Charbonneau Commission Report November 25, 2015 After 261 days of hearings, the Report of the Commission of Inquiry on the Awarding and Management of Public Contracts in the Construction Industry (the "Charbonneau Commission") was tabled and released to the public on November 24, 2015. The mandate of the Commission was: •To inquire into the existence of schemes that could have entailed activities of collusion and corruption over 15 years (1996-2011); •Including any possible connections with the financing of political parties; •To paint a picture of the possible infiltration of organized crime into the construction industry; •To examine potential remedial measures to identify, eliminate and prevent collusion and corruption in the awarding and management of public contracts in the construction industry, as well as its infiltration by organized crime. In the course of its work, the Commission, at its request, sought and was granted certain additional powers by the Government, including the right to compel production of documents and to carry out seizures. The Commission's work was also extended, owing to the nature and scope of the information obtained and disclosed at that point during its hearings An interim report summarizing the work then completed was deposited on January 13, 2014, in which the Commission stated that it was not able, at that point, to draw any specific conclusions about whether or not any schemes entailing collusive or corrupt activities actually existed, either in connection with political party financing or with the infiltration of organized criminal elements into the construction industry.
The interim report also confirmed the need to continue the inquiry, so as to enable the Commission to study potential solutions and make recommendations to expose, eradicate and prevent collusion and corruption in the awarding and management of public contracts. After completing its additional work, the Commission made public its final report on November 24, 2015. Brief overview of the Report of the Charbonneau Commission. The Report of the Charbonneau Commission, which includes 4 volumes and 1,741 pages, sets forth 60 recommendations to prevent collusion and corruption in the awarding and management of public contracts in the construction industry, as well as its infiltration by organized crime. Those involved in the construction industry will learn with some relief that the problems of collusion and corruption in the industry are not unique to Québec. The Commission admits candidly that it was inspired by solutions put forward in different countries to eradicate corruption and that these problems are not confined to any one player but are the affair of all those involved in the industry-- from the clients, as well as engineers and contractors, down to and including the workers and the labour unions. The Commission looked and identified various causes for the illegal activities it found to be pervasive throughout the construction industry. ➢The most relevant recommendations for the different players in the industry ➢A few reflections on the impact of the eventual implementation of these recommendations on major infrastructure projects. Public Authorities Awarding Contracts It is not surprising to see that the Commission's first recommendation is that Québec should set up a Procurement Authority that would constitute a centre of expertise for analyzing and verifying procurement processes, so as to support and oversee all public bodies that award contracts.
The Commission also recommends that the various public authorities be permitted to consolidate their internal expertise in construction matters. Particular emphasis is placed on the case of the MTQ. The second recommendation is to depart from the rule requiring contracts to be awarded to the lowest conforming bidder, in order to reduce the foreseeability of results in the contract awarding process. There can be no doubt that such a recommendation, if followed, will have a considerable influence on the entire process of awarding public contracts. One recommendation that will certainly be very well received by contractors is that the delays in payment of construction works be reduced. The Commission recognizes that the prevailing situation, with its overly long payment delays, contributes to restricting competition in the industry, thus promoting the creation and continuation of collusive agreements. Indeed, once they have paid their workers, their suppliers and their sub-contractors, contractors have to bear the financial brunt of any payment delays. The lack of funds that ensues limits the numbers and growth of the contractors, by restricting their ability to undertake new projects. In this regard, in 2013, more than three-quarters of all contractors are said to have refused to respond to at least one call for tenders, on the basis that they viewed the payment clauses as abusive or that they anticipated payment problems. Moreover, delays in payment further penalize small and medium-sized businesses, which do not always have easy access to credit. They are therefore more at risk of experiencing financial difficulties. This situation is unlikely to encourage them to participate in or seek opportunities in any new procurements. Delayed payment by public authorities of the government incites contractors to factor this financial risk into their pricing, with the result that the financing costs are passed on to the authorities and ultimately the taxpayers. Finally, the Commission recommends subjecting all para-municipal corporations and non-for-profit organizations (NPOs) controlled or subsidized by a public body or a municipality to the same contractual obligations as the entities to which they are related.
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