Beware of the AMP's power to terminate contracts

According to the Act respecting contracting by public bodies (ACPB), public bodies are required to use the public tendering procedure to award any public contract involving an expenditure whose value is equal to or greater than the threshold provided for in any applicable intergovernmental agreement.

However, section 13(4) of the ACPB provides that it is possible to derogate from this rule and enter into a contract by mutual agreement, in particular when a public body considers that it will be possible for it to demonstrate, having regard to the purpose of the contract and in compliance with the principles set out in section 2, that a public call for tenders would not serve the public interest.

On April 23, 2024, the Autorité des Marchés Publics (AMP) published its Recommendations to the Université du Québec en Abitibi-Témiscamingue (UQAT) concerning the tendering processes identified at SEAO under reference numbers 1743546 and 1594593.

One of the calls for tenders analyzed by the AMP concerned the awarding by UQAT of a contract by mutual agreement based on the exception provided for in paragraph 4 of section 13 of the ACPB for an amount exceeding the thresholds. According to UQAT, a public call for tenders would not have served the public interest since it was necessary to quickly find a new service provider before the winter in order to compensate for the withdrawal of the previous service provider, otherwise UQAT would have been exposed to a loss of several thousand dollars.  The AMP notes in its analysis that, according to the evidence presented, it was not until nearly five months after the withdrawal of the previous service provider that UQAT's procurement manager and the person responsible for the application of contractual rules (RARC) were informed of the need to enter into a new contract to complete the work. The AMP therefore concludes that the work became urgent because the situation was not taken care of at the appropriate time following an internal communication problem, which, in itself, does not justify the use of an exception in section 13 of the ACPB. UQAT also confirmed that without this internal communication problem, it would have proceeded by public call for tenders to award the contract.

The AMP notes that the contract was awarded without the publication of a notice of intent prior to the awarding of a contract by mutual agreement. However, according to section 13.1 of the ACPB, the organization that uses an exception in section 13 of the ACPB must, at least 15 days before the contract is entered into, publish a notice of intention that complies with the requirements of the Act, thus allowing any company to express its interest in carrying out the contract.

The AMP points out that the courts have repeatedly determined that the provisions of the ACPB relating to the awarding and awarding of public contracts are of public order and must be complied with, and that a contract entered into before the publication of the notice of intention provided for in section 13.1 may be terminated by the AMP.

Reminder

The AMP has broad powers and both public bodies and contractors should ensure that any contract is awarded in accordance with the provisions of the ACPB.  In the event of an award of contract by mutual agreement above the prescribed thresholds, they should ensure that the notice of intention is properly published.