Misconduct by suppliers and others involved in the municipal procurement process is an ever-present fact of life.
There is an old football saying, “If you are not cheating, you’re not trying.”
What is true of football is no less true of sales. Most types of supplier misconduct (e.g., passing off its goods as those of another person, general misrepresentation) give rise only to a civil remedy such as an action for damages or an action to rescind the contract.
However, while there will always be a certain amount of give and take in business relationships, including those relating to municipal procurement, there are some acts of misconduct that go so far beyond the pale they not only give rise to civil liability but also to criminal liability as well.
Although a municipality is entitled to the protection of the criminal law, its use should be guarded.
Criminal charges should never be threatened or instituted as a negotiating tactic in a contract dispute. Not only may behaviour of that sort itself suggest extortion, but it may compromise the successful prosecution of the criminal charge.
Where a municipality suspects it has been victimized by criminal conduct, it should refer the matter to police.
Another issue related to supplier is forgery.
It is a criminal offence to forge certificates of origin, quality or other documents, whether or not relating to trade.
Making false documents includes altering a genuine document in any material respect, for instance by adding to it a false date, attestation, seal or any other thing that is material, or by erasure, obliteration, removal or in any other way.
Criminal penalties for forgery are up to 10 years imprisonment. In addition to the basic crime of forgery, there are a number of more specific related offences that are also serious in municipal procurement.
Where a particularly serious instance of misrepresentation occurs with respect to the supply of services or materials to a municipality, consideration may be given to instituting a criminal charge of fraud.
Criminal breach of contract is also a concern in municipal procurement.
Only in very unusual circumstances will a breach of contract amount to a crime.
The cases in which it may are identified in the Canadian Criminal Code, which provides:
Everyone who willfully breaks a contract, knowing or having reasonable cause to believe that the probable consequences of doing so, whether alone or in combination with others, will be
- to endanger human life;
- to cause serious bodily injury;
- to expose valuable property, real or personal, to destruction or serious injury;
- to deprive the inhabitants of a city or place, or part thereof, wholly or to a great extent, of their supply of light, power, gas or water, or;
- to delay or prevent the running of any locomotive engine, tender, freight or passenger train or car, on a railway that is a common carrier, is guilty of;
- an indictable offence and is liable to imprisonment for a term not exceeding five years, or;
- an offence punishable on summary conviction.
It is also a criminal offence for a supplier, or an agent of a supplier, to pay a bribe or other secret commission to an employee of a municipality (or another person) to induce that employee to award a contract to the supplier.
The federal Competition Act creates a number of offences to conspiracies and other arrangements that are intended to limit unruly competition in the supply of goods and services.
In Ontario, two provincial statutes govern public access to government information, these being the Freedom of Information and Protection of Privacy Act and the Municipal Freedom of Information and Protection of Privacy Act.
There is also federal legislation, but normally this is of no concern in the municipal context.
Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.
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