Chapter 11 Corruption and Public Procurement

134^ United Nations Convention on International Trade Law, “Guide to Enactment of the UNCITRAL Model Law on Public Procurement” (2012) at iii, online: .

135^ UNCITRAL Model Law on Public Procurement, 1 July 2011, online: .

136^ Ibid.

137^ United Nations Convention on International Trade Law, “Guide to Enactment of the UNCITRAL Model Law on Public Procurement” (2012) at 14-15, online: .

138^ Glenn T. Ware et al., “Corruption in Procurement” in Adam Graycar and Russell G Smith, eds, Handbook of Global Research and Practice in Corruption (Northampton, MA: Edward Elgar Publishing, 2011).

139^ Ibid.

140^ Competition in Contracting Act, 41 USC § 253 (1984).

141^ Ibid. However, requirements change based on the dollar value of the contract.

142^ For greater description of the “full and open competition” requirements, see https://fas.org/sgp/crs/misc/R40516.pdf.

143^ Competition in Contracting Act, 41 USC § 253 (1984).

144^ 41 USC § 403(6) (2009).

145^ Federal Acquisition Regulation, 48 CFR § 1.101 (1983).

146^ Ibid at § 9.104(d).

147^ Ibid at § 9.406-2(a)(5).

148^ Ibid at § 9.406-2(c).

149^ Thomas P. Barletta, “Procurement Integrity and Supplier Debarment – A U.S. Perspective” (Address delivered at the Transparency International Canada Day of Dialogue, Toronto, 5 May 2015) [unpublished].

150^ Federal Acquisition Regulation, 48 CFR § 9.406-1 (1983).

151^ Thomas P. Barletta, “Procurement Integrity and Supplier Debarment – A U.S. Perspective” (Address delivered at the Transparency International Canada Day of Dialogue, Toronto, 5 May 2015) [unpublished].

152^ Federal Acquisition Regulation, 48 CFR § 9.407-1(b)(1) (1983).

153^ US Government Accountability Office, “Bid Protests”, online: .

154^ Guy Lougher, “Public procurement law: the basics”, Out-Law, online: <http://www.out-law.com/en/topics/eu--competition/state-aid1/public-procurement-law-the-basics/>. See the following resources on anti-corruption in public procurement in the UK: The Chartered Institute of Building, “A Report Exploring Corruption in the UK Construction Industry” (September 2013); Ashurst LLP, “Quick Guides: UK Public Procurement” (October 2012); UK Government, “Procurement Policy Notes”, online: ; UK Government, “Government Procurement Service Annual Report and Accounts” (dating to 2011), online: .

155^ EC, Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC Text with EEA relevance [2014] OJ, L 94/65, online: .

156^ Ibid at Article 18(2).

157^ Ibid at Article 4.

158^ EC, Public Procurement Reform: Factsheet No 1: General Overview, online: .

159^Public Contracts Regulations 2015, SI 2015/102, online: .

160^ The Public Contracts (Scotland) Regulations 2012 (PCRS) came into force on May 1, 2012. It has similar requirements to the PCR and applies to contracts offered by Contracting Authorities in Scotland. PCRS is due for updating or replacing, as it requires modifications in order to comply with the new EU Directive changes listed above.

161^Public Contracts Regulations 2015, SI 2015/102 at s. 18, online: .

162^ Ibid.

163^ Ibid at s. 90.

164^ Ashurst LLP, “Quick Guides: UK Public Procurement” (October 2012) at 10, online: <https://www.ashurst.com/doc.aspx?id_Resource=4628>. A Service Concession is when the provider’s consideration is the giving of the right to exploit the service provided.

165^ Ibid at 11.

Sole-provider exemption: only a single entity can meet the procurement needs (usually related to IP rights, such as technical or artistic requirements).

Failure of previous open/restricted process exemption: there is absence of suitable tenders or tenders exceed the Contracting Authority’s budget.

Urgency exemption: there is extreme urgency due to unforeseen circumstances. Usually emergencies require health/safety to be at risk.

Additional works exemption: there are unforeseen additional works further to the properly tendered project and re-tendering would cause major inconvenience.

166^ Ibid at 3. Public Services (Social Value) Act 2012 (UK), c. 3.

167^ UK, Cabinet Office, Social Value Acts Review Report (London: Cabinet Office, 2015), online: .

168^ Canada-US Agreement on Government Procurement, online: Foreign Affairs, Trade and Development Canada .

169^ Parliament of Canada, Report on the Canada-US Agreement on Government Procurement, online: .

170^ Ibid.

171^ Canada-US Agreement on Government Procurement, online: Foreign Affairs, Trade and Development Canada .

172^ Agreement Between the Government of Canada and the Government of the United States of American on Government Procurement, 16 February 2010 (in force) at ss. 7-9, online: .

173^ “A construction services contract” is defined under the agreement as “a contract which has as its objective the realization by whatever means of civil or building works” (ibid at Annex 5). Procurement in this context is defined as “contractual transactions to acquire property or services for the direct benefit or use of the government” (ibid).

174^ Ibid at Annex 2.

175^ Ibid at Part B of Appendix C (list of the provincial entities covered by the Agreement). All municipalities and Crown Corporations in BC are subject to the agreement, though there is a list of Ontario ministries agencies, and municipalities that are not covered by the Agreement.

176^ Agreement on Internal Trade (Consolidated Version), (Governments of Canada, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, New Brunswick, Quebec, Ontario, Manitoba, Saskatchewan, Alberta, British Columbia, the Northwest Territories and Yukon, 1994), online: .

177^ Ibid at annex 502.4.

178^ Ibid at article 504.

179^ Ibid at article 506.

180^ Ibid.

181^ Ibid at article 404 (definition of “legitimate objective”).

182^ Ibid at article 513.

183^ Ibid.

184^ Marilyn Brown, “Building a Bid Dispute Protocol: Complaint Procedures Under Trade Treaties” (Procurement Office), online: .

185^ Robert H. Knox, “Canada’s Agreement on Internal Trade: It Can Work If We Want It To” (Report prepared for the Certified General Accountants Association of Canada, April 2001) at 3.

186^ Criminal Code, RSC 1985, c. C-46 ss. 120.

187^ Ibid at s. 121.

188^ Ibid at s. 122.

189^ Ibid at s. 123.

190^ Ibid at s. 389.

191^ Ibid at s. 346.

192^ Ibid at s. 426.

193^ Financial Administration Act, RSC 1985, c. F-11, online: .

194^ Federal Accountability Act, SC 2006, c. 9 ss. 308, 301, 306, online: . This Act was largely the government’s response to the Sponsorship Scandal and the Gomery Commission’s Report that investigated the scandal: Commission of Inquiry Into the Sponsorship Program and Advertising Activities, Restoring Accountability: Recommendations (Ottawa: Public Works and Government Services Canada, 2006), online: . See also: Commission of Inquiry Into the Sponsorship Program and Advertising Activities, Who is Responsible? Fact Finding Report (Ottawa: Public Works and Government Services Canada, 2005), online: < http://epe.lac-bac.gc.ca/100/206/301/pco-bcp/commissions/sponsorship-ef/06-02-10/www.gomery.ca/en/phase1report/default.htm>.

195^ Auditor General Act, RSC 1985 c A-17, online: .

196^ Department of Public Works and Government Services Act, SC 1996 c 16, online: .

197^ Gerry Stobo & Derek Leschinsky, Pocketbook on the Canadian Public Procurement Regime (Borden Ladner Gervais, 2009) at 18. See also the following three publications by P. Emanuelli: Government Procurement (Toronot: Lexis-Nexis, 2012), Accelerating the Tendering Cycle: A Legal Due Diligence Guide (Toronoto: Northern Standard Publishing, 2012), and The Laws of Precision Drafting: A Handbook for Tenders and RFPs (Toronto: Northern Standard Publishing, 2009). See also Robert C. Worthington, Desktop Guide to Procurement Law (LexisNexis Canada, 2013).

198^ Public Works and Government Services Canada, Integrity Clauses, online: .

199^ Public Works and Government Services Canada, Government of Canada’s Integrity Regime (Ottawa: Public Works and Government Services Canada, 2015), online: .

200^ Ibid.

201^ Ibid.

202^ Ibid.

203^ The following is a list compiled by McCarthy Tetrault LLP of the provincial legislation and policies that impact MASH sector procurement: Northwest Territories – Procurement Guidelines, Financial Administration Manual (Policy 3012), Vendor Complaint Process, Government Contract Regulations; Yukon – Contract and Procurement Regulation, Contracting and Procurement Directive; Nunavut – Reference Guide to Acquiring Goods and Services with Public Money, Nunavummi Nangminiqaqtunik Ukajuuti policy; Prince Edward Island – Public Purchasing Act, Supplier’s guide to Goods procurement in the Government of Prince Edward Island; Nova Scotia – Province of Nova Scotia Sustainable Procurement Policy, Public Procurement Act; New Brunswick – Procurement Act; Newfoundland & Labrador – Public Tender Act; Quebec – An Act Respecting Contracting by Public Bodies, the Regulation Respecting Supply Contracts of Public Bodies; Ontario – Procurement Guideline for Publicly funded Organizations in Ontario, Broader Public Sector Accountability Act, Broader Public Sector Procurement Directive. The provinces also have Financial Administration Acts similar to the federal legislation. The following information complements that provided by McCarthy Tetrault:

The governments of BC, AB and SK worked together to draft the following guide to their New West Partnership Trade Agreement: Governments of British Columbia, Alberta and Saskatchewan, Guidelines to the Procurement Obligations of Domestic and International Trade Agreements, (November 2013). British Columbia also has the Procurement Services Act; Saskatchewan has The Purchasing Act, 2004 and The Purchasing Regulations; Manitoba - The Government Purchases Act.

204^ Louis Letellier, “Application of An Act respecting contracting by public bodies” (Address delivered at the Transparency International Canada 5^th Annual Day of Dialogue, Toronto, 6 May 2015) [unpublished].

205^ Linda Gyulai, “More contract bidders to be vetted under provincial decree”, The Montreal Gazette (11 June 2015), online: .

206^ An Act Respecting Contracting by Public Bodies, CQLR 2012, c. C-65.1, s. 21.26. The objective criteria in s. 21.26 involve previous convictions for various offences. However, Bill 26 (enacted in April 2015) amended the Act by describing two situations in which the AMF need not automatically refuse to issue a certificate even though the objective criteria in s. 21.26 are met. See Bill 26, An Act to ensure mainly the recovery of amounts improperly paid as a result of fraud or fraudulent tactics in connection with public contracts, 1^st Sess, 41^st Leg, Quebec, 2014, c. 6, cl. 26 (assented to 1 April 2015).

207^An Act Respecting Contracting by Public Bodies, CQLR 2012, c. C-65.1, s. 21.27.

208^ Graham Steele, “Quebec’s Bill 1: A Case Study in Anti-Corruption Legislation” (2015) at 22, to be published in Richmond J Int’l L.

209^ Ibid at 24.

210^ Ibid at 41.

211^ Ibid at 39.

212^ Ibid at 35.

213^ Ibid at 40.

214^ Ibid at 41.

215^ Ibid at 42. As of June 2015, 1300 companies have been approved by the AMF and six or seven have been rejected. See: Linda Gyulai, “More contract bidders to be vetted under provincial decree”, The Montreal Gazette (11 June 2015), online: . SNC-Lavalin received approval to bid on public contracts in Quebec in February 2014: “SNC-Lavalin and WSP green lit to bid on public contracts in Quebec” CBC News (5 February 2014), online: . For more on the realities of Bill 1 for companies, see Linda Gyulai, “Anti-corruption legislation creates niche market for private eye and accounting firms”, The Montreal Gazette (17 July 2014), online: . For the first decision on the legality of the AMF’s refusal of authorization, see Quebec v Autorité des marches financiers, 2014 QCCS 2070 (leave to appeal refused).

216^ For more information on the OECD monitoring process see: .

217^ OECD, Working Group on Bribery, Phase 3 Report on Implementing the OECD Anti-Bribery Convention in the United States (2010), online: .

218^ OECD, Working Group on Bribery, United States: Follow-Up to the Phase 3 Report and Recommendations (2012) at 13, online: .

219^ OECD, Working Group on Bribery, Phase 3 Report on Implementing the OECD Anti-Bribery Convention in the United Kingdom (2012) online: .

220^ OECD, Working Group on Bribery, United Kingdom: Follow-Up to the Phase 3 Report and Recommendations (2014) at 11, online: .

221^ OECD, Working Group on Bribery, Phase 3 Report on Implementing the OECD Anti-Bribery Convention in the United Kingdom (2012) online: .

222^ Sue Hawley, “Yawn and You’ll Miss It: New EU Debarment Rules, Old Problems”, Corruption Watch (4 March 2015), online: .

223^ OECD, Working Group on Bribery, Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Canada (2011) online: .

224^ Ibid at recommendation 2b.

225^ Ibid at 23.

226^ OECD, Working Group on Bribery, Canada: Follow-Up to the Phase 3 Report and Recommendations, 2013 at 3, online: .

227^ Gustavo Piga, “A fighting chance against corruption in public procurement?” in Susan Rose-Ackerman & Tina Soreide, eds, International Handbook on The Economics of Corruption, vol 2, (Northampton, MA: Edgar Elgar Publishing, 2011) 141 at 152.

228^ Ariane Lambert-Mogiliansky & Konstantin Sonin, “Collusive market-sharing and corruption in procurement” (2006) 15(4) Journal of Economics and Management Strategy, 883 at 900.

229^ Bent Flyvbjerg & Eamonn Molloy, “Delusion, Deception and Corruption in Major Infrastructure Projects: Cases, Conseqeunces, and Cures” in Susan Rose-Ackerman & Tina Soreide, eds, International Handbook on the Economics of Corruption, vol 2 (Northampton, MA: Edward Elgar Publishing, 2011) at 81.

230^ Ibid at 88.

231^ Ibid at 99.

232^ Jill Wells, “Corruption in the construction of public infrastructure: Critical issues in project preparation”, U4 Issue (March 2015 No 8), online: .

233^ Ibid at 104.

234^ Ibid.

235^ Mott Macdonald, Review of Large Public Procurement in the UK, study for the HM Treasury (London: HM Treasury, 2002).

236^ Ibid at 2.

237^ Ibid.

238^ Ibid at 9.

239^ Ibid.

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