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Bulletin

Public Contracts in Québec: What’s New?

Fasken
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Corporate/Commercial Bulletin

On January 25, 2019, the Autorité des marchés publics (AMP) officially began operating as the central oversight body for public contracting in Québec. It replaces the Autorité des marchés financiers (AMF), which had previously been responsible for administering and applying the Act respecting contracting by public bodies (ACPB) following the Commission of inquiry on the awarding and management of public contracts in the construction industry, otherwise known as the Charbonneau Commission.

The transition from the AMF to the AMP had been expected, however, since the Act to facilitate oversight of public bodies' contracts and to establish the Autorité des marchés publics ("Bill 108"), assented to on December 1, 2017, established the AMP, with responsibility for overseeing all contracts by public bodies and applying the provisions of the ACPB.

In light of the foregoing, requests for authorization to obtain public contracts, public subcontracts, or requests for their renewal (Authorization) must now be submitted directly via AMP E-Services

It is worth pointing out that this Authorization is unique in Canada, in that no province other than Québec provides this kind of authorization mechanism for contracting with a public body or a municipality.

Main functions of the AMP

The AMP is a neutral, independent authority for the oversight and monitoring of public contracts. Its role is to monitor the public sector, health and education networks, state-owned enterprises, and municipalities.

In addition to powers to grant, renew or revoke Authorizations, the AMP is now responsible for maintaining the register of enterprises ineligible for public contracts (or subcontracts) (RENA) which, to date, had been kept by the Treasury Board, as well as the register of enterprises eligible for public contracts (or subcontracts) (REA), which had been previously managed by the AMF.

Moreover, the Act respecting the Autorité des marchés publics (AMP Act) gives the AMP auditing and investigation powers that enable it to issue orders, make recommendations, and suspend or cancel a public contract.

Under the AMP Act, provisions concerning the AMP's functions and powers will gradually come into force, as noted earlier in our bulletin of December 14, 2017. A portion of the AMP's mandate came into force on January 25, 2019, namely:

  •  Intervention, audit and investigation powers relating to the tendering and awarding of public contracts in Québec;
  • The issuance of authorizations to contract with the state; and
  • The administration of the REA and RENA.

What enterprises need to know or remember

a. New Internet Platform

As noted above, applications for Authorizations must be submitted via the AMP's website.

An initial reading of that platform prompts us to share several observations, including the following:

  • The Companion Guide, the forms, as well as all of the declarations to be submitted in order to apply for an Authorization or a renewal were updated in January 2019. The content is nonetheless substantially the same as before;
  • Of note, a section dedicated to foreign enterprises and individuals operating an enterprise has been added, with the obligation to complete an additional form both for a first application for an Authorization and for an application for renewal or for non-renewal;
  • We also note the addition of a section on updating files, since the obligation to inform the AMP of any change in the information provided when the application for the Authorization or renewal was made happens no later than 15 days after the end of the month in which the change occurred still applies; and
  • Foreign enterprises, i.e., those that are not constituted under the laws of Québec and do not have their head office or an establishment in Québec where they primarily conduct their activities, must complete a paper application.

b.  Reminders and preparation of a first application or an application for renewal of the Authorization

Any enterprise involved in a contract or subcontract tendering or awarding process with one of the levels of the government of Québec – ministères, public bodies, state-owned enterprises, or municipalities – which involves an expenditure above certain thresholds must apply for an Authorization. The thresholds have not changed. In fact, the threshold is $1 million for a service contract or subcontract entered into pursuant to a call for tenders made on or after November 2, 2015, or for which the process of contracting by mutual agreement began on that date. The threshold is $5 million for a construction or public-private partnership contract or subcontract. Note that certain specific thresholds are provided for certain contracts or subcontracts with the City of Montréal.

In order to determine whether a contract or subcontract reaches the thresholds set out above, the amount of the expenditure to be incurred will continue to be included, where applicable, if all options to renew were exercised.

The procedure is substantially the same as it was with the AMF. In spite of the fact that the forms and declarations contain minor changes, the documents to be provided are the same.

The AMP's website states that the processing times for an application will be identical to the times that were met in the past. That is to say, when an enterprise responds to a public call for tenders and the proposed contract is subject to the thresholds, the processing times are estimated to be about eight (8) weeks from the date on which the AMF receives a complete and compliant application. The complexity of the application is also a factor to be considered.

An enterprise that had obtained its Authorization from the AMF in the past will be able to renew it with the AMP at least 90 days before the expiry date of the Authorization. If the renewal application is received within the prescribed time, the Authorization will remain valid (unless it is revoked during that time) until the AMP makes a decision on the application for renewal of the Authorization.

c. Discretionary Power of the AMP in Assessing the Integrity of Enterprises

Like the AMF, the AMP will have the discretionary power to refuse to allow an enterprise to contract with a public body, given its expertise in assessing the integrity that must be demonstrated by an enterprise seeking to do business with the State. We therefore believe that the principles already developed in this regard will also apply when dealing with the AMP, which will continue to base its decisions on the importance of combating corruption and collusion in public contracting, a public interest objective that is laid down in the Integrity in Public Contracts Act. The courts should therefore continue to apply a broad interpretation to the concept of integrity.

We also believe that the transition from the AMF to the AMP will not raise any doubts about the fact that enterprises that wish to contract or subcontract with a public body will have the onus of proving their integrity within the framework of the Authorization process.

d.  What will happen in the event of refusal or revocation?

As was the case under the AMF, if the AMP intends to refuse to issue an Authorization to an enterprise or to revoke its Authorization, it will notify the enterprise of the refusal/revocation with a statement of the reasons for its intention to refuse to issue/revoke its Authorization.

In some cases, that notice may give the enterprise an opportunity to take corrective measures, and, if those measures satisfy the AMP, the Authorization may be issued/maintained.

In all cases, the enterprise will have an opportunity to submit its observations and information to the AMP that could influence the decision. In notifying the enterprise of a refusal/revocation, the AMP must allow it at least ten (10) days to submit its written observations or provide additional documents to complete its file.

e. Can an enterprise contest a decision of the AMP? To whom should an enterprise go to complain about the AMP's decision?

A decision by the AMP to refuse or revoke an Authorization may have serious consequences: the name of the enterprise concerned could be entered on the RENA for a period of five (5) years.

In addition, the AMP's decision is an administrative decision. It is final and not subject to appeal. An enterprise that wishes to complain about a decision may apply to the Superior Court.

Enterprises that were handed refusals by the AMF have sought remedies by applying to the Superior Court under authority to conduct judicial review of administrative decisions. Unless there has been a breach of procedural fairness, the courts have always shown great deference to the AMF and have generally declined to interfere in decisions made by the AMF. We believe that the same will be true of the AMP.

Conclusion

According to the AMF's latest report, [1]  which covers the period from 2017 to 2018, 4,047 enterprises have obtained Authorizations since this process came into force. In the 2017 to 2018 period alone, 1,122 authorizations were granted. According to a Treasury Board report,[2]  approximately $25 billion in public contracts are signed in Québec. That report also states that there are about 24,000 enterprises in the potential pool of enterprises that could bid on public contracts. The AMP will therefore play a decisive role in the future, since we can foresee that the number of applications will rise over the next few years.

Please do not hesitate to contact us if you have any questions.


 

[1] Online: AMF's Annual Rapport 2017-2018 at p. 13 (PDF - only available in French)

[2]  Online: Treasury Board Report at p. 4. (PDF - only available in French)

 

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