If the Government of Canada decides to terminate, it will notify the supplier of the violation and provide an opportunity to show cause as to why the right to terminate should not be exercised.
If a decision is made to continue with the contract or real property agreement, an Administrative Agreement between PWGSC and the supplier will be required to provide the Government of Canada with additional assurances that the supplier is taking steps to address the causes of the misconduct.
22. How does this Integrity Regime align with those implemented in other countries?
The Integrity Regime is designed to strengthen integrity on a government-wide basis and better aligns with international practices. The Regime provides suppliers with due process, recognizes remedial action undertaken by firms, and allows for the use of Administrative Agreements to provide the Government with additional assurances when conducting business with ineligible suppliers.
23. Will the regime include deferred prosecution agreements like they have in the United States (US)?
The issue of deferred prosecution agreements is beyond the scope of the Integrity Regime and falls under the mandate of the Minister of Justice. This would be a major change to Canada's legal system and would require amending the Criminal Code.
24. How does the Integrity Regime benefit suppliers?
The department has an obligation to ensure that it is doing business with ethical suppliers, especially in the increasingly global marketplace. At the same time, it must also consider procurement integrity and accountability for Canadian taxpayers. The Integrity Regime ensures all suppliers are given equal and fair access to the procurement process, which leads to more opportunities for transparent competition. The Integrity Regime is also consistent with Canada's international trade obligations.
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