Frequently Asked Questions

The Integrity Regime protects the integrity of procurement and real property transactions by ensuring that these transactions are carried out with ethical suppliers.

In Budget 2015, the Government of Canada announced a new government-wide integrity regime for its procurement and real property transactions to ensure that it does business with ethical suppliers in Canada and abroad. The new regime will be 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.

Public Works and Government Services Canada (PWGSC) will administer the regime on behalf of the Government of Canada.

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 on behalf of the Government of Canada 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.

The department consulted broadly with industry associations and will continue to consult on the development and implementation of the integrity regime as is 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.

No. The new integrity regime will not cause delays in competitive processes for procurements. The majority of current verifications are carried out in short turn-around time. Officials will continue to ensure the efficient processing of these verifications.

PWGSC will reach out to suppliers who are currently ineligible in order to inform them of the new integrity provisions and to reassess their ineligibility under the new regime.

The Integrity Regime addresses the primary concerns of industry. Specifically, the proposal:

• 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 would cause the 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; and
• recognizes remedial actions on the part of suppliers with the possibility of a reduced period of ineligibility.

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
• Addressed the causes of the misconduct

At the end of the ten year ineligbility 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 frauds under the Financial Administration Act and the Criminal Code results in permanent ineligibility unless a record suspension is obtained.

A suspension may occur when a supplier is charged in Canada or abroad of a listed offence or has admitted to wrongdoing. Suspension could be up to 18 months in duration, unless a judicial process is underway, in which case it could be extended.

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.

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.

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 would cause the ineligibility.

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 similarity of foreign convictions will be taken into account the following factors:

• That the foreign court acted within its jurisdiction;
• That the supplier/affiliate voluntarily appeared during the court's proceedings or submitted to the court's jurisdiction;
• That the court's judgment was not obtained by fraud;
• That the supplier/affiliate was entitled to present to the court every defense that they would have been entitled to present in Canada, had they been tried in Canada for committing the act or omission.

Independent third parties would be hired by the bidder to provide information on the foreign conviction, however the Government of Canada takes the final decision.

Yes, PWGSC will publish a list of ineligible suppliers. 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.

The regime applies to all suppliers. Prime contractors will be required to subcontract only with eligible suppliers.

A prime contractor who knowingly subcontracts with an ineligible subcontractor would be ineligible for five years under the regime. As there will be a public list, prime contractors will have the ability to verify the eligibility of their subcontractors.

Should a supplier require the services of a suspended or ineligible subcontractor (e.g., the only subcontractor capable of undertaking the work is ineligible), approval of the Government of Canada must be sought by the prime in advance.

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.

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 ineligibilty periods reduced by up to  five 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 would be given to a supplier that has demonstrated that:

1. it has cooperated with law enforcement authorities; or
2. it has taken positive steps to cleanse itself of the causes of the conduct that led to the ineligibility and it has implemented a compliance program.

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 conditions of their administrative agreement, they would face a lengthened ineligibility period.

A supplier cannot be reinstated through the payment of fines.

Administrative Agreements include conditions and compliance measures that the supplier must meet to remain eligible to contract with the Government of Canada.

Administrative agreements will be used in instances where:

• an ineligible supplier has had their ineligibility period reduced;
• in lieu of a suspension;
• a public interest exception was invoked with a ineligible supplier;
• a decision made to continue with an existing contract with a supplier which has become non-compliant.

Suppliers would contract, at their own expense, with a private sector third party that has expertise in corporate governance and integrity. These third parties would report to the Government according to the terms of the administrative agreement. The failure of a supplier to meet the terms of an administrative agreement would result in a lengthened ineligibility period.

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 ineligible or suspended, where it is in the public interest. Possible circumstances necessary to the public interest could include:

• no other supplier is capable of performing the contract;
• an emergency;
• national security;
• health and safety of Canadians are at risk;
• security of supply in accordance with its public commitments; and
• economic harm and financial injury.

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 record suspension has been obtained.

The new clauses in the integrity regime will be adopted on a go forward basis and will not impact existing contracts.

If a supplier is convicted of a listed offense during the life of a contract, 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 demonstrate that they have addressed or are in the process of addressing the cause of the misconduct.

If a decision is made to continue with the contract/lease, 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.

This integrity regime is designed to strengthen integrity on a government-wide basis and better aligns with international practices. The new 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.

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.

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.