President of the Treasury Board appearance before the Standing Committee on Government Operations and Estimates (OGGO) – Federal Government Consulting Contracts Awarded to McKinsey & Company – February 8, 2023

On this page

1. Scenario Note

Roles and Responsibilities

1. Global Overview of Roles and Responsibilities in Procurement
2. Role of Treasury Board in Procurement
3. President of the Treasury Board Mandate Letter Commitment on Procurement

Procurement Directives and Policies

4. Treasury Board Directive on the Management of Procurement
5. Proactive Disclosure of Contracts
6. Federal Procurement and Professional Services
7. Sole Source Contracting
8. Supplier Diversity

TBS Legislation

9. Measures of protection against conflict of interests

Scenario Note

Appearance of the President of the Treasury Board, the Honourable Mona Fortier, and TBS Officials before the House of Commons Standing Committee on Government Operations and Estimates (Oggo) on Federal Government Consulting Contracts Awarded to Mckinsey & Company

Background

• Following reporting from Radio Canada which noted a significant increase in contracts awarded to McKinsey and Company, the OGGO Committee adopted a motion concerning all contracts awarded to McKinsey and Company on January 18, 2023. The motion:
  • invites the President of the Treasury Board; the Minister of PSP; The Deputy Prime Minister and the Minister of Finance; the Minister of National Defence; the Minister of Immigration, Refugees and Citizenship; the Minister of Health and the Minister of Public Safety;
  • invites senior executives at McKinsey and Company, as well as Dominic Barton;
  • agrees the committee will report to the House to call on the Auditor General to conduct a performance and value for money award on all contracts awarded to McKinsey and Company from January 1, 2011 to present; and,
  • calls on departments, agencies and crown corporations to provide contract information (from January 1, 2011 to present) to the Committee within 5 weeks of the adopted order (deadline: February 22, 2023). McKinsey and Company will also be required to provide contract information within the same timeframe.
• Professor Clarke (Carleton University) and Sean Boots (CDS, OCIO) are expected to appear on January 30 on their IT procurement research paper. They previously appeared before the Committee to discuss their findings in relation to ArriveCan on November 17, 2022.
• Officials from McKinsey and Company are expected to appear on February 1.
• The Minister of Public Services and Procurement will appear on February 6.
• On February 8, the President of the Treasury Board and supporting officials will appear. All officials will appear in the room with the President.  

Day of – Scenario (OGGO)

• The meeting is expected to begin at 4:30 p.m. The President will make an opening statement (maximum of 5 minutes) and will partake in 3 rounds of questioning. The entire meeting is expected to run for approximately an hour and twenty minutes.

Supporting Officials

• Roch Huppé, Comptroller General of Canada
• Samantha Tattersall, Assistant Comptroller General, Acquired Services and Assets Sector, OCG
• Emilio Franco, Executive Director, Procurement, Material and Communities Directorate, OCG
• Paul Wagner, Assistant Deputy Minister, Strategy and Transformation, OCIO

Other Relevant Information

• OGGO’s meetings continue to thread along the themes of outsourcing, the use of government resources, accountability to Parliament and openness and transparency.
• OGGO has a number of outstanding studies, including Diversity in Procurement and Outsourcing of Contracts. The outsourcing study heard from TBS and PSPC officials on October 3, and from public service unions on October 24. The unions were very critical of government outsourcing during their appearance. The Diversity in Procurement study began with a single meeting in October and has not yet resumed.
• The Chief Information Officer of Canada appeared at OGGO on Thursday, November 17, 2022, as part of their study on the ArriveCan App. There was a lot of discussion around the ability to retain and recruit IT talent during the meeting. The Committee also received testimony from PSPC, PHAC, CBSA and SSC officials on Monday, November 14, 2022.

Global Overview of Roles and Responsibilities in Procurement

Issue

The Roles and Responsibilities of the Treasury Board Secretariat, Common Service Providers, and Deputy Heads in Procurement.

Response

• The procurement process is a shared a responsibility across departments, with Public Services and Procurement Canada (PSPC) and Shared Services Canada (SSC) as common service providers, and the Treasury Board Secretariat (TBS), which maintains the policy under which departments are to manage their procurement activities.
• Departments are responsible for deciding to procure and for ensuring the right processes, systems and controls are in place for any contracting they undertake. As common service providers, PSPC and SSC have the expertise to manage larger, complex procurements on behalf of departments.

Background

Contracting

Treasury Board (TB) sets the policy framework under which departments are to manage the process and procedures of their procurements.

TB also sets contracting limits – dollar thresholds which determine which contracts will require TB authority to allow entry into the contract and which ones are fully delegated to a minister. Under these thresholds, individual departments may enter into contracts by themselves.

PSPC and SSC, as common service providers, can be the contracting authority for other departments (and can provide additional due diligence to the department). These departments have higher contracting limits than other departments, so will typically handle large scale procurements.

PSPC is the central buyer for the Government of Canada and procures 10% of the volume and approximately 80%-90% of the value of goods, services and construction (including defence) on behalf of departments up to a delegated level.

SSC procures goods and services related to email, data centres, networks and end-user devices for its 43 partner organizations, and optionally to other departments and Crown corporations.

Departments have additional controls in place for financial and investment management that consist of processes and systems under the responsibility of a senior designated official within the department. These controls include oversight and audit, financial management (including costing), risk management, record-keeping, and monitoring.

Auditor General reports and reviews conducted by the Procurement Ombudsman provide additional assurance mechanisms.

Spending

TBS oversees how the federal government spends taxpayers’ money by reviewing government programs, spending proposals and spending authorities, and by reporting to Parliament and Canadians on government spending. It does this by working with departments to ensure that proposals:

• align with Treasury Board policies and government priorities
• support value for money
• clearly explain the results that will be achieved and how they will be measured
• contain clear assessments of risk, including financial risk

TBS also sets the strategic direction for how departments are to report on their planned and actual spending and on their performance in their Departmental Plans and Departmental Results Reports and on GC InfoBase.

Role of Treasury Board in Procurement

Issue

The Role of Treasury Board and the Treasury Board Secretariat in Procurement.

Response

• The Treasury Board sets procurement policy that clearly defines responsibilities for departments when conducting procurements.
• Treasury Board policies and directives identify how procurements should be managed, including the governance and oversight mechanism that need to be in place.
• Given the volume of government procurement, controls are in place at various levels based on contract value, risk and complexity.
  • Deputy heads of departments and agencies are responsible for procurement activities in their organization.
  • Every department has an appointed senior official who is responsible for the management of procurement, including the establishment of systems, processes and controls to ensure that procurement policies are followed and that contracts deliver best value.
  • Approval from the Treasury Board is required for contracting values over certain dollar amounts or risk levels.

Background

The Financial Administration Act commits the Government of Canada to take appropriate measures to promote fairness, openness, and transparency in the bidding process for procurement contracts.

Treasury Board (TB) sets the administrative framework for procurements in which departments operate. In relation to contracts, the Directive on the Management of Procurement (the Directive) sets out the requirements, including the key roles and responsibilities that departments need to follow when procuring. Given Deputy heads of departments and agencies are responsible for procurement activities in their organization, the Directive requires that they have a procurement management framework in place that has the systems, processes and controls to ensure that procurement policies are followed and that contracts deliver best value.

This includes dollar limits that establish which contracts a department can manage itself, which must be procured under the responsibility of common service provider (PSPC or SSC); and which contracts require Treasury Board authority before the responsible Minister can enter into a contract.

Basic Contracting Limits

A contract may be entered into without the approval of the Treasury Board, if the amount payable including all applicable taxes, fees and amendments, does not exceed the stated limit in Canadian dollars for the contracting authority identified in the basic limits schedule:

TB sets higher contracting limits for competitive procurements because they provide the greatest opportunity for potential bidders to participate and compete in winning government contracts, that results in best value. These limits are designed to ensure appropriate governance and oversight for procurements.

To assist departments, TBS issues guidance to support implementation of the Directive, and sets reporting requirements and guidance to support departments in meeting their obligations under the Access to Information Act to publicly disclose contracts and amendments over $10,000.

President of the Treasury Board Mandate Letter Commitment on Procurement

Issue

What is the President of the Treasury Board doing regarding the mandate commitment to “Strengthen federal procurement policies to integrate human rights, environment, social and corporate governance principles and supply chain transparency principles, and ensure they apply to federal departments and agencies, while working with Ministers responsible for Crown corporations to require adherence to such policies”?

Response

• The government is committed to supporting human rights, environment, social and corporate governance, and supply chain transparency through its procurements.
• The proposed updates set the expectation that the government will only do business with ethically, socially, and environmentally responsible companies.
• We will also make it mandatory for departments and agencies to have their suppliers attest to a Code of Conduct for Procurement, which has been recently updated to include new expectations relating to human rights and labour standards.
• This will further protect government spending from fraud, corruption, unethical practices and collusive behaviour.

Background

On December 16, 2021, the Prime Minister asked the President of the Treasury Board (TB) in her mandate letter to:

“Strengthen federal procurement policies to integrate human rights, environment, social and corporate governance principles and supply chain transparency principles, and ensure they apply to federal departments and agencies, while working with Ministers responsible for Crown corporations to require adherence to such policies.”

Federal procurement policies are enshrined in the TB Directive on the Management of Procurement (the Directive). A key objective of the Directive is that procurements are managed in a manner that enables operational outcomes and demonstrates sound stewardship and best value consistent with the Government of Canada’s socio-economic and environmental objectives. Environmental principles in procurement are supported by the Greening Government Strategy and TB’s Policy on Green Procurement and recently strengthened through new standards on Embodied Carbon in Construction and on the Disclosure of Greenhouse Gas Emissions and the Setting of Reduction Targets.

Specifically, the proposed amendments would require departments to integrate these principles into their existing Departmental Procurement Management Frameworks, as well as set requirements for identifying, mitigating, and disclosing risks of human trafficking, forced or child labour, or any other unethical business practices in departmental supply chains.

In addition, the proposed amendments would make the Code of Conduct for Procurement (the Code) mandatory to all government departments and agencies. The Code, administered by Public Services and Procurement Canada (PSPC) and currently only applying to procurements PSPC conduct, covers a broad range of responsible conduct which suppliers and sub-contractors must attest to when contracting with the government such as: ethics, conflict of interest, environmental protection, abuse and harassment, Indigenous rights, human trafficking, and, forced labour and child labour.

Treasury Board Directive on the Management of Procurement

Issue

An overview of the Treasury Board Directive on the Management of Procurement.

Response

• The Treasury Board (TB) sets policy for federal procurement, which is guided by the principles of fairness, openness, and transparency.
• In line with a commitment to continuous enhancement, TB procurement policy is regularly reviewed to ensure it remains relevant and effective.
• In May of 2021, the Treasury Board introduced the new Directive on the Management of Procurement that clearly defines responsibilities for procurements.
• First and foremost, departments are required to maintain the integrity of the procurement process and safeguard government spending from fraud and unethical business practices.
• Departments are also responsible for having effective governance and oversight mechanisms in place and ensuring best value.
• In addition, departments are responsible for clearly defining the intended outcomes of a procurement – including operational requirements, expected benefits, and how those outcomes align with the government’s socio economic and environmental objectives.
• As part of TB’s directive, every department has an appointed senior official who is responsible for the management of procurement, including the establishment of processes and controls to ensure that procurement policies are followed and that contracts deliver best value.

Background

Contracts are to be issued in accordance with laws, regulations, trade agreements, and Treasury Board (TB) policies and procedures. The Directive on the Management of Procurement (the Directive) sets the framework for which departments are to operate within once a decision is made to undertake a procurement.

The legal requirement that procurement be conducted in a fair, open and transparent manner subjects procurement to public scrutiny and provides a level of public accountability.

Ministers are responsible for the contracts under their respective portfolios. Deputy heads of departments as the Accounting Officer are responsible for ensuing their departments have the right controls, oversight and processes in place for the contracts they undertake.

The objective of the Directive is that procurement of goods, services and construction obtains the necessary assets and services that support the delivery of programs and services to Canadians, while ensuring best value to the Crown. The Directive applies to all organizations designated as departments (including corporations and branches) for purposes of the Financial Administration Act (Schedule I, I.1, and II). It does not apply to Crown Corporations.

TB approves entry into a contract when the estimated amount is above a department’s dollar value contracting limit. When a department needs to contract above this threshold, a first course of action would be to request Public Services and Procurement Canada to conduct the procurement on its behalf.

Under the Directive there is now a requirement to have a senior designated officials for the management of procurement. They are responsible for ensuring that the departmental management framework includes oversight, planning and reporting mechanisms.

The Financial Administration Act states Deputy Heads as Accounting Officers are responsible for ensuring compliance with TB policies and putting in place internal controls, governance, and risk-based internal audit plans in respect of organization’s contracting activities. For non-compliance, the accountable Deputy Head is responsible for response and corrective measures.

Proactive Disclosure of Contracts

Issue

When the Government of Canada discloses contracts publicly.

Response

• The Government of Canada is committed to open government, transparency, and accountability.
• Federal departments’ contracts over $10,000 are proactively disclosed on the open government portal so that Canadians are better able to hold the government and public sector officials accountable.
• This includes the name of the company, the value of the contract, and a brief description of the work.
• In addition, government opportunities are also posted publicly on CanadaBuys.canada.ca.

Background

In June 2019, the amended Access to Information Act (ATIA) received royal assent bringing into effect proactive publication requirement that included the requirement that all contracts over $10,000 are to be proactively disclosed within 30 days after the end of the first three quarters of a fiscal year and 60 days after the end of the fourth quarter.

Before the update to the ATIA in June 2019, the Government of Canada had implemented proactive disclosure requirements under various policies for certain types of expenses or management actions including on March 23, 2004, the mandatory publication of contracts over $10,000 and, seven months later, the mandatory publication of grants and contributions over $25,000.

Since January 1, 2017, in support of the 2^nd National Plan on Open Government, departments are required to proactively publish information on contracts and amendments over $10,000 in a centralized, machine-readable database on the TBS open government portal. Prior to this, departments posted proactive disclosure reports on their respective websites.

As set out in the ATIA, contract disclosures are to include the following information: a) subject matter of the contract; b) names of the parties; c) contract period; d) value of the contract; e) reference number assigned to the contract, if any; and f) any other information that, in accordance with Treasury Board (TB) policies must be published.

Generally, all departments, agencies and other bodies are responsible for timely and accurate reporting of contacts on the government portal. The ATIA does not require Crown Corporations to proactively disclose (except for those identified under the Financial Administration Act).

Disclosed information excludes that which would be withheld in a response to an access to information request, such as personal information, or Cabinet confidences.

In addition to the requirements in the ATIA, Departments need to disclose 31 other mandatory fields including a description of the work, whether a procurement is covered by a trade agreement or by a comprehensive land claim agreement; the solicitation procedure (including whether it was competitive or non competitive) and whether it is a Minister’s office contract.

The Guidelines on the Proactive Disclosure of Contracts supports departments in meeting their reporting requirements by providing guidance to managers and functional specialists on the identification, collection, reporting and publication of contract information.

Review of Access to Information

Having come into effect in 2019 the legislated proactive publication program is still relatively new (less than four years old). In 2022, TBS concluded an internal evaluation of proactive publication under Part 2 of the ATIA, which provided recommendations for how TBS could better support institutions in implementing proactive publication.

The evaluation supported the first legislative review of the ATIA, which was launched in June 2020 and concluded in December 2022. One of the strategic outcomes that was a focus of the Review report was increasing trust and transparency in institutions. For example, the Government of Canada is committed to examining ways to improve proactively published information under Part 2 of the ATIA.

The amendments in C-58, which came into force in 2019, introduced a requirement for the President of the Treasury Board to undertake a review of the ATIA every five years and table a report to Parliament. As outlined under the ATIA (subsection 93(2)), the Report was referred to the Standing Committee on Access to Information, Privacy and Ethics (ETHI).

Federal Procurement and Professional Services

Issue

The Government of Canada’s use of Professional Services.

Response

• The Government of Canada is committed to providing high-quality services to Canadians, while ensuring the best value for taxpayers.
• Contracted services play an important role in the delivery of programs and services and complement the work of our professional public service.
• The procurement of professional services may be required to acquire special expertise, and to meet unexpected fluctuations in workload.
• While professional services expenditures have increased over the past decade, the Government’s spending in this area as a percentage of total expenditures, has remained relatively consistent (11.1% in 2011 vs 11.7% in 2022).
• While contracting serves an important role, the government is also taking steps to address the requirement for long-term specialized expertise within the public service. The Office of the Chief Information Officer of Canada is developing a Digital Talent Strategy, to support recruitment, talent sourcing, and development. This will include guidance to help departments determine when they should contract for IT talent and when they should seek to build, develop and leverage internal talent and expertise.

Background

Government spending on External Professional Services (EPS) – a broad category that includes everything from nursing to engineering to research to management consulting – has increased from $8.5B in 2015-16 to $13.5B in 2021-22, for a total increase of $5.0B mainly related to four major types of professional services:

1. Informatics Services (Computer services, information technology and telecommunications consultants);
2. Health and Welfare Services (Hospital services, welfare services purchased from social and related agencies, physicians and surgeons, paramedical personnel, and dental services);
3. Business Services (Accounting and audit services, banking services, collection agency fees and charges, real estate services and other business services); and
4. Engineering and Architectural Services (Architectural design, control and plans, construction supervision of buildings, and architecture of naval vessels, services related to assessment, remediation, care, maintenance and monitoring of contaminated sites and engineering consultants).

While absolute spending has increased, the proportion of spending on EPS has remained relatively consistent when compared to overall expenditures. Specifically, total departmental EPS in 2011 was 11.1% of gross external expenditures excluding transfer payments and public debt charges as compared to 11.7% in 2022. Through those years the range was from 10.6% (2013 and 2021) to 11.8% (2016 and 2017).

Since 2011 the ratio of external professional services as a percentage of personnel expenditures by fiscal year has been relatively consistent ranging from a low of 19% in 2013 to a high of 23% in 2017. For fiscal year 2022 the ratio was 22%.

The Treasury Board Guide to Cost Estimating provides guidance for managers faced with Make-or-buy decisions: When decision-makers are considering whether to develop and deliver a program, product, or service or to arrange to have another department or the private sector do the work, they can use cost estimates to determine the one-time and the ongoing costs of each option.

While contracting is a normal and acceptable delivery strategy, the Office of the Chief Information Officer of Canada is developing a Government of Canada Digital Talent Strategy to ensure that the federal public service has the in-house digital talent and leadership it needs to build, deliver, and maintain simple, secure, and efficient digital services and programs.

The Strategy is designed to support the digital community in the federal public service. This includes people who have skills, knowledge, and experience in a variety of digital disciplines, including development, cybersecurity, data, and many more. It also includes leaders who guide and sponsor digital initiatives. The Strategy is currently under development and will be forthcoming later in 2023.

Sole Source Contracting

Issue

The Government of Canada’s use of sole sourcing (non-competitive) over competitive contracts.

Response

• When possible, practical and cost-effective contracts are tendered by fair and open competitive processes.
• However, competition is not always possible, practical, or cost-effective.
• The Government may enter into non-competitive contracts in four situations:
  1. 1) to respond to emergencies,
  2. 2) for matters not in the public interest (e.g., national security)
  3. 3) when there is only one supplier that can do the work (usually related to intellectual property)
  4. 4) or when the procurement has a low dollar value (and it would not be practical or cost-effective to solicit bids).
• All non-competitive contracts need to follow Treasury Board Policy and the context and rationale for why bids are not solicited must be documented

Background

The Financial Administration Act commits the Government of Canada to take appropriate measures to promote fairness, openness, and transparency in the bidding process for procurement contracts and the Government Contracts Regulations (GCRs) establish the government’s default position on procurement which is to solicit bids.

Canada has further entered into numerous international free trade agreements and a domestic free trade agreement (the Canadian Free Trade Agreement) which, subject to certain exceptions, require open competition for goods, services, and construction acquired by the Government of Canada and include non-discrimination obligations.

Approximately 80% (by value and volume) of the Government of Canada’s contracts over $25K since 2011 were tendered through fair, open, and transparent competitive procurement processes.

However, there are reasons where running a competition may not be possible, practical, or cost-effective. For procurements not subject to the trade agreements (in accordance with their limited tendering provisions), the GCRs allow for exceptions to competition where:

• In response to a pressing emergency such as to clean up an oil spill or respond to forest fires.
• For low dollar value contracts, meaning below $25K for goods and $40K for services as the costs associated with soliciting bids would make it uneconomical to buy things that have a relatively low dollar value.
• When it is not in public interest, for example to protect Canada’s national security or the confidentiality of a criminal investigation.
• When only one supplier is capable of performing the contract, usually for intellectual property reasons.

Majority non-competitive contracts are of lower dollar value below $25K.

To ensure the Government of Canada obtains best value when awarding non-competitive contracts, it is best practice that a cost and price analysis is conducted which can include examining current published price lists, comparing copies of invoices for similar goods or services sold to other customers, and obtaining a certification from the supplier that Canada is treated as well as the supplier’s most favoured customer.

Supplier Diversity

Issue

The OGGO Committee is currently undertaking a study of supplier diversity.

Response

• The Government of Canada is committed to helping more businesses get involved in federal procurement to build a more inclusive economy
• Through the new Directive on the Management of Procurement, we are taking concrete steps to increase the participation of underrepresented groups in government procurements.
• The Directive includes several provisions to support supplier diversity and remove barriers for suppliers. This includes unbundling requirements, making contracts simpler and easier to understand, and limiting the number of mandatory technical criteria so that smaller suppliers can bid.
• Treasury Board Secretariat is also working closely with Public Services and Procurement Canada and Indigenous Services Canada to support the government’s commitment to award a minimum of 5% of federal contracts to businesses managed and led by Indigenous Peoples by 2025.
• In April of 2022, Treasury Board introduced Mandatory Procedures for Contracts with Indigenous Businesses to support this target.

Background

Supplier diversity and social procurement leverages government purchasing power towards socio-economic objectives such as enhancing market competition; job creation; economic and social benefits of procuring from small and medium enterprises (SMEs), local industry, social enterprises, and not-for-profit organizations; encouraging socially responsible business conduct; as well as advancing diversity and inclusion.

Under the Treasury Board Directive on the Management of Procurement, it is expected that procurements are managed in a manner that enables operational outcomes, demonstrates sound stewardship and best value. Best value considers not just the price, but also non-financial outcomes such as social, economic, Indigenous, and environmental returns.

The Directive on the Management of Procurement, which came into effect Spring 2021, also supports supplier diversity by setting expectations that departments:

• Leverage procurement to provide socio-economic and environmental benefits;
• Unbundle requirements so that instead of a large contract with a single supplier, contracts can be broken down into smaller pieces which allows for procurements to better align with the capacity of smaller and more diverse suppliers to respond;
• Before launching a procurement, engaging with industry early and conducting market analysis to gain deeper understanding of industry capacity, opportunities, and barriers. By doing so industry is engaged and the government has a better understanding of who has the capacity to deliver and concurrently allows those companies to understand what the government wants;
• Make contracts simpler and easier to understand, as well as limit the number of mandatory technical criteria. SMEs have identified the complexity of the procurement process and   long complex technical requirements as barriers to participation as they increase the risk of mistakes in bidding (resulting in disqualification) and often gear the procurement to the large firms who have the capability to meet the governments demands.

In addition to the above Treasury Board Secretariat (TBS) supports increasing indigenous procurement through specific initiatives:

• 5% Indigenous Procurement Target: in order to increase economic prosperity for Indigenous businesses, the Government of Canada has committed to award a minimum of 5% of the annual value of contracts to Indigenous businesses.
  • As of April 2022, the TB Directive on the Management of Procurement was updated to provide guidance on how to measure and report on progress towards the 5% target.
  • A phased onboarding approach has been developed for departments and agencies to meet the target by the end of Fiscal Year 2024-2025. As of now, 32 departments are expected to meet the target in 2022-23. The remaining departments are expected to meet the target in 2023-24 (20 departments) and 2024-25 (43 departments).
• Nunavut Directive: In support of obligations under Article 24 of the Nunavut Agreement, TBS has established a Directive that aims to increase participation by Inuit firms in business opportunities to support the Nunavut Settlement Area (NSA) economy, improve Inuit firm capacity to compete for government contracts and leases in the NSA, and employ Inuit at a representative level in the NSA workforce.

In support of these measures, TBS has worked with the Canada School of Public Service to deliver a mandatory training course on Indigenous Considerations in Procurement, which provides a common understanding of procuring from Indigenous businesses within the Government of Canada. New employees are required to complete the course within 3 months of joining the functional procurement community.

Measures of protection against conflict of interests

Issue

Conflict of interest in procurement.

Response

• Government is committed to procuring in a fair, open and transparent manner and meeting public expectations for integrity and impartiality.
• The Conflict of Interest Act establishes conflict of interest and post-employment rules for public office holders, including Ministers and ministerial staff.
• The Values and Ethics Code for the Public Service and the Directive on Conflict of Interest also require the government to monitor and report on any conflict of interest and take appropriate action.
• The Conflict of Interest and Ethics Commissioner holds investigative powers on possible contraventions to the Act or the Conflict of Interest Code for Members of the House of Commons.

Background

With respect to contracting, public office holders and persons employed in the Core Public Administration are subject to obligations to prevent conflicts of interest. These obligations are found in the Conflict of Interest Act, the Values and Ethics Code for the Public Service, Treasury Board’s (TB) policies related to conflict of interest, and procurement.

Conflict of Interest Act

The Conflict of Interest Act (the Act) establishes conflict of interest and post-employment rules for public office holders. Public office holders covered under the Act include ministers, ministerial staff, and Governor-in-Council appointees such as deputy heads.

Under the Act, all public office holders have a duty to arrange their affairs to prevent conflicts of interest and to abstain from making or participating in decisions that would place them in a conflict of interest. The Act provides that a public office holder is in a conflict of interest when they exercise an official power, duty or function that provides an opportunity to further their private interests or those of their relatives or friends or to improperly further another person's private interests. Such a power, duty or function could include the awarding of contracts. Section 9 prohibits public office holders from using their position to seek to influence a decision of another person, and section 21 requires public office holders to recuse themselves from any discussion, decision, debate or vote on any matter in respect of which they would be in a conflict of interest.

The Act also includes specific rules and other requirements related to contracting, including:

Subject to certain exceptions, no minister of the Crown, minister of state or parliamentary secretary shall either “knowingly be a party to a contract with a public sector entity under which he or she receives a benefit” or “have an interest in a partnership or private corporation that is a party to a contract with a public sector entity”:

• No public officer holder shall enter into a contract or employment relationship with his or her spouse, common-law partner, child, sibling or parent.
• No minister of the Crown, minister of state or parliamentary secretary shall permit the public sector entity for which he or she is responsible to enter into a contract or employment relationship with his or her spouse, common-law partner, child, sibling or parent or, with certain exceptions, a spouse, common-law partner, child, sibling or parent of another minister of the Crown, minister of state, or parliamentary secretary.
• The Act also prohibits Ministers of the Crown, ministers of state, parliamentary secretaries, and certain other public office holders from, among other things, entering into a contract of service with an entity with which they had direct and significant official dealings during the period of two years following their last day in office.

The Act is administered by the Conflict of Interest and Ethics Commissioner. Pursuant to section 44(1), a member of the Senate or House of Commons who believes that a public office holder or former public office holder has contravened the Act may request that the Commissioner undertake an investigation.

Values and Ethics Code of the Public Service, Directive on Conflict of Interest and other Treasury Board policies related to procurement and transfer payments

Persons employed in the Core Public Administration (CPA) are subject to Values and Ethics Code of the Public Service, the Treasury Board Directive on Conflict of Interest and other TB policies related to procurement and transfer payments.

In the context of contracts, the Directive on the Conflict of Interest sets out requirements for persons employed in the CPA that are broadly similar to those set out in the Conflict of Interest Act.

At the same time, TB policies related to procurement require that departments have in place procurement management frameworks that include processes, systems and controls to ensure the integrity of the process. Procurement officials are required to monitor and report any conflict of interest that may exist and take appropriate mitigating action. They are also required to make every reasonable effort to ensure that no direct benefits accrues to anyone who has an interest in the procurement or in the awarding of a contract to a successful bidder.

Meanwhile, TB policies related to transfer payments ensure that no current or former public servant or public office holder can derive direct benefit from a funding agreement. Furthermore, no member of the Senate or the House of Commons shall be admitted to any share or part of the agreement, or to any benefit arising from it, that is not otherwise available to the general public.