Ottawa insists it isn't softening its anti-corruption regime, as several key defence and technology suppliers face possible bans on selling to the government for up to 10 years.
A number of prominent government suppliers, including Hewlett-Packard Inc., BAE Systems PLC, and Siemens AG, could be sanctioned in Canada for crimes they committed in other countries.
Robert Card, chief executive of Montreal-based engineering firm SNC-Lavalin Group Inc., warned last week that the strict federal rules are like a "meat cleaver" that could destroy the company if it's ultimately convicted in an ongoing corruption probe.
But the government is strenuously defending its "integrity framework," which it significantly tightened up in March. Officials argue the purchasing rules already allow ample flexibility, including the power to wave the ban in the "national interest," on a case-by-case basis.
Ottawa said it has no plans to allow disbarred companies to win reinstatement for good behaviour – as the U.S., the European Union and many other countries do.
"This has been an evolving framework, but there are not plans in place to add a discretionary regime," said a senior government official, speaking on condition of anonymity.
"We do apply discretion, but narrowly. Each regime has its own characteristics and benefits. Yes, other countries do it differently."
The official declined to discuss specific cases, although the government has previously indicated it is looking at a number companies convicted of charges in other countries.
Hewlett-Packard, which last month pleaded guilty to bribery charges in the U.S., is the only supplier whose status the federal government has confirmed is under review.
Under the revised federal regime, companies seeking to sell products or services to Ottawa must certify that neither they nor their affiliates have been charged with a long list of criminal offences anywhere in the world, including bribery and fraud, in the past 10 years. Unlike the U.S. and the European Union, Canada doesn't offer disbarred companies a way to get back on side, such as dismissing employees involved or introducing internal anti-corruption controls.
Business groups and many legal experts complain the government's regime is unfairly harsh, denies due process and could have severe economic consequences, including lost jobs and investment. They also argue it will inflate the government's cost of buying goods and services.
The federal official acknowledged the new rules, brought in by Public Works and Government Services Canada, have caused some concern among companies that sell to the government.
"Every time you introduce rules you are going to have a transition period," the senior federal official said.
The official said there has been "an uptick" in requests from the industry for the government to explain its rules after the Globe and Mail reported that HP's status was under review.
"I'm not sure I would call it a backlash," the official said.
"We have received requests from industry groups to go out and do presentations [on the rule changes], and they may well have comments and feedback that they put on the table."
The bottom line is that the rules work as intended, the official insisted.
"An integrity framework that is rules-based can be seen as tough," the official explained. "What we are talking about are incentives, and I would suggest that a rules-based system is a pretty big incentive not to engage in criminal activity."
The official also pointed out that the government has in the past purchased vaccines from an unnamed pharmaceutical company that had overseas convictions because it was only available supplier, official pointed out.
"It's a mitigating factor, and it has been done," the official said.
Officials of HP, BAE and Siemens have all acknowledged they are reviewing the impact of the new Canadian rules.