On February 3, Bill 12, An Act mainly to promote Québec-sourced and responsible procurement by public bodies, to reinforce the integrity regime of enterprises and to increase the powers of the Autorité des marchés publics, (the Bill) was tabled in the National Assembly of Québec to support Québec's new promotion strategy with respect to Québec-sourced procurement, to reinforce the integrity regime applicable to businesses in the context of management of public contracts and to increase the powers of the Autorité des marchés publics over them.
The BLG experts present you a review of the material elements of the Bill as well as the proposed changes to the legislation currently in force.
Québec-sourced and responsible procurement
The first objective of the Bill is to promote Québec-sourced and responsible procurement by public bodies subject to the Act respecting contracting by public bodies (ACPB). To this end, new provisions will aim to promote the economic development of Québec.
For procurement, service or construction contracts involving an expenditure, including options, equal to or greater than the minimum threshold specified in any intergovernmental agreement, but less than the minimum threshold applicable under the Comprehensive Economic and Trade Agreement between Canada and the European Union and its Member States, the amendments made by the Bill are intended to:
- Allow the Conseil du trésor to set up a program allowing public bodies to reserve public calls for tenders for Québec small businesses;
- Favour the acquisition of Québec goods, services or construction work when awarding or granting contracts, and;
- Grant a premium in the form of a preferential margin not exceeding 10 per cent based on the Québec value added.
For contracts that are not subject to an intergovernmental agreement, the amendments introduced by the Bill are intended to:
- Favour the use of the regionalized public tendering procedure, and;
- Favour the acquisition of Québec goods, services or construction work when awarding or granting supply, service or construction work contracts.
In addition, the Bill provides that a contract involving an expenditure below the public tender threshold may be awarded by a public body following a public or invitational tender, or by mutual agreement (de gré à gré). If the public body proceeds by call for tenders, it must favour regionalization of the call for tenders or invitation of local businesses, as the case may be, and give preference to the acquisition of Québec goods, services or construction work. If the public body proceeds by mutual agreement, it must favour the acquisition of Québec goods, services or construction work from local businesses and ensure a rotation among them.
The integrity regime of businesses
The powers of the Autorité des marchés publics
The Bill also seeks to strengthen the integrity regime of businesses under the ACPB and to expand the powers of the Autorité des marchés publics (AMP). To that end, the Bill:
- Subjects to the oversight authority of the AMP any business that holds an authorization to contract with a public body or any business that is a party to a public contract or subcontract as defined in the ACPB;
- Provides that, in order to exercise this oversight power, the AMP will have the necessary powers to verify the integrity of any business subject to its oversight, including the power to require a business to provide it, at any time, with any documents deemed useful for the performance of its duties. In addition, the AMP will be able to investigate any matter relating to its oversight of public contracts;
- Introduces the authority of the AMP to impose corrective measures on any business that fails to meet the integrity requirements for the performance of public contracts or subcontracts, and provides the AMP with the authority to monitor and support such businesses;
- Allows the AMP to temporarily suspend an authorization to contract issued under the ACPB, and;
- Provides that, under certain circumstances, a business whose authorization to contract is temporarily suspended will be able to continue to perform any public contract or subcontract in progress while implementing corrective measures imposed by the AMP and submitting to its monitoring and oversight authority.
Note that for contracts in progress as of the effective date of the applicable provisions, the new provisions of Bill 12 will not have the effect of subjecting businesses to AMP oversight or to any resulting actions and penalties.
Authorizations to contract
With respect to the application for the issuance of an authorization to contract, the Bill proposes the following changes:
- The authorization to contract will have to be held by a business at the time of the submission of a bid to obtain a public contract or subcontract subject to the ACPB or the conclusion of such a contract by mutual agreement. Thus, it will no longer be possible for a public body to provide that such authorization will be required at the time of the conclusion of the contract as opposed to the time the bid is submitted, as is the case under the current ACPB regime;
- Authorization to contract will now be issued for five-year terms (instead of three years);
- Authorizations to contract that are in effect at the time these new requirements will come into effect will automatically be extended for two years;
- The introduction of an annual update regime for information provided to the AMP and the requirement for ongoing disclosure following the occurrence of a change in such information; in addition, a declaration of integrity will be required to be provided at the time of the conclusion of any public contract or sub-contract, and;
- The authorization to contract requirements for businesses consisting of a consortium structured as a limited or general partnership are clarified.
Interestingly, the Bill also introduces the possibility for a business subject to the oversight authority of the AMP, and party to a public contract or subcontract, to voluntarily submit to a review of its integrity by the AMP. Such review may be requested by a business before it is listed in the register of businesses ineligible for public contracts and will allow such business to comply with the corrective measures imposed by the AMP following the review, and thus continue to perform the contract to which it is a party.
Monetary Administrative Penalties and Penal Sanctions
The Bill introduces an administrative monetary penalty regime into the ACPB and adds new penal provisions to several laws impacted by the ACPB and Bill 12. Administrative monetary penalties may be imposed on a business:
(1) that submits a bid for a public contract or subcontract or enters into such a contract or subcontract although it is ineligible for public contracts or does not hold the authorization to contract required to enter into such a contract or subcontract, unless the business was given permission to enter into a contract or subcontract under section 25.0.3;
(2) that, in the course of the performance of a public contract with a public body or with a body described in section 7, enters into a public subcontract with a business that is ineligible or does not hold the authorization to contract required to enter into such a subcontract, unless the business was given permission to enter into that subcontract under section 25.0.3;
(3) whose authorization to contract expires while it is in the process of performing a public contract or subcontract for which such an authorization is required;
(4) that, while it is party to a public contract or subcontract or holds an authorization to contract, fails or refuses to send to the AMP, within the time and on the terms and conditions prescribed, any document or information required for the purposes of Chapter V.1;
(5) that fails or refuses to confirm, in an affidavit, the authenticity of documents or the veracity of information communicated to the AMP;
(6) that fails to submit to an oversight or monitoring measure imposed on it by the AMP under Chapter V.1 or, if the measure was applied by the AMP, fails to repay it the costs of such a measure.
In addition, AMP regulations may provide that a failure to comply with a regulation adopted under Chapter V.1 of the ACPB (Integrity regime of enterprises) may give rise to an administrative monetary penalty.
With respect to administrative monetary penalties, the AMP will develop and make public a general framework for applying such administrative penalties. In addition, a record of administrative monetary penalties will be established and the AMP will be required to record, at a minimum, the name of the business subject to the penalty, the date and the nature of the penalty, the amount imposed and any other information that the AMP considers of public interest.
With respect to the penal provisions, the Bill proposes the following changes:
- A fine for making a false or misleading statement may now be imposed during the performance of the contract, and not just at the time of bidding;
- A fine between $5,000 to $30,000 in the case of a natural person and $15,000 to $100,000 in any other case may be imposed to anyone who hinders or attempts to hinder a person exercising audit or investigation functions. This fine is in addition to the current regime under the ACPB regarding the prohibition of a business from communicating or attempting to communicate with a member of a selection committee for the purpose of influencing a call for tenders, and;
- Proof that an offence was committed by an agent, mandatary or employee of any business will be sufficient to establish that it was committed by that business, unless the business establishes that it exercised due diligence and took all necessary precautions to prevent the offence.
It is also important to note that the penal provisions contained in the Bill amending the Act respecting the Autorité des marchés publics and the Act to facilitate the disclosure of wrongdoings relating to public bodies also provide for fines of up to $250,000 in certain circumstances, including for providing false or misleading information to the AMP or for retaliating against any person for making a bona fide disclosure or cooperating with an audit of the AMP or investigation conducted on the basis of a disclosure. The amount of such fines will be doubled in the event of a subsequent offence.
Coming into force
The provisions of Bill 12 will come into force on the date of assent, except for those introducing the rules on sustainable development and Québec-sourced procurement, which will come into force six months after the date of assent, and those relating to declarations of integrity and the option of voluntarily submitting to an integrity review by the AMP. The same goes for those relating to monetary administrative penalties and penal sanctions, which will come into force when the regulations adopted by the AMP in application of these new rules come into force, those relating to the obligation to update information and data annually, and the rules relating to applications for the renewal of authorizations to contract, which will come into force twelve months after the date of assent.
If you have any questions about recent developments in the legal framework, public bodies contracts, authorizations to contract, and the powers of the AMP in this area, please contact one of BLG's construction lawyers listed below.
