Ottawa’s anti-corruption rules put government’s main buyer in a bind

Recently toughened rules that block Canada from doing business with companies who commit crimes anywhere in the world have put the federal government’s main buyer of goods and services in a bit of a bind.

OTTAWA — Recently toughened rules that block Canada from doing business with companies who commit crimes anywhere in the world have put the federal government’s main buyer of goods and services in a bit of a bind.

The Public Works Department has contracts worth hundreds of millions of dollars with HP Canada — whose Russian sister company pleaded guilty in a United States court last September to charges of bribing Russian government officials for a contract and was fined more than US$58 million.

HP Russia executives created a secret, multimillion-dollar slush fund and used some of that money to bribe Russian government officials, who gave the company a contract worth more than 35 million euros, according to the U.S. Department of Justice.

Under the so-called integrity framework, companies convicted of crimes in Canada or abroad are barred from bidding on government contracts for 10 years. The ban also extends to subsidiaries and sister companies of convicted companies.

That had Public Works scrambling to figure out what to do about HP Canada — a company with which the department has 66 active contracts, standing offers, supply arrangements and call-ups worth around $377 million.

Then-deputy minister Michelle D’Auray prepared a memo to Public Works Minister Diane Finley in August 2014 — a little more than two weeks before HP Russia pleaded guilty — outlining what could happen if a U.S. court convicted the company.

Public Works has the option of using a special “public interest” exception to get around the integrity framework’s 10-year ban and sign new contracts with HP Canada, D’Auray told Finley.

“Should HP Russia be convicted, HP Canada will not be eligible to enter into new contracts with PWGSC or the other organizations using PWGSC’s Integrity Framework — including Shared Services Canada (SSC) — unless it is in the public interest,” the memo says.

“The public interest exception applies on a contract-by-contract basis where exceptional circumstances are necessary to the public interest … In these circumstances, PWGSC could impose stringent controls, administrative measures and monitoring over the contract.”

The Canadian Press obtained a copy of the memo under the Access to Information Act.

The department found that only two of its contracts with HP Canada included integrity framework clauses. The first was a $290-million contract for a pension modernization project, which expires in November 2017 and has three, two-year renewal options. The memo to Finley recommends letting the contract run its course without renewing it in two years’ time.

The second contract, valued at $428,000, is a sole-source deal to provide the Defence Department with technical support for software installed aboard 17 ships and seven facilities on shore. The memo says Public Works will not cancel the contract “for reasons of operational requirements and proprietary rights.”

Another 13 Public Works contracts do not include the integrity framework clause, so they cannot be cancelled.

“Should any of these contracts have a follow-on requirement once expired, (Public Works) or (Shared Services Canada) will put them up for competition,” the Finley memo says.

“In some cases, there may be a need to utilize HP Canada, for example, if they have the intellectual property rights, in which case the public interest exception could apply.”

Shared Services Canada has 13 of its own contracts with HP Canada, worth a total of $85 million. But only one of those deals — worth $13,000 — has the integrity framework clause. The contract expires in June, and the Finley memo recommends letting the deal run out.

Neither Public Works nor HP Canada immediately responded to requests for comment.

Just Posted

Scares and chills await at haunted house in Red Deer

Zed Haunted House helps raise money for Boys and Girls Club of Red Deer District

PHOTO: Renewable Energy Fair at Red Deer College

The Renewable Energy Fair and Workshops event was held at Red Deer… Continue reading

PHOTOS: Red Deer College Queens host third annual Pink in the Rink game

Queens raised $12,035 for the Central Alberta Cancer Centre.

PHOTOS: The Mustard Seed CEO speaks at Seeds of Hope Gala in Red Deer

The first-ever Seeds of Hope Gala was held at the Red Deer… Continue reading

Person airlifted to hospital after collision near Innisfail

One person was airlifted to hospital after a serious collision west of… Continue reading

WATCH: Make-A-Wish grants Star Wars loving teen’s wish

The Make-A-Wish Foundation granted Anakin Suerink’s wish in Red Deer Saturday afternoon

Turkey to reveal details of probe into Khashoggi’s killing

ISTANBUL — In a sign of growing pressure on Saudi Arabia, Turkey… Continue reading

Utah truck driver is jailed without bond after crash kills 6

HEBER, Utah — A man suspected of driving under the influence remained… Continue reading

A ragged, growing army of migrants resumes march toward US

TAPACHULA, Mexico — A ragged army of Honduran migrants streamed through southern… Continue reading

Postal workers to begin strikes in 4 Canadian cities Monday if deal not reached

OTTAWA — The union representing 50,000 Canada Post employees says it will… Continue reading

Migrant caravan swells to 5,000, resumes advance toward US

CIUDAD HIDALGO, Mexico — Despite Mexican efforts to stop them at the… Continue reading

“I don’t feel real”: Mental stress mounting after Michael

PANAMA CITY, Fla. — Amy Cross has a hard time explaining the… Continue reading

Toronto residents set to vote Monday on the next four years of civic leaders

Toronto’s municipal election campaign, marked by unprecedented provincial interference, ends Monday when… Continue reading

Former PQ minister Lise Payette remembered as role model for female politicians

MONTREAL — Members from across Quebec’s political spectrum gathered at a downtown… Continue reading

Most Read