Authorization From the AMF: a New Monetary Threshold Now Applies to Services Contracts
Since the coming into force of the Integrity in Public Contracts Act, there have been several developments regarding the requirement for business entities that wish to enter into a public contract or sub-contract, to obtain authorization from the Autorité des marchés financiers (the “AMF”), Quebec’s financial markets regulator. We have already published two bulletins in this regard1. This past October 30, the Quebec government announced its intention to transfer the AMF’s authorization role to a commissioner for public contracts, a brand new office that will be the subject of a bill in 2016.
It should be noted that the AMF’s authorization attests that the business entity concerned satisfies the high standard of integrity that the public is entitled to expect. The entire public sector is subject to this regime, including Crown corporations and municipalities.
The government’s goal is to eventually subject all public contracts for more than $100,000 to the requirement for such authorization. Because the business entities concerned are numerous, the authorization requirement is being applied gradually. The government determines by decree which contracts are targeted, depending on their nature and the amount of the contract price.
To date, the AMF’s authorization is required for, inter alia, construction contracts and public-private partnership contracts (and sub-contracts of the same nature) where the contract cost is $5 million or more. The cost amount includes any renewal options provided for in the contract, as well as all applicable taxes.
On November 2, 2015 however, the monetary threshold for services contracts dropped from $5 million to $1 million. In order for a services contract to be subject to this new threshold, the call-for-tenders process or the negotiations for a mutual agreement must have begun on or after November 2, 2015.
In closing, it must be emphasized that a business entity must be duly authorized on the date it submits its bid, unless the call for tenders specifies another date which precedes that on which the contract is awarded. Moreover, a business that submits a bid with a cost amount higher than the threshold without having received the AMF’s authorization thereby commits a penal offence.