In response to serious questions recently raised regarding the integrity of the federal procurement system, Public Services and Procurement Canada (PSPC) announced a number of measures the Government of Canada is implementing to strengthen and streamline oversight of federal procurement.¹

These updates are important for all suppliers to the Government of Canada to take into account. Notably, understanding the expansion of the debarment and suspension criteria is critical for any supplier that has had legal issues relating to fraud and other offences or who has been debarred in another jurisdiction or international organization.

New office of supplier integrity and compliance program

PSPC is moving forward to further strengthen oversight of federal procurement processes with the launch of the new Office of Supplier Integrity and Compliance (OSIC) program.

The establishment of OSIC will provide an opportunity to modernize the Government of Canada’s debarment and suspension program and further strengthen its approach to the use of data analytics to identify potential instances of fraud and wrongdoing within federal procurement. This includes ensuring the Government of Canada has the tools to address other concerning conduct, such as empowering the government to debar suppliers convicted of offences like terrorist financing, the use of human trafficking or forced labour, or similar offences recognized in provincial and foreign civil judgments.

With the launch of OSIC, PSPC is updating previous frameworks governing supplier integrity to expand the list of offences that would render a supplier ineligible to do business with the Government of Canada. This includes debarring suppliers who have been convicted of fraud; terrorist financing; the use of human trafficking/forced labour; or similar offences recognized in provincial and foreign civil judgments. It would also introduce the ability to render suppliers ineligible to participate in federal procurements when they have been debarred by another jurisdiction or an international organization. Finally, it empowers the Registrar of OSIC to review whether contracting with the supplier may bring the federal procurement into public disrepute or otherwise be contrary to Canadian public policy (such as in situations of false declarations, significant or persistent deficiencies in performance of any substantive requirement or obligation under a prior contract or contracts, final judgments in respect of serious crimes or other serious offences and professional misconduct or acts or omissions that adversely reflect on the commercial integrity of the supplier).

In addition, the OSIC will also provide additional tools to support federal efforts in other areas, such as eradicating forced labour from Canadian supply chains. It will enable a broader application of anti-forced labour measures and introduce additional measures to encourage compliance.

This new program includes a revised Ineligibility and Suspension Policy, which will come into effect in May 2024, and apply to all applicable federal contracts and real property transactions. The OSIC will also be responsible for the development and deployment of additional data analytics capacity, which is a key tool for detecting fraudulent schemes and other types of wrongdoing.

The changes to the current Integrity Regime will significantly broaden the scope for potential bidder debarment. Time will tell whether these changes will result in more bidders being subject to debarment, suspension or administrative agreements with PSPC. The immediate lesson for stakeholders is that having robust compliance programs in place is more important than ever for companies that do substantial business with the Government of Canada.

Continued modernization of government procurement practices

The launch of OSIC builds on other recent activities undertaken by PSPC to make immediate improvements to procurement processes and procedures, beginning with professional services contracting, increasing transparency surrounding contract information, increasing the diversity of bidders, better vendor management, making government data available, clear metrics and prompt payment.

In November 2023, PSPC wrote to government departments and agencies to inform them that it would be invalidating and replacing all master-level user agreements with client departments. These agreements set out the conditions for access to select professional services and methods of supply maintained by PSPC, namely Task-based informatics professional services, solutions-based informatics professional services and tasks and solutions professional services.

PSPC is working with client departments to finalize new master-level user agreements, which will require the use of new contract provisions to increase costing and subcontractor transparency and provide important clarifications on the role of client departments and agencies (i.e., technical authorities) in ensuring consistent practices when using these procurement instruments.

Important changes that are being implemented to professional services contracts include:

• Proving evaluation requirements to more effectively validate that all resources have the necessary and proven work experience;
• Requiring increased transparency from suppliers around their pricing and use of subcontractors;
• Improving documentation requirements at the time of contract award and when task authorizations are issued; and
• Requiring clearer descriptions of the work requirements and activities and specifying which initiatives and projects resources will be permitted to work on.

Additionally, PSPC has started using advanced data analytics to ensure the soundness of the procurement system. These activities have proactively uncovered a number of instances of suppliers fraudulently billing the Government of Canada. In response, PSPC has referred these cases to the Royal Canadian Mounted Police and will be working with suppliers and impacted departments to recover fraudulently billed funds. In addition, PSPC regularly explores lessons learned from identified schemes and cases of wrongdoing to refine its prevention (including training) and detection measures in order to respond better to future instances of misconduct.

The Treasury Board of Canada Secretariat steps

The Treasury Board of Canada Secretariat (TBS) has released an update to the Manager’s Guide: Key Considerations When Procuring Professional Services² and signalled its intent to embed certain elements of the Guide within TBS Mandatory Procedures to strengthen the accountability of managers.

Additionally, in the coming months, TBS will introduce a new Risk and Compliance Process to assess government-wide trends, risks and individual departmental performance in key management areas and take immediate corrective actions where necessary.

Lastly, to ensure that public servants maintain the trust of Canadians, TBS will review the Directive on Conflict of Interest to ensure that the requirements are clear and effective, particularly as they relate to employees who engage in outside employment, including contracts with the Government of Canada. TBS will also review guidance provided to deputy heads and explore additional oversight, including strengthening the consequences of non-compliance with the Directive.

As a result of these steps, suppliers of professional services should ensure they have robust policies and practices in place to ensure rigorous compliance with the TBS and PSPC requirements.

For more information on this topic, please contact Paul Lalonde or Sean Stephenson.

[1] Public Services and Procurement Canada, "Taking action against fraud and strengthening financial and procurement management", March 20, 2024, https://www.canada.ca/en/public-services-procurement/news/2024/03/taking-action-against-fraud-and-strengthening-financial-and-procurement-management.html.
[2] Treasury Board of Canada Secretariat, "Manager’s Guide: Key Considerations When Procuring Professional Services", March 19, 2024, https://www.tbs-sct.canada.ca/pol/doc-eng.aspx?id=32775.