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Federal officials dismiss as "hypothetical" the notion that selecting an SNC-Lavalin Group Inc.-led consortium to rebuild and operate Montreal's Champlain Bridge might endanger the massive project.

In February, the RCMP charged Canada's leading engineering firm with fraud and corruption for alleged crimes committed in Libya between 2001 and 2011.

And under strict federal anti-corruption rules, a conviction would automatically disqualify SNC-Lavalin from doing federal work for a decade and retroactively force it off the contract.

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But the government appears oddly unconcerned about this possibility.

"If you're ready to pass judgment on what will happen in the future, fine. I won't," federal Infrastructure Minister Denis Lebel told reporters last week in Montreal.

Why the blasé attitude? Perhaps because Ottawa is quietly consulting with major industry associations on possible changes to Public Works and Government Services Canada's so-called "Integrity Framework." What automatically disqualifies SNC-Lavalin today might well be tolerable tomorrow.

The changes aren't just being driven by SNC-Lavalin's predicament. Numerous current government contractors – companies doing billions of dollars worth of federal work – find themselves in various stages of legal jeopardy, in Canada and abroad. Technology suppliers Hewlett-Packard Inc. and Siemens AG already have U.S. convictions. Toronto-based Brookfield Asset Management Inc., which has a contract worth as much as $22.8-billion over 14 years to manage federal buildings, is being investigated in the United States over allegations that an executive bribed officials in Sao Paulo, Brazil.

And last month, one current and two former IBM Canada Ltd. employees were charged with fraud, breach of trust and conspiracy after being caught in a probe of a Revenue Quebec contract by the province's anti-fraud squad.

"IBM is committed to the principles of business ethics and lawful conduct," the company said in a statement. "We are co-operating with local authorities investigating this matter."

The array of companies nervously watching the process goes way beyond this handful of companies. Public Works, the government's main purchasing arm, has consulted with 10 industry groups, representing thousands of companies involved in everything from aerospace and defence to drugs, high technology and real estate, as well the Canadian chapter of Transparency International.

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These groups aren't merely worried about some hypothetical future event, as Mr. Lebel suggests. Charges often lead to convictions, which under current federal rules, trigger automatic federal sanctions – sanctions that can destroy companies and jobs.

Companies are well aware that SNC-Lavalin's troubles could one day be theirs too.

The government refuses to acknowledge what many legal experts say is the fundamental problem. Eager to send a strong message that it wouldn't tolerate corrupt suppliers, Ottawa put in place an excessively rigid and sweeping regime – rules that, on paper, are tougher than in most other developed countries.

Inexplicably, the government somehow failed to anticipate that many of its leading suppliers would be caught in its policy dragnet.

The government isn't making any promises on when new rules might be in place, or how far it's willing to go in tweaking its policy or introducing new regulations.

"We have consulted with a number of industry associations and will be taking their feedback into consideration before making a decision on a path forward," said Amber Irwin, spokeswoman for Public Works Minister Diane Finley.

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Ottawa is believed to be looking at changes in three key areas – shortening the 10-year ban, creating an appeal and reinstatement process, and treating crimes committed by distant foreign affiliates differently than corruption on Canadian soil.

Industry groups want more leniency in all areas, particularly when companies can show that they've taken appropriate remedial action, such as putting in place strict internal controls and dismissing corrupt employees.

The problem, of course, is timing.

The Conservative government is headed into an election in the fall, leaving relatively little time to make changes, particularly if they require legislative or regulatory action.

Some suppliers are threatening to start laying off employees and pulling out of Canada in the next few months if the rules aren't softened.

This all puts the government in an awkward spot.

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It, quite rightly, doesn't want to appear soft on corruption.

But inaction could force the banishment of otherwise good companies, costing hundreds of innocent workers their jobs because of crimes committed by former employees in distant subsidiaries and markets.

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