Companies with ties to money laundering, tax evasion, drug crimes or bribing foreign officials — or connections with organized crime — will be allowed to continue contracts they already have with the federal government, despite the government’s tough new integrity framework, a government official revealed yesterday.

“The framework doesn’t cover companies that are already working,” assistant deputy minister Pierre-Marc Mongeau told members of the Government Operations committee. “So companies which already have contracts are not targeted by this new framework.”

“If people already have contracts, we have to respect the contracts.”

However, Mongeau suggested that the integrity framework could kick in if contracts are modified.

Mongeau, who is overseeing a billion-dollar renovation project on Parliament Hill, said he doesn’t believe any of the companies involved in the project would be ineligible for government business under the new rules.

“At the level of the major contracts we have on the Hill, it is businesses like PCL. They are companies which don’t currently have any accusations against them.”

Mongeau’s testimony comes only a week after Public Works Minister Rona Ambrose revealed that the government has adopted a tough new integrity policy because of fears that companies linked by Quebec’s Charbonneau Commission to corruption in public sector construction contracts would try to do business with the federal government.

Ambrose has said the government adopted the framework because it didn’t want to do business with those kinds of companies.

The new policy, which quietly went into effect in July, is the latest step in the evolution of rules on who can do business with the federal government.

In 2007, Public Works introduced changes to bar suppliers who had been found guilty of defrauding the government, had committed fraud under the Financial Administration Act or who had paid a contingency fee to someone subject to the Lobbying Act.

In 2010, Public Works added companies found guilty of corruption, collusion, bid-rigging or other anti-competitive activity to the list.

In July the list was expanded to include money laundering, participation in the activities of criminal organizations, income and excise tax evasion, bribing a foreign public official and drug offences.

For the first time, Public Works also decided to apply its integrity provisions to real estate transactions such as leasing agreements, letting of space and acquisition and disposal of properties.

In a policy notification note dated Nov. 9, the department said it also is scrapping the leniency provisions, which allowed those in the Competition Bureau’s Leniency Program to continue doing business with the government.

The notification said Public Works will honor its contracts with companies that are in the leniency program now — but will impose “heightened scrutiny and oversight and rigorous controls.” Those companies will be excluded from future contracts.

According to Mongeau’s testimony, similar provisions will apply also to companies found to have been involved in money laundering, criminal organizations, tax evasion, drug offences and bribing foreign officials.

Another loophole in the policy will allow businesses to continue to get federal government contracts if an executive suspected of one of those offences leaves the company or is fired before a conviction.

Nor will the integrity policy prevent a company from getting Canadian government contracts if they are convicted of an offence outside Canada, Public Works confirmed Thursday.

“Any Canadian or foreign company that has been convicted of any of these offences under Canadian law would be ineligible to do business with PWGSC,” the department wrote. “Foreign jurisdictions’ offences are not included in the provisions.”

NDP MP Linda Duncan, who has asked for the government operations committee to be briefed about the new integrity policy, said she was surprised to learn the government will not apply the integrity policy to contracts that already have been issued.

“They said it cannot be retroactively applied. My recollection is that the minister has said that it can be.”

Duncan said the integrity policy should also apply to subcontractors.

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