More integrity checks for public contracts

Authorization to be required for bids as low $1M

The number of companies that will require a background check and authorization to bid on certain types of public contracts is expected to double under a provincial decree passed in late May.

The decree, which was published in the Gazette Officielle on Tuesday and takes effect on Nov. 2, will lower the value of public service contracts and subcontracts that are subject to Quebec’s Integrity in Public Contracts Act to $1 million from the current $5 million.

Consequently, the number of contracts and companies that will be required to clear a background check by Quebec’s financial regulator — the Autorité des marchés financiers — before they can win the contract will increase.

“It should affect 1,300 additional businesses that will seek authorization,” AMF spokesperson Sylvain Théberge said on Thursday. Those businesses will add to the 1,300 companies already approved by the AMF, he said.

The law, passed by the National Assembly in December 2012, applies to contracts awarded by public bodies, including municipalities and provincial institutions, departments and agencies.

The new edict dropping the value to $1 million applies only to service contracts, which includes engineering, architecture, computers and information technology and other consulting work. The limit will also be $1 million for subcontracts for such professional services.

The decree doesn’t lower the bar for construction work awarded by public bodies. The limit remains $5 million for those contracts, Théberge said.

The decree also doesn’t affect contracts awarded by the city of Montreal, where specific rules apply. As of last fall, any supply or service contract awarded by the city worth more than $100,000, and any supply or service subcontract worth $25,000 and more, requires bidders be vetted by the AMF.

The Quebec government has said it is progressively lowering the dollar value of construction and service contracts subject to the law and that eventually all public contracts that are subject to a public call for tenders—meaning contracts worth $100,000 and more — will require bidders to get AMF authorization.

When it was passed in 2012, the anti-corruption law applied to public contracts worth $40 million and more. The limit was later lowered to $10 million and then to $5 million in October.

“The government is going step by step precisely to avoid being clogged with requests (for authorization),” Théberge said. The timeline, however, “is the prerogative of the government.”

The background checks are carried out for the AMF by Quebec’s permanent anti-corruption squad, UPAC. Convictions related to fraud or corruption against a firm or any of its directors or owners in the previous five years are among the grounds to reject a company.

To date, the AMF has rejected six or seven companies that requested authorization, Théberge said. However, many of the 1,300 that have been approved had to clean up their act to get their authorization, he said. Some companies, he said, had to replace company directors, install independent boards of directors, adopt ethics policies or agree to an external audit every three months to ensure they’re respecting the law.