Procurement Improvement Action Plan

The Government of Canada is committed to conducting procurements in an open, fair, and transparent manner. This starts by ensuring sound management and integrity of its procurement processes.

As the central purchasing agent for the Government of Canada, Public Services and Procurement Canada (PSPC) is committed to continually improving and strengthening all aspects of the federal procurement process.

Since 2017, PSPC has been modernizing government procurement practices, including deploying modern comptrollership, encouraging greater competition, making use of electronic procurement tools and leveraging data so that procurements are simpler, less administratively burdensome and demonstrate the integrity of the suppliers the government does business with.

As part of this modernization, PSPC began to implement advanced data analytics to review and monitor contracts across the Government of Canada. These efforts, along with recent reports by the Auditor General of Canada and the Procurement Ombud, as well as parliamentary committee studies, have revealed a need for action on many fronts to improve the management and integrity of Canada’s procurement processes.

Of particular concern are allegations of fraud, bid aiding and falsification of documents. PSPC’s detection measures have uncovered instances where individuals, acting as sub-contractors to suppliers, have fraudulently billed the government while working on federal contracts.

In light of these findings, PSPC is taking taking action to strengthen oversight of federal procurement processes, through:

• advancing the modernization of procurement;
• actively detecting and responding to instances of fraud and fraudulent billing;
• implementing immediate improvements to contracting processes and procedures, beginning with professional services contracting; and
• introducing a new Office of Supplier Integrity and Compliance (OSIC).

Procurement modernization

Public Services and Procurement Canada is modernizing government procurement practices so that they are simpler, less administratively burdensome, deploy modern comptrollership, encourage greater competition and include practices that support our economic policy goals, including innovation, green and social procurement.

This includes:

• increasing the diversity of bidders
• better vendor management
• clear metrics
• making government data available
• prompt payment

For more on this, please see: Procurement modernization and improving e-procurement.

Fraud prevention and detection

Public Services and Procurement Canada (PSPC) has a framework of laws, regulations, policies, programs and services in place to prevent, detect and respond to wrongdoing and safeguard the integrity of the federal procurement system. This allows us to detect wrongdoing and actively respond to allegations that the Government of Canada is being defrauded in either a specific contract or on a broader scale.

On March 20, 2024, PSPC announced that it had detected several  fraudulent billing schemes undertaken by subcontractors (i.e. individuals) working on federal professional services contracts. This is the result of ongoing departmental efforts to strengthen its approach to detecting fraudulent activities and other types of wrongdoing.

PSPC has taken swift action to revoke or suspend the security statuses of the individuals (i.e. subcontractors) in question. Following administrative investigations, the department has referred the cases to the Royal Canadian Mounted Police.

The department is also moving forward to recover these illegitimate payments on behalf of the Government of Canada.

As today’s announcement demonstrates, PSPC has effective methods to detect and respond to instances of fraudulent activity. We will continue to refine and expand the use of our tools, including data analytics, to better detect and address wrongdoing, and to ensure that individuals or entities engaging in fraud or other illegal activities are held accountable for their misconduct, while seeking restitution to the Crown.

In addition, PSPC is regularly exploring lessons learned from identified schemes and cases of wrongdoing to further refine our prevention (including training) and detection measures in order to better respond to future potential instances of misconduct.

We encourage people who have information related to illegal or illicit activities in Government of Canada contracting to report it directly to our Special Investigations and Internal Disclosure Directorate, at spac.dgsdivulgationinterne-dobinternaldisclosure.pspc@tpsgc-pwgsc.gc.ca, or to the Federal Contracting Fraud Tip Line.

Changes to procurement processes

PSPC is actively exploring opportunities to improve and streamline the way the Government of Canada conducts procurement, and changes have already been made to procedures and guidance regarding professional services contracting.

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 methods of supply maintained by PSPC, namely Tasked-based informatics professional services, Solutions-based informatics professional services and the 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 sub-contractors.
• improving documentation requirements at the time of contract award and when task authorizations are issued.
• requiring clearer descriptions of the work requirements and activities, and specifying which initiatives and projects that resources will be permitted to work on.

The department is actively engaging with client departments and agencies to ensure that these new measures are implemented quickly and efficiently.

In addition, a new position of Chief, Contract Quality and Records Compliance Office, has been created to ensure that critical elements of decision-making throughout the procurement process are properly documented, that guidelines and tools are put in place and that quality is being actively monitored.

Office of Supplier Integrity and Compliance

To help ensure the Government of Canada does business with ethical suppliers, a government-wide debarment and suspension program has been in place since 2015. That program holds suppliers accountable for their misconduct, and also encourages them to cooperate with law enforcement and take corrective action.

The marketplace has greatly evolved and requires more robust and agile tools to mitigate emerging risks of misconduct and fraud while protecting the integrity of the federal procurement and real property systems.

With the launch of the Office of Supplier Integrity and Compliance, 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 the Office 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).

The Office of Supplier Integrity and Compliance will launch in May 2024, bringing necessary enhancements to the existing suspension and debarment program.

This action reinforces federal commitment to strengthen responsible corporate governance within the supplier community and strengthen our ability to better know who we do business with.

The new program will apply across the Government of Canada and provide further coherence and alignment of corporate compliance measures. The new Office of Supplier Integrity and Compliance will establish a more agile approach, with greater flexibility to respond to a broader range of misconduct and unethical behaviour. It will also provide the ability to respond in a manner that better reflects the risk posed by the implicated supplier. The new Office will allow for consideration of aggravating and mitigating factors in determining the duration of a supplier’s ineligibility.

In addition, the new Office 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 Office 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 Office 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 Office of Supplier Integrity and Compliance  is a concrete example of government action to respond to corporate misconduct, and will encourage the government’s industry partners to apply high ethical standards, in line with programs employed by close trading partners like the US and UK. It is designed to deter misconduct, promote self-disclosure of potential wrongdoing, foster better corporate compliance, and bring Canada in line with international best practices. This will allow PSPC to respond in a proportionate and measured manner that is commensurate with the risk posed by the supplier in question.

Further details on the Office of Supplier Integrity and Compliance and the new policy will be available in May 2024. In the meantime, the department is working closely with suppliers and industry partners to ensure a seamless transition.

Current regime and under the Office of Supplier Integrity and Compliance

The following few examples help to illustrate different gaps and shortcomings within the current program.

Similar provincial offences are not a trigger

While PSPC is able to consider whether foreign offences are similar to one of the listed offences in the policy (e.g., a test of similarity), the department does not have the ability to consider whether provincial offences are similar despite the misconduct being comparable.

Under OSIC, similar provincial offences would be grounds to engage with a supplier to review their status under the modified program. This case also illustrates that the consequences for the guilty plea for the federal tax offence would have included an automatic 10-year debarment period, thus showing a significant incentive for the accused to avoid that conviction and accept an offence that did not trigger a debarment.

Foreign civil judgements

There are some foreign jurisdictions that pursue civil proceedings against corporations (legal persons) rather than criminal courts (reserved for natural persons).

Under the current Integrity Regime, only criminal offences are considered as triggering events despite the misconduct being considered as similar to the type of malfeasance currently listed in the Ineligibility and Suspension Policy.

Under OSIC, for foreign civil judgements where the misconduct would be considered as similar to one of the listed offences, PSPC would be able to take action against the supplier in question.

Another jurisdiction debars a supplier

If a supplier to the Government of Canada is debarred by another jurisdiction or an international organization, PSPC does not have the ability to engage the supplier to obtain assurances that similar misconduct has not infiltrated their work with the federal government. This includes debarment or suspension decisions by a close trading partner (such as the US) or a province (such as Quebec).

Under OSIC, a supplier’s presence on a debarment list in another jurisdiction would provide grounds to review that supplier’s status under the modified program.

Absence of offences

PSPC has encountered a number of instances where the department has adverse information related to a supplier to the Government of Canada, however, in the absence of criminal charges or convictions, the department is unable to take action under the Integrity Regime.

Under OSIC, PSPC would be able to act when it becomes aware of final judgments with respect to 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, PSPC would be able to initiate a review of a supplier in instances where doing business with a specific entity would bring the procurement in public disrepute.