Round Table on The Proposed Code of Conduct For Government Procurement Mr. Ron Lunau Ms. Phuong Ngo Ms. Catherine Beaudoin Gowling Lafleur Henderson LLP - Ottawa Procurement Group

Consultation on the draft Code of Conduct for Procurement Question 1: Is the purpose of the Code of Conduct for Procurement clear? If not, please explain. Question 2: Does the Code as currently formulated provide adequate information to help guide your actions? If not, please provide suggestions on other tools you would like to see. Question 3: Do you have suggestions about how to better promote the Code?

Amendment No. 021 to RFP: “ It is acknowledged by Canada that third parties were involved in assisting Canada in the preparation of documentation that forms part of this bid package. As Canada has taken the steps necessary to ensure the integrity of the bidding process, these third parties are not prohibited from submitting a bid. Bidders, in submitting a proposal for this requirement, acknowledge these facts and signify their acceptance of the process.” “ It is acknowledged by Canada that third parties were involved in assisting Canada in the preparation of documentation that forms part of this bid package. As Canada has taken the steps necessary to ensure the integrity of the bidding process, these third parties are not prohibited from submitting a bid. Bidders, in submitting a proposal for this requirement, acknowledge these facts and signify their acceptance of the process.”

The Washington Post, November 24, 2004 “Rumsfeld: Druyun Had Little Supervision By Thomas E. Ricks Washington Post Staff Writer Defense Secretary Donald H. Rumsfeld blamed an Air Force procurement scandal on high turnover in top management positions, which he said reduced the amount of ‘adult supervision’ of major weapons contracts over the past decade. Cautioning that his view isn’t yet ‘definitive’, Rumsfeld said at a Pentagon news briefing yesterday that he had recently been looking into the case of former Air Force acquisition official Darleen A. Druyun, who last month was sentenced to nine months in prison after admitting to granting favors in contracts to aerospace giant Boeing Co. before going to work there.”

Wall Street Journal, February 18, 2005 “Former Boeing Finance Chief Gets 4-Month Prison Sentence Michael Sears, Boeing Cos. former Chief Financial Officer, was sentenced to four months in prison for holding improper job talks with Darleen Druyun, a former senior Air Force procurement official, while she still had sway over contracts involving the company. Ms. Druyun, who also pleaded guilty, is currently serving a nine- month prison term at a minimum-security facility in Marianna, Fla., after she admitted giving Boeing special treatment on billions of dollars in high-profile contracts while negotiating jobs for herself and family members.”

Roundtable Topic 1  Responsibilities of vendors in regards to public servants Is the Code sufficiently clear in defining a vendor’s responsibilities?Is the Code sufficiently clear in defining a vendor’s responsibilities?

CBC News, September 12, 2005 “Inquiry Judge: ‘People Disgraced Themselves’ In Toronto Scandal The judge appointed to probe a computer-leasing scandal in Toronto criticized participants for greed, mismanagement and lying. Justice Denise Bellamy investigated how a $40 million computer contract between the City of Toronto and MFP Financial Services swelled to over $100 million. ‘Some people disgraced themselves, failed in their duty to the City, lied, put self-interest first, or simply did not do their jobs,’ she wrote. In reference to testimony from the city’s once powerful budget chief, Bellamy said that Tom Jakobek ‘drifted from lie to lie in a performance worthy of Pinocchio, his phenomenal memory conveniently failed him’ about a cash payoff he had received from an MFP salesperson.”

CBC News, May 5, 2006 “Sponsorship Player Brault Sentenced to 30 Months Advertising executive Jean Brault – one of the key players in the federal sponsorship scandal – was sentenced to 30 months in jail on Friday for defrauding the federal government. … He admitted in March to filing bogus invoices for $1.6 million for work of little or no value.”

CBC News, April 7, 2006 “Appeal Court Orders Coffin Jailed The Quebec Court of Appeal has overturned the conditional sentence given to Montreal advertising executive Paul Coffin and ordered him to serve 18 months in jail for his role in the sponsorship scandal. A lower court had given Coffin two years less a day, to be served in the community, and ordered him to give lectures to university business students on ethics after he pleaded guilty to 15 counts of fraud involving $1.5 million. …”

CBC News, June 19, 2006 “Guité Sentenced to 3 ½ Years in Prison Chuck Guité, the former civil servant who ran the federal sponsorship program, was sentenced Monday to 3 ½ years in prison for his conviction on fraud charges.”

Roundtable Topic 2  Responsibilities of public servants Will the Code be broad enough so that public servants will be more accountable?Will the Code be broad enough so that public servants will be more accountable?

New York Times, Friday February 23, 2007 “COMPANY NEWS; AIR FORCE BARS DEALS WITH BOEING SPACE UNITS The space units of Boeing were suspended by the Air Force yesterday from seeking military contracts after the Air Force concluded there ‘serious violations of federal law in Boeing’s use of documents from Lockheed Martin to win a $1.5 billion rocket contract. The Air Force also stripped seven launches from Boeing’s schedule, won in a 1998 competition to develop a rocket for military satellites. … ‘Our inquiry into Boeing found that they were in possession of thousands of pages of Lockheed Martin proprietary documents during the 1998 selection,’ Peter Teets, Air Force under secretary, said in a statement.”

Interim Administrative Agreement Between The Boeing Company And The United States Department of The Air Force  Employees responsible to comply with Ethics and Business Conduct Program  All employees to sign Employee Certification to comply with code of conduct  Compliance Assessment Team to establish robust compliance processes  Compliance Review Board to receive reports from Compliance Assessment Team and ensure risk areas identified, prioritized and followed up

Interim Administrative Agreement Between The Boeing Company And The United States Department of The Air Force  Promulgation of Marketing Policies and Procedures  Issue a procedure on Procurement Integrity  Ethics/Compliance Training Program for new employees  Revision of offer letters re: other companies’ proprietary information  Boeing Law Department to conduct investigations of potential violations

CanWest News Service, March 5, 2006 “The Scandal That Went Away” “The Scandal That Went Away”  An “obscure” government employee, Frank Brazeau, with Consulting and Audit Canada (CAC) suspended after contracting irregularities were uncovered by auditors for KPMG, including contracts improperly let to the family company of Quebec MP David Smith.  “Evidence of manipulation of procurement process, including apparent manipulation of evaluations”, as well as “evidence that in three cases contractors were directed to submit false or misleading invoices”

 PWGSC cancelled the two contracts handled by Smith’s family company and dismantled the CAC  It was discovered later by PWGSC that Smith and Brazeau were cousins and grew up togetherSmith and Brazeau were cousins and grew up together Brazeau – secretary of Smith’s Liberal riding associationBrazeau – secretary of Smith’s Liberal riding association  Evidence of “contract-splitting” found where bureaucrat found to have split a contract into chunks of $25,000 or less to avoid mandatory open competition  Bureaucrats at CAC suspended and disciplined.

Roundtable Topic 3  Accountability of Vendors  Should a vendor be held accountable for everything its employees do?

Roundtable Topic 4  Are there other issues not addressed in the proposed Code?  Do you want to make submissions to PWGSC? e.html

Breaches of the Code What does this mean to vendors? Existing remedies set out in existing legislation and policiesExisting remedies set out in existing legislation and policiesPLUS

Breaches of the Code (cont’d) Failure to limit enquiries and communications during bid solicitation period solely to identified contracting authority:Failure to limit enquiries and communications during bid solicitation period solely to identified contracting authority: may result in bid disqualificationmay result in bid disqualification

Breaches of the Code (cont’d)  False certification of compliance with the requirements of the Code will be developed and implemented to include: Bid inclusionBid inclusion Termination of contractTermination of contract Exclusion from future workExclusion from future work Sanctions imposed in relation to severity of conductSanctions imposed in relation to severity of conduct

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Thank you. Mr. Ron Lunau Ms. Phuong Ngo Ms. Catherine Beaudoin Gowling Lafleur Henderson LLP Tel: (613) Fax: (613)