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Vol. 141, No. 39 — September 29, 2007 Regulations Amending the Government Contracts RegulationsStatutory authority Financial Administration Act Sponsoring agency Treasury Board Secretariat
REGULATORY IMPACT (This statement is not part of the Regulations.) Description This proposal would amend the Government Contract Regulations (GCRs) to deem three clauses in government contracts for goods and services pursuant to amendments to the Financial Administration Act (FAA) made through the Federal Accountability Act (FedAA), assented to on December 12, 2006. The FAA is "an Act to provide for the financial administration of the Government of Canada, the establishment and maintenance of the accounts of Canada and the control of Crown corporations." The GCRs establish conditions for contract entry and establish security requirements for government contracts. The approach of including deemed provisions in contracts is not novel, since a similar provision has been included in section 40 of the FAA for over 10 years. The Treasury Board's Contracting Policy already prohibits the payment of contingency fees to consultant lobbyists, and the Criminal Code already prohibits people convicted of fraud from contracting with the Government. In addition, the Treasury Board provides guidelines to departments respecting the public disclosure of contracts over $10,000. The proposed amendments would increase administrative transparency, oversight and accountability for procurement by deeming terms in contracts that • prohibit the payment of contingency fees to consultant lobbyists; • require each bidder to declare that they have not been convicted of fraud; and • notify contractors that the Government publicly discloses basic information about procurement contracts. In addition, this proposal contains a technical amendment to extend the definition of a Contracting Authority beyond ministers to include those positions that are given an authority to enter into contracts on behalf of Her Majesty. Amendment to the GCRs based upon FAA paragraph 42(1)(a) The Treasury Board's Contracting Policy, section 8.11 and Appendix M, prohibit contractors from paying contingency fees to consultant lobbyists. This amendment would convert these policy requirements into a regulation by deeming clauses that have the same effect as the policy. Amendment to the GCRs based upon FAA paragraph 42(1)(c) Following the intent of the current contracting policy requirement, as informed by the recent amendment to the Criminal Code through the FedAA, this amendment to the GCRs would deem a clause in every procurement contract to prohibit people who are convicted of fraud against the Government from entering into the contract. This prohibition is already in the Criminal Code and is reflected in the Contracting Policy, section 12.5.1: 12.5.1. The Criminal Code, subsection 750(3) prohibits anyone who has been convicted of an offence under: • Section 121, Frauds upon the Government; • Section 124, Selling or Purchasing Office; or • Section 418, Selling Defective Stores to Her Majesty, from holding public office, contracting with the government or receiving a benefit from a government contract, unless the Governor in Council has restored (in whole or in part) these capabilities to the individual or the individual has received a pardon. The FedAA amended the Criminal Code and the FAA to create new fraud provisions and include them in subsection 750(3). However, since few people have been convicted of an offence under the old provisions of the Criminal Code, and since there have been no convictions under the new provisions, there is little possibility that any current contractor would be affected by these Regulations. In addition, there is no known reason why any person would object to including this prohibition in contracts. Suppliers and Canadians would reasonably expect that people who have been convicted of fraud should not be allowed to enter into a contract with the Government. Amendment to the GCRs based upon FAA paragraph 42(1)(e) Government departments currently disclose all contracts over $10,000. Under the proposed deemed clause, contractors would agree to the publication of basic information about the contract, thereby enabling all Canadians to know what the federal government is acquiring. Amendment to the GCRs to make the Regulations apply to all procurement contracts This technical amendment would expand the definition of a "contracting authority" to include those office holders and positions that are given the authority to contract under a law, usually a law that created a department or an agency. The current definition limits contracting authority to ministers. For example, the Auditor General has the authority to contract for auditing services under the Auditor General Act. This would expand the definition to include these positions. The amendments would not impose any limitation to the powers of the Auditor General, as required by FAA subsection 42(2). In addition, these amendments are not in conflict with any other law, regulation or government policy. Alternatives Option 1 — Maintain current Regulations without changes This option was rejected since it would not fulfill the will of Parliament as expressed in the FedAA and committed to by the Government of Canada. In addition, during committee hearings into these sections of the FedAA, committee members demonstrated that they clearly understood that the powers were to convert the existing policies and practices into regulations and that the only reason that these requirements were not contained in the laws was that they would need further study. Therefore, not proceeding with the Regulations would be contrary to this expressed will. Parliamentarians in both houses have clearly indicated that they want the Government to act upon all the powers set out in the FedAA. Option 2 — Amend the GCRs to fix terms that are deemed to be in contracts This option would involve making the technical and non-controversial amendments to bring into force the regulatory authority of FAA subsection 42(1) as described above. The Regulations have been analyzed and they would not create any unintended consequences. Benefits and costs The amendments would not impose any new costs on federal departments and agencies that are not already required under the Contracting Policy or its guidelines. Consultation The FedAA involved extensive consultations and public involvement. Dozens of witnesses were called to two parliamentary committees studying Bill C-2, the committees held over 40 meetings during 2006, and parliamentarians debated Bill C-2 for 22 days before passing it. The provisions dealing with lobbyists, fraud and proactive disclosure were addressed in several committee hearings and were the subject of amendments in both the House and the Senate, which were passed. No consultations, outside of the pre-publication comment period, are proposed for these amendments, since they are already effectively in place due to a high level of compliance with the applicable policy requirements or are technical in nature. Compliance and enforcement The compliance and enforcement of the GCRs would remain the same as they are currently.
Glenn Richardson
Notice is hereby given that the Governor in Council, pursuant to subsections 41(1) (see footnote a) and 42(1) (see footnote b) of the Financial Administration Act, proposes to make the annexed Regulations Amending the Government Contracts Regulations. Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Glenn Richardson, Senior Policy Analyst, Assets and Acquired Services Directorate, Government Operations Sector, Treasury Board of Canada Secretariat, Ottawa, Ontario K1A 0R5 (tel.: 613-941-7179; fax: 613-957-2405; e-mail: Richardson. Glenn@tbs-sct.gc.ca). Ottawa, September 18, 2007
MARY PICHETTE REGULATIONS AMENDING THE GOVERNMENT CONTRACTS REGULATIONS AMENDMENTS 1. (1) The definition "contract" in section 2 of the Government Contracts Regulations (see footnote 1) is replaced by the following: "contract" means a construction contract, a goods contract or a service contract entered into on behalf of Her Majesty; (marché) (2) The definition "contracting authority" in section 2 of the Regulations is amended by striking out the word "or" at the end of paragraph (b), by adding the word "or" at the end of paragraph (c) and by adding the following after paragraph (c): (d) any individual who is authorized by or under an Act of Parliament to enter into a contract on behalf of a department. (autorité contractante) 2. The portion of section 3 of the Regulations before paragraph (a) is replaced by the following: 3. These Regulations apply to all contracts entered into by a contracting authority except 3. The Regulations are amended by adding the following after section 17:
PART III
18. (1) The following terms are deemed to be expressly set out in every contract that provides for the payment of any money by Her Majesty: (a) the contractor agrees to declare in writing, on or before entering into the contract, that the contractor has not, directly or indirectly, paid or agreed to pay — and will not, directly or indirectly, pay — a contingency fee to any individual for the solicitation, negotiation or obtaining of the contract if the payment of the fee would require the individual to file a return under section 5 of the Lobbyists Registration Act; (b) all accounts and records relating to any payment by the contractor of fees or other compensation for the solicitation, negotiation or obtaining of the contract shall be subject to any accounting and auditing provisions of the contract; (c) the contractor agrees to declare in writing, on or before entering into the contract, that the contractor has not been convicted of an offence, other than an offence for which a pardon has been granted, under section 121, 124 or 418 of the Criminal Code; (d) the contractor consents, in the case of any contract that has a value in excess of $10,000, to the public disclosure of basic information relating to the contract; and (e) if the contractor makes a false declaration under paragraph (a) or (c) or fails to comply with the terms set out in paragraph (b) or (d), the contractor agrees to immediately return any advance payments or progress payments and the contracting authority may terminate the contract. (2) The following terms are deemed to be expressly set out in every bid for a contract that provides for the payment of any money by Her Majesty: (a) the bidder agrees to declare in writing, on or before making the bid, that the bidder has not, directly or indirectly, paid or agreed to pay — and will not, directly or indirectly, pay — a contingency fee to any individual for the solicitation, negotiation or obtaining of the contract if the payment of the fee would require the individual to file a return under section 5 of the Lobbyists Registration Act; and (b) the bidder agrees to declare in writing, on or before making the bid, that the bidder has not been convicted of an offence referred to in paragraph (1)(c), other than an offence for which a pardon has been granted. COMING INTO FORCE 4. These Regulations come into force on the day on which they are registered. [39-1-o] S.C. 2006, c. 9, s. 311 S.C. 2006, c. 9, s. 312 SOR/87-402 |
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