A federal office tasked with policing government suppliers has blacklisted or suspended 23 contractors in its first two years while federal managers award nearly 3,000 contracts annually, according to a Department of Public Works memo.“Since its launch, the Office of Supplier Integrity and Compliance has taken action against various bad actors and continues to step up efforts to identify and respond to suppliers of concern,” said the May 5 memo Procurement.The department said four suppliers were suspended, another six were “provisionally suspended” and 13 were declared ineligible. None of the suppliers were identified in the memo.Blacklock's Reporter said federal managers awarded an average of 2,978 contracts annually over the same period.The Office of Supplier Integrity and Compliance opened May 31, 2024, with a mandate to identify potentially problematic government suppliers and address misconduct.“It supports the Government of Canada’s ability to identify suppliers of concern, take appropriate action to mitigate the risk they pose and promote ethical business practices,” the department said in a 2025 briefing note.The office oversees integrity issues involving a federal procurement and real estate system worth approximately $20 billion annually.“The new Office will play a significant role in safeguarding the federal procurement and real property systems which encompasses approximately $20 billion annually for procurement contracts, real property agreements, management of Crown-owned properties and rental payments on 1,690 lease contracts across Canada,” said the briefing note.Public Works said the office was intended to give Ottawa additional powers to address misconduct and fraud involving federal contractors.“The new Office improves the government’s ability to respond to emerging risks of misconduct and fraud while protecting the integrity of the federal procurement and real property systems,” said the note. “The Office provides new tools to address corporate misconduct on a government-wide basis.”The initiative followed scrutiny surrounding the $60 million ArriveCan scandal involving federal contracts to develop the pandemic-era border application..GC Strategies of Woodlawn, Ont., which became the lead contractor on ArriveCan and has since been blacklisted, billed the government at a rate of $2,600 an hour for work subcontracted to other companies.The RCMP later raided the company’s office as part of an investigation into alleged fraudulent billing.Federal Procurement Ombudsman Alexander Jeglic has also repeatedly raised concerns about irregular contracting practices, including a tactic he described as “bid low, let it grow.”Jeglic told the House of Commons government operations committee in an Oct. 31 submission the practice was suspected of being systemic.“The method of ‘bid low, let it grow’ was something the Office heard in interviews and is suspected of being systemic,” wrote Jeglic.He said some suppliers understand federal procurement rules well enough to identify weaknesses in statements of work that can later be used to increase the value of contracts through additional orders.“The methodology is to bid low to win the contract and then exploit the issues and inconsistencies of the Statement Of Work to grow the value of the contract beyond what was intended,” wrote Jeglic.The ombudsman said the extent of the practice remains unknown but warned it could pose a significant risk to taxpayers.“Efforts should be made to better understand this to mitigate the risks,” he wrote.
