Canada’s Conflict of Interest and Ethics Commissioner recently confirmed that urgent low-value contracts remain subject to federal conflict rules. In the December 2022 Ng Report, the Ethics Commissioner found that the Minister of International Trade, Small Business and Economic Development was involved in awarding two government sole-source contracts to a firm owned by her friend, which breached the Conflict of Interest Act.
According to the report, the Minister failed to implement proper mitigation measures, including recusals and conflict screening. As the Ethics Commissioner stated, “The simple fact of receiving a service under contract from a friend should have prompted Ms. Ng to withdraw herself completely from the process and obtain similar services from another provider.”
The two media training contracts, performed in March-April 2019 and April-May 2020, were each worth under $25, 000 and did not require public tendering under federal Treasury Board policy. According to the report, the Minister maintained that the second contract involved pandemic-related media training “sought in the time of a pressing emergency during which a delay would have been injurious to the public.”
However, the Ethics Commissioner determined that the awards breached the conflict law since, irrespective of the contract values, they furthered the financial interests of the Minister’s friend. The Ethics Commissioner also concluded that the Minister had “ample time” to implement conflict compliance measures, including recusals and screening, since the first award occurred prior to the pandemic. The ruling serves as a reminder to elected officials and their senior advisors that public contracts, no matter how small, should not be awarded to friends, no matter how urgent the circumstances.
The decision echoes a similar recent case involving senior advisors to the Prime Minister of the United Kingdom where the appearance of conflict and bias undermined the legal validity of an emergency sole-source decision. In its June 2021 decision in The Good Law Project v. Minister for the Cabinet Office, the England and Wales High Court of Justice ruled that a non-competed high-profile government contract award to a public opinion consulting firm was legally invalid due to concerns over personal connections between that firm and senior government officials.
The Court found that the direct award of a contract for COVID-19-related public opinion focus group services was justified to allow the government to quickly deal with the unforeseen COVID-19-related emergency. However, the Court also found that the fact that senior government officials decided to award the contract to a firm run by individuals with whom they had long-standing personal relations, without also considering whether other firms were qualified for the sole-source services, gave rise to the appearance of bias and therefore rendered the award legally invalid. In other words, emergency situations do not allow government institutions to part company with due process and engage in conflicted sole-source awards.
Turning back to the Canadian Ethics Commissioner’s conflict ruling, the Commissioner found that proactive conflict measures should have been adopted by the Minister upon first entering public office. This is not the first conflict case involving Canada’s federal Cabinet in recent years. Given prior high-profile cases involving Canada’s Prime Minister, including the SNC Lavalin and WE Charity scandals, the new ruling underscores the need for public institutions across all jurisdictions to implement proactive protocols to avoid becoming the next conflict of interest case study.
