Government of Canada Revises Ineligibility and Suspension Policy for Suppliers

The Government of Canada’s revised Ineligibility and Suspension Policy (Ineligibility Policy), which came into effect on May 31, 2024, expands the circumstances under which vendors can be debarred or suspended from supplying the federal government and provides greater flexibility for setting, and potentially reducing, existing ineligibility periods. 

Expanded Circumstances for Vendor Debarment or Suspension

The previous version of the Ineligibility Policy included many offences that would result in debarment, including conduct contrary to the cartel or bid-rigging provisions of the Competition Act and the anti-bribery provisions under the Corruption of Foreign Public Officials Act and Criminal Code. The new Ineligibility Policy substantially expands the circumstances in which vendors could be disbarred or suspended. For example, some additional convictions or circumstances that will now result in automatic debarment include:

• Violations of certain Canadian sanctions laws, as well as vendors owned or controlled by, or designated as, a sanctioned person under certain Canadian sanctions laws
• Financing terrorism under the Criminal Code
• Illegal immigration and human trafficking under the Immigration and Refugee Protection Act
• Making prohibited campaign contributions under the Canada Elections Act
• Fraud other than against the Crown under section 380 of the Criminal Code (fraud against the Crown already resulted in debarment under the previous version of the Ineligibility Policy) and municipal corruption under section 123 of the Criminal Code
• Where contracting with the vendor “may bring the federal procurement system into public disrepute or otherwise be contrary to Canadian public policy”
• Where the supplier is deemed to “lack business integrity or business honesty in a manner that seriously and directly” impacts the supplier’s present responsibility
• Provincial offences similar to certain prescribed federal offences identified in the Ineligibility Policy, which appears to include provincial lobbying laws

In addition, the new Ineligibility Policy provides for expanded discretion to suspend eligibility. Under the previous Ineligibility Policy, charges without a conviction of a listed offence, or a similar foreign offence, could result in suspension. Under the new Ineligibility Policy, this same discretion applies to the new broader list of offences and circumstances and has been increased to include "professional misconduct or acts or omissions of the supplier which adversely reflect on the commercial integrity of the supplier."

Increased Flexibility for Ineligibility Periods and Administrative Agreements

While expanding the situations subject to the authority of the Registrar of Ineligibility and Suspension (Registrar), the Ineligibility Policy provides the Registrar with greater discretion in setting ineligibility periods, replacing the mandatory 10-year suspension periods with a full discretion to set an ineligibility period (with no mandatory minimum). This may be up to a maximum of 10 years (except for offences set out under section 750(3) under the Criminal Code, including fraud against the government, His Majesty or the selling or purchasing office), taking into account a number of factors, including the information that the vendor provides Public Services and Procurement Canada, any independent third-party information acquired, the seriousness of the conduct engaged in and the steps taken by the supplier to ensure that similar conduct does not repeat itself.

The new Ineligibility Policy also permits ineligible suppliers to request an administrative agreement, which would allow them to supply government entities after 36 months of any ineligibility (as opposed to after five years under the previous regime) and gives the Registrar the discretion to suspend any ineligibility period at any time at their discretion. For a supplier to qualify for an administrative agreement, they must demonstrate that they cooperated with law enforcement authorities where applicable and/or have undertaken remedial action(s) to address the wrongdoing that led to their ineligibility. Administrative agreements can include a number of conditions, including the supplier submitting to third-party monitorship at its own expense. Under the transitional provisions of the Ineligibility Policy, current ineligible suppliers may request a reassessment of their ineligibility period under the new, more flexible provisions of the updated Ineligibility Policy.

Practical Considerations 

 In light of the amendments to the Ineligibility Policy:

• Businesses potentially subject to the Ineligibility Policy should remember that while the Registrar has increased discretionary decision-making in determining ineligibility periods, there is considerable ambiguity (and discretion) regarding the grounds for debarment and suspension (for example, where the vendor is deemed to “lack business integrity or business honesty,” or where a vendor relationship is found to “bring the federal procurement system into public disrepute”). 
• Organizations that proactively identify, investigate and carefully analyze the nuanced considerations around self-reporting will be treated more favourably. Robust compliance programs that proactively identify and remediate misconduct will militate in favour of reducing the length of debarment. 
• Organizations that contract with the government (and their first-tier subcontractors, to which the Ineligibility Policy also applies) should carefully review their compliance programs and training to ensure they are current and address all of the new risk areas so that they are well-positioned to utilize resolution mechanisms in the event of misconduct.
• Current ineligible suppliers should consider applying for a reassessment of their ineligibility periods under the new, more flexible Ineligibility Policy.

If you have any questions, please do not hesitate to contact your usual Blakes contact or any member of the Blakes Competition, Antitrust & Foreign Investment or Business Crimes, Investigations & Compliance group.