Bill 12: Important changes to the legislative framework governing the integrity regime of enterprises and the AMP’s powers

On June 2, 2022, the Quebec National Assembly adopted the Act mainly to promote Québec-sourced and responsible procurement by public bodies, to reinforce the integrity regime of enterprises and to increase the powers of the Autorité des marchés publics (Bill 12), implementing a number of significant changes to the Act respecting contracting by public bodies (Act).

Bill 12 expands the powers of the Autorité des marchés publics (AMP, the body that oversees public procurement in Quebec), which now holds all the powers necessary to verify the integrity of enterprises party to a public contract or subcontract, as well as any enterprise holding an authorization to enter into a public contract or subcontract. The AMP may notably require that enterprises subject to its oversight provide all information that it requires at the risk of incurring administrative penalties. 

This update summarizes the main changes put into effect by Bill 12, the last of which went into effect on June 2, 2023. Except where otherwise indicated, the changes discussed below went into effect at the date of assent of Bill 12, that is on June 2, 2022. 

Authorization issued by the AMP

• Enterprise must hold its authorization on the date it submits its bid: An enterprise that responds to a call for tenders for a public contract or subcontract must hold an authorization on the date it submits its bid. Public bodies¹ will no longer be able to allow the authorization to be obtained later. 
• Authorization in the case of a consortium: The obligation to hold an authorization applies to every enterprise in the consortium, in addition to the consortium itself, but only where the latter is in the form of a general or limited partnership. 
• Declaration of integrity: An enterprise interested in entering into a public contract must now, by way of a written declaration, recognize that it is aware of the standards of integrity applicable to enterprises contracting with public bodies, and undertake to implement all measures necessary to meet those standards throughout the contract’s duration. This declaration must be submitted at the same time as the bid. 
• Suspended or expired authorization / enterprise that does not satisfy integrity standards: An enterprise that lacks a valid authorization or does not satisfy the standards of integrity must continue performing all public contracts or subcontracts to which it is a party. It must, however, submit to all oversight measures imposed by the AMP. The performance of the contract must cease immediately at the request of the public body concerned. 
• Definition of de facto control: In assessing the integrity of an enterprise, the AMP may also evaluate the integrity of persons or entities having legal or de facto control over the enterprise. Legal or de facto control may be established, for instance, on the basis of participation in the concerted exercise of rights within the enterprise or of powers over the enterprise. Each participant in the exercise is then presumed to be the holder of control even though none of them would alone be the holder of control. 
• Imposition of corrective measures: Before refusing an application for authorization or for the renewal of the authorization, the AMP may impose corrective measures that would allow the enterprise concerned to meet the standards of integrity. 
• Cancellation or suspension of the authorization: The AMP may cancel the application for authorization or suspend the authorization of an enterprise having failed to communicate a document or information requested by the AMP. 
• Extension of the authorization period (in effect since June 2, 2023): The validity period of an authorization has been extended to five years. Authorizations in effect on June 2, 2023, have been automatically extended by two years. An email confirming this extension has been sent by the AMP to all the designated respondents of enterprises authorized as of June 2, 2023. 
• New obligation to file an annual update (in effect since June 2, 2023): Authorized enterprises must file a request for an annual update during the period starting 45 days prior to the anniversary date of the issuance of their authorization and ending on such anniversary date. To this end, enterprises must indicate to the AMP that their declared business relationships (i.e. officers, directors, shareholders, establishments, lenders, etc.) are up to date, or make the necessary modifications before filing their request for an annual update. The first annual update must be completed between June 2 and July 2, 2023.
• Changes to information (in effect since June 2, 2023): The deadline to notify the AMP of any changes to previously transmitted information has been modified to 30 days after the change took place. Consequently, in addition to the annual update procedure, enterprises must continue notifying the AMP of changes to information already transmitted. 

Increased powers of the AMP

The AMP has a power of oversight over any enterprise party to a public contract or subcontract as well as any authorized enterprise. To ensure such oversight, the AMP may conduct audits at any time or proceed with an examination of an enterprise’s integrity. 

Audit powers

The AMP holds all powers necessary to verify the integrity of any enterprise party to a public contract or subcontract as well as any authorized enterprise. In the exercise of an audit, the AMP may:

• conduct an investigation into any matter relating to its oversight mission;
• require that the enterprise being audited, along with any persons or entities with control over it, transmit any documents or information the AMP deems useful;
• enter, at any reasonable hour, the establishment of the enterprise being audited or any other premises in which documents or information relevant to the audit may be kept;
• require from any persons present at such premises any relevant information;
• use any electronic device present at such premises to gain access to relevant data; 
• require the associate commissioners for audits under the Anti-Corruption Act to conduct oversight or audit of an enterprise under the AMP’s authority.

Examination of an enterprise’s integrity

The examination of an enterprise’s integrity may cover any element that can be considered in the decision relating to an application for authorization to enter into a public contract or subcontract. The AMP may initiate an examination of integrity by sending a notice to the enterprise concerned that mentions:

• The information the enterprise must provide to the AMP and the time limit for doing so;
• Any information held by the AMP that could demonstrate that the enterprise does not meet the standards of integrity, as well as the time limit granted to the enterprise to submit written observations relating to such information. 

Following the examination, if the AMP believes the enterprise does not meet the standards of integrity, it must notify the enterprise in writing and allow the enterprise at least 10 days to complete its file and/or provide written observations. 

Following a decision concluding that an enterprise does not meet the standards of integrity, the AMP must impose on the enterprise concerned any corrective measure that would enable the enterprise to meet those standards. These corrective measures, the costs of which are assumed by the enterprise, are adapted to the enterprise’s situation after it has been given the opportunity to present its observations.

Should the enterprise fail to implement the corrective measures, the AMP temporarily registers the enterprise on the register of enterprises ineligible for public contracts (RENA). If the enterprise does not remedy the situation within three months following its temporary registration, it is then definitively registered on the RENA. It is also placed on the RENA if no adequate corrective measure can be imposed. 

New administrative penalties

Since June 2, 2023, the AMP may impose an administrative penalty if: 

• an ineligible enterprise ($10,000²) or an enterprise without an authorization ($7,000) submits a bid for a public contract or subcontract or enter into such a contract or subcontract;
• an enterprise enters into a subcontract with an ineligible enterprise ($10,000) or an enterprise without an authorization ($7,000) in the course of the performance of a public contract;
• an enterprise whose authorization expires while it is in the process of performing a public contract or subcontract ($2,500); 
• an enterprise fails or refuses to send information or documents requested by the AMP while it is party to a public contract or subcontract or holds an authorization ($4,000 or $2,000, depending on the context);
• an enterprise fails or refuses to send information or documents required in the filing of its annual update ($4,000);
• an enterprise fails to submit to the oversight or monitoring measures imposed by the AMP ($4,000); 
• an enterprise fails or refuses to confirm the authenticity of documents or the veracity of information communicated to the AMP ($1,000).

When penalties are imposed by the AMP, the following considerations are of particular importance: 

• Responsibility of officers and directors: Officers and directors are solidarily liable for the payment of the penalty when the enterprise concerned fails to pay it, unless they establish they exercised due care and diligence.
• Penalties secured by legal hypothec: The amount of a penalty is secured by a legal hypothec covering all the movable and immovable property of the enterprise and of the directors and officers solidarily liable for the payment of the penalty.
• Public register of administrative penalties: The AMP will keep a public register relating to monetary administrative penalties, which will notably include information on the date and the nature of each failure to comply with the Act and/or regulations, the penalty imposed, as well as the enterprise’s name.
• Application for review of a penalty: An enterprise may apply in writing for a review of the decision imposing the penalty within 30 days following notification of said decision. The AMP’s decision on the application for review must present its reasons and be given to the enterprise, with a mention of the enterprise’s right to contest it before the Administrative Tribunal of Québec.
• A penalty may be imposed for every day during which a failure to comply continues: Penalties may rapidly become substantial, since every additional day during which the same failure to comply continues is considered a new and distinct failure.