August 2016 – We are pleased to provide you with an overview of the Voluntary Reimbursement Program (the “Program”) which is aimed at facilitating the recovery of amounts improperly paid by public bodies in connection with public contracts.
Objective The Program’s main objective is to enable the enterprises and individuals concerned (the “Participant”) to reimburse an overpayment made by a public body for any public contract signed after October 1, 1996 in order to avoid a situation whereby the Participant would face subsequent legal proceedings.
Deadlines The deadline for submitting a notice of intent to participate in the Program is November 1, 2016. The parties have until November 1, 2017 to reach a settlement. If no agreement has been reached before the deadline, a large number of legal proceedings could be initiated.
The process The process aimed at implementing the Program begins with the sending of a notice of intent mentioning the contracts for which the Participant was a bidder and the overpayment made by the public body concerned. Upon receipt of the notice of intent, the Director of the Program informs each public body concerned with regards to the list of public contracts submitted, the amounts involved and the relevant facts.
Once the notice of intent is received, the public bodies concerned may inform the Director of the Program about other contracts which were not mentioned by the Participant in the notice of intent. The Program protects the confidentiality of all documents submitted which cannot subsequently be received as evidence in court. No Program participant may be forced to testify or compelled to produce any document prepared or obtained for the Program. However, the names of all parties involved in the Program will be made public at the end of the process whatever its outcome.
Within 30 days following the filing of the notice of intent, the Participant must send a settlement proposal (the “Proposal”) and demonstrate its ability to pay the amounts due. The documents which make it possible to establish the overpayment must also be provided to the Director of the Program.
The parties will therefore have to begin negotiations on the basis of the Proposal submitted and agree on a settlement amount that will be acceptable for the Minister of Justice and the public body concerned. The parties will have until November 1, 2017 to reach an agreement, according to the timeframe established in the Program. At the end of this process, each public body will vote to approve the amount submitted by the Participant, except if all public bodies concerned approve the Proposal or if the Proposal solely pertains to government departments. Once the Proposal is approved, it will help avoid any subsequent legal action against the Participant, except in cases involving criminal prosecutions or public contracts which were not mentioned in the notice of intent.
Amounts to be paid The overpayment made by the public body concerned must be reimbursed in full by the Participant. Furthermore, once the Participant has filed the Proposal, a non-refundable amount equal to 2% of the total amount proposed by the Participant must be added as a deposit to demonstrate the seriousness of the Proposal. When an agreement is reached between the parties, an additional amount of 10% of the amount reimbursed must be provided to the Director to cover the Program’s operational costs. The 2% initially paid could be deducted from this latter amount.
Consequences for non-participation in the Program After November 1, 2016, several remedies and presumptions will be available to the Quebec government under the applicable law. Among other things, the government will be able to more easily prosecute individuals, including directors and officers, as well as enterprises which failed to comply with the awards process for public contracts.
In a judicial proceeding, statutory provisions will enable the government to invoke an alleged injury, as a result of fraud or fraudulent tactics, which can be as high as up to 20% of the total cost of work and bear interest from the time the contract concerned was awarded. In the event of a conviction, the court will automatically add a lump sum equal to 20% of any amount granted for injury to cover expenses incurred. To enforce an eventual judgment sentencing an individual or an enterprise, the law confers on the government a legal hypothec registered on the property of the individual or enterprise convicted.
Any procedure initiated which is aimed at recovering the amounts resulting from public contracts will be dealt with on a priority basis, thus speeding up the process leading to a court decision. It should be noted that in the event of a conviction for violation of a law mentioned in Schedule 1 of the Integrity in Public Contracts Act, the enterprise or individual convicted will no longer be authorized by the Autorité des marchés financiers to bid on public contracts. Furthermore, the individual or enterprise convicted under the Act to prevent, combat and punish certain fraudulent practices in the construction industry and make other amendments to the Building Act or the Act to provide for measures to fight crime in the construction industry will have its RBQ licence suspended or revoked. However, the Program does not exempt the individual or enterprise concerned from criminal prosecutions.