On March 24, 2015, the Quebec government passed the Act to ensure mainly the recovery of amounts obtained as a result of fraud or fraudulent tactics in connection with public contracts (Act). The Act includes various measures to make it easier for public bodies to recover amounts improperly paid in connection with public contracts. In particular, the Act provides for a presumption of injury and a presumption of the value of the injury. For more information, we invite you to refer to our legal update on the topic.1
The Act also provides for the establishment of a voluntary reimbursement program (Program) to give enterprises the opportunity to repay improperly paid amounts and avoid legal proceedings. The Program has been in effect since November 2, 2015.
Program operation and steps
Notice of intent
Any person or enterprise wishing to participate in the Program (Participant) must send the director of the Program (Director) a notice of intent containing a list of the public bodies for which the enterprise intends to submit a reimbursement proposal and the years covered by the proposal. The notice of intent must be sent with a letter consisting of an unconditional undertaking to abide by the Program rules. Finally, the Participant must indicate the enterprises and natural persons2 for which a discharge is required.
Within 30 days after filing a notice of intent, the Participant must file a settlement proposal with the Director providing the following for each public body named in the notice:
- a list of all contracts awarded for each year specified in the notice, regardless of whether they are covered by the settlement proposal;
- a list of all contracts covered by the settlement proposal and the total amount paid by the public body for each contract;
- the settlement proposal, the method used to set the proposal amount, and the terms of payment, including the guarantees proposed to secure payment;
- the terms of the discharge sought and, if applicable, the terms of the public statement it intends to make if the settlement proposal is accepted.
Director’s assessment and recommendation
The Director assesses the Participant’s settlement proposal and makes a recommendation to the Minister of Justice (Minister). If, upon analysis of the Proposal, a positive recommendation cannot be made, the Director informs the Participant so the latter can make the necessary changes.
Within 150 days after the notice of intent is filed, the Director sends the settlement proposal to the Minister along with his or her preliminary recommendation.
Public body’s reply
Within 30 days after receiving a settlement proposal, the Minister must inform each public body involved of the aspects of the proposal that concern it, along with the total amount proposed by the Participant. Each public body must then inform the Minister in writing within 60 days after receiving the proposal that it agrees or disagrees with it. If a public body fails to send a notice of refusal within the allotted time, it will be deemed to have accepted the settlement proposal. If a public body disagrees with the proposal, it must explain why and provide a counter proposal. If a public body sends a notice of refusal, the Director may convene the interested parties to a conciliation meeting.
The settlement proposal must be voted on by the public bodies within 210 days after it is received by the Minister, unless it concerns only government departments, no notice of refusal has been sent to the Director, or no notice of refusal is still outstanding when the Director makes his or her final recommendation. The Minister may have the public bodies vote only on the portions of the proposal that have received a favourable recommendation from the Director. To be accepted, a settlement proposal must be approved by public bodies holding at least 2/3 of the voting rights. Each public body holds one voting right for each dollar that concerns it in the amount covered by the settlement proposal.
Once accepted, the settlement proposal constitutes a transaction. The Minister will then sign a discharge on behalf of the public bodies involved after full payment is made or any other time if the Minister is satisfied with the guarantees proposed.
It is important to note, however, that the discharge will be without effect for contracts for which false statements were made or for which disclosure was clearly incomplete.
Points to consider
The Participant undertakes to disclose to the Director all facts and information relevant to the assessment of its proposal. The proposal must also be verifiable and the Participant will have to make all the documents and information showing that the proposal is reasonable available to the Director.
However, anything said or written within the framework of the Program is confidential and cannot be admitted into evidence unless the parties agree otherwise. When submitting its notice of intent, the Participant must indicate whether it wishes its participation (and not the content of discussions) to be made public. Confidentiality remains the rule, provided, however, that the final report made public when the Program ends specifies the names of the participants but not the outcome of the process.
A non-refundable cheque equal to 2% of the proposal must be sent to cover Program costs. If the settlement proposal is accepted, a lump-sum amount equal to 10% of the settlement proposal must be added, from which the initially submitted deposit (2% of the initial proposal) will be deducted.
Participating in the Program and entering into an agreement under it does not protect the Participant against penal and/criminal proceedings that have been or may be brought against it in connection with public contracts that it entered into.
However, enterprises wishing to do so may obtain, under certain conditions, a comprehensive discharge in respect of all of the public bodies with which it has contracted since October 1, 1996. To do this, the Participant must, among other things, identify in its notice of intent all of the public bodies it has contracted with since October 1, 1996 and request that the Director publish on a dedicated website a notice addressed to all public bodies informing them that it is participating in the Program. The Participant will have to provide the terms of the discharge sought, drafting it so that it is comprehensive. In such a case – and it is important to be bear this in mind – the Participant would, in effect, be waiving the confidentiality of its participation in the Program.
The government clearly appears to be promoting and encouraging participation in the Program. The Act’s provisions facilitating legal proceedings by public bodies are still not in force, and any enterprise against which legal action is taken could seek a stay of proceedings on the grounds that it wished to participate in the Program. Enterprises wishing to participate in the Program have until November 1, 2016 to send their notices of intent. Participating in the Program has certain advantages and it is worth it for enterprises to assess the appropriateness of doing so. Among other things, consideration should be given to advantages resulting from avoiding long, costly and potentially publicized debates in multiple judicial districts.
1 This legal update was prepared upon publication of the bill in the Gazette officielle du Québec. Some minor changes were made to the bill at the time of passage into law.
2 Under the Act, an action may be brought against any enterprise or natural person, including the officers and directors in office at the time of the events, under certain conditions.