Canada

A 2007 evaluation of the Crown Assets Distribution Program describes the authority of Public Works and Government Services Canada: &quoute;Under the 1996 Department of Public Works and Government Services Act, PWGSC operates as a common service organization responsible for the provision of asset-related common services including disposing of goods on behalf of departments. The Treasury Board Common Services Policy provides for the disposal of moveable surplus Crown assets as a mandatory service provided by the PWGSC common service organization Crown Assets Distribution. CAD derives its authority from the Surplus Crown Assets Act, which stipulates that federal departments and other bodies ask the Minister of PWGSC to dispose of their surplus assets.&quoute;

Asset disposals are managed on the Department of National Defence side by the DDSAL (Director Disposal, Sales, Artefacts and Loans). According to a Canadian government website, &quoute;the level at which individual disposal projects are managed depends on a number of factors, including but not limited to the value of the surplus asset, whether it is locally or centrally managed and if it contains controlled goods.&quoute; (PWGSC, &quoute;Frequently Asked Questions.&quoute;) When the disposal of surplus assets involves sales, the sale is managed through the Government of Canada Surplus section of Public Works and Government Services Canada (PWGSC).

PWGSC's &quoute;GC Surplus&quoute; website publishes a list of all disposals currently underway. This website includes all goods currently for sale and all goods which have been sold in the past.

When the sale involves controlled military assets, the sale is &quoute;subject to a wide variety of controls and regulations. Controlled goods are ordinarily sold to other nations and Original Equipment Manufacturers (OEMs). Under exceptional circumstances, however, the sale of controlled goods to industry may also be considered. These sales are subject to applicable policies and legislation, including but not limited to Controlled Goods Regulations (CGR) and the Surplus Crown Assets Act. Potential Canadian bidders must be registered under the Controlled Goods Program (CGP) of PWGSC&quoute; (Canadian Forces. &quoute;References: Disposal of Department of National Defence Surplus Infrastructure.&quoute;)

A 2007 evaluation of the Crown Assets Distribution Program describes the authority of Public Works and Government Services Canada: &quoute;Under the 1996 Department of Public Works and Government Services Act, PWGSC operates as a common service organization responsible for the provision of asset-related common services including disposing of goods on behalf of departments. The Treasury Board Common Services Policy provides for the disposal of moveable surplus Crown assets as a mandatory service provided by the PWGSC common service organization Crown Assets Distribution. CAD derives its authority from the Surplus Crown Assets Act, which stipulates that federal departments and other bodies ask the Minister of PWGSC to dispose of their surplus assets.&quoute;

The same report lists the Department of National Defence as the largest user of the Crown Asset Distribution Program (CAD). Items sold by DND include special items (such as vehicles, vessels and aircraft), machinery, tools, office furniture, household furnishings, appliances and other assets. DND asset sales accounted for 34% of all goods sold under the CAD program in 2006-2007.

The CAD division of PWGSC publishes all sales publicly and online (see Government of Canada Surplus). Reports on these disposals are made publicly available in a timely fashion. Moreover, surplus assets sold under the CAD Program form part of the Government of Canada's budget, and are therefore subject to external review mechanisms.

There is an internal audit capacity within PWGSC, which has published audits of the CAD division specifically (see Public Works and Government Services Canada). The PWGSC website indicates that another audit of the CAD division is scheduled to take place in 2015-16. Based on publicly available reports, no internal audits took place between 2006-2007 and 2014. In August 2009, the Chief Review Services conducted an audit of inventory surpluses and disposal practices.

The score of 3 has been awarded due to the long gap between audits.

RESPONSE TO REVIEWERS: Peer review 1's first remark is noted at the end of the commentary section. Added information and source from peer reviewer 2.

Canada does have a certain percentage of government defence spending that is devoted to secret items, for instance the Canadian special forces (Joint Task Force Two). This amount is generally thought to be small. One expert interviewed for the project estimated that it would be between 1 and 3 percent of the defence budget. However, the assessor was unable to find any publicly available sources confirming this estimate.

A 2003 analysis of the Canadian budget devoted to spending on the military estimates the budget of JTF2 pegs it at about 100 mln CAD, under 1% of the total defence budget.

The score of 0 has been selected as this information is not made public by the government.

The parliament and associated parliamentary committees are not given detailed information on secret / special operations expenses. They are provided with general budget information which does not have this spending disaggregated. Lagassé (2010) has raised questions about the committees' level of access to information, which undermines their ability to hold the government to account (for instance during the 2009 hearings on the issue treatment of Afghan detainees by Canadian Forces deployed with ISAF). The members of Canada's defence committees do not have security clearances, rendering them unable to oversee classified files.

Some oversight of the spending of intelligence agencies is performed by the Security and Intelligence Review Committee (for CSIS) and the Office of the Communications Security Establishment Commissioner (for CSEC), both of which have security clearances and are to have unfettered access to classified information. These are, however, not parliamentary bodies, though they report to Parliament. The SIRC Annual Report for 2012-2013 mentions financial pressures on CSIS, which indicates that the Committee does have access to CSIS budgets and reviews expenditures. However, the annual reports to Parliament do not contain classified information and there is no indication that Parliament or a legislative committee receives more information than what is included in the general budget.

There is no indication that a parliamentary committee reviews the specific expenditures of Joint Task Force 2, the Canadian special forces unit.

One expert interviewed for this project suggested that in the next five years there are likely to be parliamentary reforms that make the Canadian system function more like the US system, where defence and foreign affairs committee members are cleared to the highest level of security classification and therefore receive more detailed information on secret / special forces spending.

An example of secret defence and military spending is the construction of the new headquarters of Communications Security Establishment Canada, which has been classified as top secret, and is therefore not subject to oversight.

RESPONSE TO PEER REVIEWER 2: Agree, source and information added.

As a retired senior Canadian military official noted in an interview, the Canadian Parliament and its legislative committees are provided with general budget information which does not disaggregate secret / special forces defence spending. Detailed audits of these programs are not provided to legislators. Parliament does receive annual reports from both CSIS and CSEC, but they lack detail on specific policies and expenditures majority of review; more detailed reports are classified ( 'List of SIRC Reviews'; CSIS Annual Public Report 2013-2014; Communications Security Establishment Commissioner).

Lagassé (2010) has raised questions about the committees' level of access to information, which undermines their ability to hold the government to account (for instance during the 2009 hearings on the issue treatment of Afghan detainees by Canadian Forces deployed with ISAF). The members of Canada's defence committees do not have security clearances, rendering them unable to oversee classified files.

Aggregated expenditure information for the Canadian Security Intelligence Service (CSIS), and the Communications Security Establishment Canada (CSEC) are publicly available online (see Government of Canada).

The Canadian Constitution directs that all government revenue should be paid into the Consolidated Revenue Fund, and that all spending from the Fund has to be approved by Parliament. (OAG) The Canadian Department of National Defence is provided with an annual budget, which the Minister is required to abide by. Within this budget, there are secret items (for instance special forces costs). As a retired senior Canadian military official stated in an interview, off-budget expenditures not appear to be permitted in most cases.

In the case of disaster relief efforts, there may be extra-budgetary expenditures (those exceeding the authorized budget), but these are not secret. As an example, the Canadian Disaster Assistance Response Team (DART) is given an annual budget, but it may at times exceed that budget. For instance its deployment to the Philippines following Typhoon Haiyan was not accounted for in the budget. These additional expenditures must be approved by the Canadian parliament.

As stated in the previous question, there is no off-budget military expenditure, although there is evidence of extra-budgetary expenditure.

While the determination of what constitutes classified information on the grounds of national security is a somewhat subjective exercise in any jurisdiction, in Canada is it informed by a list of questions / checklist that determines the varying levels of classification (confidential, secret, top secret, etc.). These categories and checklists are easily accessible on the Public Works and Government Services Canada and in a presentation available on the Office of the Information Commissioner of Canada.

Canadian officials who make such a determination are required to make professional judgments when deciding on a level of classification. The Policy on Information Management, issued by the Treasury Board Secretariat, identifies deputy heads of government departments (and senior officials nominated by them) as those responsible for the overall functioning and implementation of the policy, and directs the Treasury Board Secretariat to perform oversight functions over it. Parliamentary oversight over access to information issues is provided by the Standing Committee on Access to Information, Privacy and Ethics (ETHI).

Everyone is entitled to request classified information, though parts of the information may be redacted. There is a process to appeal if the person requesting the information feels that it has been excessively redacted. The 1985 Access to Information Act lays out the legal grounds for refusing access to information. The Department of National Defence has a Access to Information and Privacy Director at National Defence Headquarters. The organization publishes completed Access to Information Requests on its website.

While the government had maintained a database of requests for information made in the Coordination of Access to Information Requests System, which allowed the public to quickly search and access previously released material, this has since changed. In 2008 the government announced the database would no longer be updated, which &quoute;effectively rendered the system obsolete.&quoute; Furthermore, in an investigation conducted in response to a parliamentary request, the Office of the Information Commissioner found a pattern of interference with access to information at one of the government departments ('Interference with Access to Information'). Most of the Commissioner's recommendations were implemented.

However, in a 2010-11 scorecard on departmental performance re. access to information, the Information Commissioner assessed Department of National Defence as 'above average'. However, no scorecards are available for later years.

The score of 4 was selected as the legal framework is in place and no concerns regarding National Defence specifically were reported.

RESPONSE TO PEER REVIEWERS: Relevant information added.

The assessor was unable to find any evidence of a commercial business owned by the Canadian military; none of the experts interviewed for this research were able to provide an example of a commercial business owned by the Canadian military. The government's list of Crown Corporations and the ministers responsible for them also does not list any enterprises owned by the Canadian Forces and the Financial Administration Act, which governs publicly owned enterprises, does not list any enterprises the Canadian Forces would be responsible for. Given the transparency regarding publicly owned corporations in general, it is unlikely that the Canadian Forces as an institution own businesses in secret.

According to an interview with a senior Canadian defence analyst, there are no military-owned business operating in Canada. While little evidence could be found to confirm this finding, none of the experts interviewed for this research were able to provide an example of a business owned by the Canadian military. The government's list of Crown Corporations and the ministers responsible for them also does not list any enterprises owned by the Canadian Forces and the Financial Administration Act, which governs publicly owned enterprises, does not list any enterprises the Canadian Forces would be responsible for. Given the transparency regarding publicly owned corporations in general, it is unlikely that the Canadian Forces as an institution own businesses in secret.

The Canadian Forces Code of Values and Ethics allows employees of the Department of National Defence to engage in outside employment in activities, provided that they don't cause an apparent, potential or real conflict of interest. (para 14) Should a possibility of a conflict of interest arise, employees are required to notify the Director for Defence Ethics. Conflict of interest issues are regulated by Defence Administrative Order and Directive (DAOD) 7021 (which is, however, not available online) and employees are required to resolve resolve any conflict of interest in a way that would prioritise their public functions.

Breaches of the Code, which would include unauthorised enterprise leading to a conflict of interest, are subject to disciplinary sanctions including termination of employment (para 7), as well as criminal sanctions laid out in the National Defence Act.

Assessor could find no evidence at all of unauthorized private enterprise by members of the Canadian Forces or the Department of National Defence.

Commitment to anti-corruption and integrity of government and military officials is evident in the political mandate of the RCMP National Division (“Part of the RCMP’s National Division’s mandate is to investigate cases which pose a threat to the political, economic and social integrity of Canada’s national interests, including corruption”). It is further embodied in the Department of National Defence’s Code of Ethics, which contains a statement by Canada's Chief of Defence Staff and Deputy Minister of Defence emphasizing the importance of ethical behaviour in the Canadian Forces. However, it needs to be noted that the statements contained in the Code come from 2012 and the Chief of Defence Staff who made them is no longer in the post.

The defence sector’s commitment to integrity tends to be emphasized publicly during military scandals, but has usually dealt with issues of sexual misconduct (The Globe and Mail) and a case of murder committed by a military officer. General Vance, CDS since mid-2015, emphasized his commitment to combating sexual harassment in the military.

However, a search of media articles and speeches by Canada's Minister of National defence and Chief of defence Staff turned up no references to corruption. In 2012, a former Chief of defence Staff expressed support for the procedurally troubled F-35 fighter-jet procurement program (it should be noted that no allegations of corrupt practices with regard to the F-35 were made, but significant procedural shortcomings have been identified).

RESPONSE TO PEER REVIEWER 2: Added information from reviewers and concur that score should be changed to 2 to reflect lack of public commitment to anti-corruption.

Corruption and bribery are criminalised in the Canadian Criminal Code (sections 121 and 426); the Criminal Code foresees sanctions of up to five years’ imprisonment for individuals. Bribery of foreign public officials is criminalised in the Corruption of Foreign Public Officials Act (CFPOA), which establishes sanctions of imprisonment of up to 14 years and fines determined by judges.

The 2012 Code of Values and Ethics, the National Defence Act and the Code Of Service Discipline, which apply to military and civilian personnel, make clear that military personnel are bound by the Canadian Criminal Code and its definition of offences, and will be sanctioned for offences. The Code of Values and Ethics also states that breaches of the Code will be subject to disciplinary and administrative measures, up to and including termination of employment and/or demotion. These sanctions are laid out in Directive DAOD 5016-0 'Standards of Civilian Conduct and Discipline' for civilian employees and in the National Defence Act for military officers. Since the Code includes provisions on conflict of interest and post-separation employment, it provides an additional layer of mitigation for corruption risks.

Corruption scandals are uncommon in Canada but there have been several high profile cases in recent years. The affair that became known as the &quoute;Sponsorship Scandal&quoute; resulted in a special commission, known as the Gomery Commission (officially the Commission of Inquiry into the Sponsorship Program and Advertising Activities), which resulted in extensive investigation and criminal charges of fraud for the federal civil servant at the centre of the corruption. However, other cases reflect less positively on the anti-corruption mechanisms in place in Canada. The former head of the intelligence watchdog committee (the Security Intelligence Review Committee), Dr. Arthur Porter has faced an inquiry for misappropriating $22.5 million.

Research has not uncovered other corruption cases involving the defence and security sector.

RESPONSE TO PEER REVIEWERS: AGREE. Score changed score from 4 to 3. Rephrased response.

The 2005 Public Servants Disclosure Protection Act (PSDPA) mandates chief executives of government departments to establish whistleblowing procedures which are confidential and protect the identity of the whistleblower (section 10 and 11). The Canadian Forces website advises Department of National Defence and Canadian Forces members that if they become aware of wrongdoing, they have &quoute;a responsibility to report that wrongdoing under the PSDPA or the Canadian Forces Disclosure Process;&quoute; the former applies to civil servants and the latter to members of the armed forces. The website advises any members who have been &quoute;subjected to any form of reprisal for having come forward in good faith to report a wrongdoing&quoute; to call the Canadian Forces Internal Disclosure Office.

The PSDPA also prohibits reprisals against whistleblowers (section 19) and establishes the post of Public Sector Integrity Commissioner, who investigates complaints of reprisal actions and who can also receive and investigate disclosures of wrongdoing from public servants. For military personnel, Principal of the Canadian Forces Internal Disclosure Office is the unit processing complaints related to reprisals.

One of the most recent high-profile examples of whistleblowing occurred when Canadian Forces General Daniel Menard was charged with sexual misconduct. There is evidence that in this case, whistleblowing was taken seriously by the Ministry of Defence and the officer charged later pleaded guilty to the offences. The misconduct was revealed by another officer, who faced no subsequent reprisals for reporting the wrongdoing.

However, organizations such as Democracy Watch and Canadian Journalists for Free Expression (CJFE) have raised concerns about whistle blower protections in Canada, pointing out that the Public Sector Integrity Commissioner (who is mandated with investigating public sector mismanagement and protecting whistle blowers) has been ineffective at investigating allegations of wrongdoing, protecting whistle blowers and sanctioning offenders. Military personnel are also in a more difficult situation than their civilian counterparts, being exempt from the potential additional layer of protection afforded by a non-departmental reporting channel.

RESPONSE TO PEER REVIEWER 2: AGREE. Score changed from 4 to 3.

RESPONSE TO PEER REVIEWER 1: The PSDPA and the institutional architecture including the Canadian Forces Internal Disclosure Office and the Office of the Public Sector Integrity Commissioner were created in 2005 and 2007 respectively, indicating a situation qualitatively different from that in the 1990s.

Officials in sensitive positions are required to acquire and maintain secret security clearances. Biographical information is publicly available about all of the senior officials with sensitive positions relating to defence procurement.

The Federal Accountability Act and Conflict of Interest Acts put in place policies around conflicts of interest for officials in these sensitive positions (including for example Deputy Ministers and Assistant Deputy Ministers). The definitions section (2-1) of the Conflict of Interest Act defines &quoute;public office holder,&quoute; including ministers, members of ministerial staff, ministerial advisers and others. The officials in these positions are subject to the provisions of the Federal Accountability and Conflict of Interest Acts; both these acts define the officials they apply to, thus identifying at least some of the posts considered to be sensitive.

The Department of National Defence and the Canadian Forces Code of Values and Ethics addresses conflict of interest and post employment restrictions for military and defence employees as does the Defence Administrative Orders and Directives (DAODs) 7021 series.

However, no detail regarding recruitment, rotation, time in post, or targeted training for employees in, for example, procurement-related positions, was available publicly.

RESPONSE TO PEER REVIEWER 2: Added detail as suggested.

The Canadian Department of National Defence (DND) publishes the number of military personnel, reservists and civilian employees in the Canadian Forces (CF) and DND: 68,000 Regular Force members, 27,000 Reserve Force members and 24,000 civilian employees. These numbers are confirmed in the DND Report on Plans and Priorities for 2015-2016.

The rates of pay, allowances and benefits for all military personnel are openly published on the Canadian Forces website. The rates of pay for all civilian personnel, as members of the Canadian public service, should be published on the Treasury Board Secretariat website and the Government of Canada website dealing with pay rates. The rates of pay and allowances of Ministers are published on the Parliament of Canada website. The assessor was, however, unable to find rates of pay for executive positions within the Department of National Defence.

RESPONSE TO PEER REVIEWER 2: Agree, score changed from 4 to 3 due to lack of information on pay and allowances for senior Defence staff.

The Policy on Terms and Conditions of Employment mandates the Treasury Board Secretariat to determine and regulate 'pay, hours of work, leave provisions and other terms and conditions of employment', and points to Public Works and Government Services Department as the entity responsible for the administrative processes necessary to disburse pay, such as maintenance of a pay system and conveyance of salaries. This is done on the basis of the Pay Disbursement Administrative Services Order; online documentation indicates that this Order was adopted in 2011. The architecture of an established pay system for civil servants in therefore in place and publicly available. Information regarding the Pay Modernization Project carried out by the Public Works and Government Services Canada further indicates that there is a well-established system of pay which is currently being modernised.

Within the Department of National Defence, the Director Pay Policy and Development is responsible for setting pay rates and administering pay systems. Publicly available information indicates that basic pay is established and non-discretionary (this was confirmed by experts interviewed), and that deductions can only be made in specific circumstances such as non-rendering of duties (Queen's Regulations & Orders, Pay Rates). Another mechanism by which personnel's pay can be withheld is through disciplinary action. Summary Trials and Court Martials, as laid out in the National Defence Act, can result in financial penalties against personnel.

As two experts interviewed for the research noted, Canadian Forces personnel receive their pay on time and in the correct amount. Reimbursements take time, but this is typically because of waiting for approvals.However, there have been reports of delays of up to two years in the remittance of severance payments for reserve officers leaving the force (Pugliese).

There is an established appointment system for the selection of military personnel at the middle and top management level, which is laid out in Defence Administrative Order and Directive 5031-8, 'Canadian Forces Professional Development'. This document establishes guidelines for promotions to various levels, or &quoute;Development Periods&quoute; in the Canadian Forces. According to an interview with a former Canadian Military Procurement Specialist, the system is transparent and objective, in the sense that the institution publishes information on who was appointed; the system is also based on performance reviews. There are military promotions review boards. The system of promotion is independent from the chain of command. Oversight is provided by the Military Grievances External Review Committee, which can review promotions criteria and particular decisions.

However, concerns have been raised that the department relies excessively on consultants who were previously members of the Canadian Forces or ex-employees of the Department of National Defence (Ivison).

RESPONSE TO PEER REVIEWER 2 and PEER REVIEWER 1: Concerns incorporated. Score 4 maintained as the strength of the system warrants it.

Promotions in the Canadian Forces are based on the Canadian Forces Personnel Appraisal System (CFPAS). As one report noted: “The CFPAS consists of two inter-related processes administered at the unit level: the PDR [Personnel Development Review] and the PER [Personnel Evaluation Report]. The purpose of the PDR is to provide Regular and Reserve Force personnel a standardized format for feedback in which the supervisor and subordinate can discuss performance, potential and career development. The purpose of the PER is to assess and report the subordinate’s performance and potential for retention and advancement based on MOS [Military Occupational Structure] and rank specifications and position requirements set by the supervisor during the PDR sessions.”

Promotion decisions can be reviewed by the Military Grievances External Review Committee on the basis of complaints; the case quoted indicates that the Committee works on the basis of extensive promotion criteria. The Committee publishes the outcome of complaints brought under this system.

Career paths and expectations at different levels of &quoute;Development Periods&quoute; are laid out in Defence Administrative Order and Directive 5031-8, Canadian Forces Professional Development. The Canadian Forces promotion system is based on performance reviews. There are military promotions review boards. The system of promotion is independent from the chain of command. There is no evidence of promotions which were not based on merit.

Canada does not have a system of compulsory conscription. The Canadian Forces is an all-volunteer force.

There is no conscription or voluntary conscription in the Canadian Forces - this is an all-volunteer force (hence the score of N/A).

The Canadian Forces have a policy of refusing bribes during the voluntary recruitment process. Accepting bribes in exchange for preferred postings is contrary to the Department of National Defence and Canadian Forces Code of Values and Ethics.

In 2006, Canada's National Defence Ombudsman conducted a thorough review of the Canadian Forces recruiting system, including an in-depth investigation of over 300 complaints made by recruits. The major problems were found to be the length of the recruitment process, a lack of information and follow-up from recruiters and problems receiving accurate information on recruitment incentives. The issue of bribery and the solicitation of payments in exchange for preferential posting was not raised in these complaints, even though the Ombudsman provided a confidential avenue to register them.

No more recent sources which dealt specifically with bribery in the recruitment process could be found. It is assumed that bribery of recruitment officers is extremely rare and has not been documented in recent years.

According to two experts interviewed for this research, the Canadian government's payroll systems make it highly unlikely that there are 'ghost soldiers' on the payroll who are not currently employed. Official publication of pay rates and numbers of civilian and military employees, along with the strong pay systems controlled by the Treasury Board Secretariat, the Public Works and Government Services Department, and the Director, Pay Policy and Development at the Department of National Defence, make the existence of ghost soldiers highly unlikely. The separation of chains of command and payment (the Pay Policy and Development unit and the human resources management at the Department of National Defence are not part of the command chain) also mean that the pay chain makes it difficult for anyone to benefit directly from ghost soldiers on the payroll.

The chain of command is strictly separated from the chain of payment through the Canadian Department of National Defence and Canadian Forces.The National Defence Act states that payments and allowances are determined and regulated by the Treasury Board. This does imply that management of military personnel payments falls outside the purview of military chain of command. With basic pay being non-discretionary and allowances and deductions from pay set through policies and orders, there is little space for commanding officers to influence soldier pay. The only such mechanism is disciplinary action. As per the National Defence Act, both Summary Trials and a Court Martial can result in financial penalties, and these decisions are not taken by individual officers.

Moreover, as a retired senior Canadian military official stated in an interview, there is a human resources section at the Department of National Defence responsible for paying personnel salaries, which is independent from the chain of command. Pay policy and administration is under the direction of Director, Pay Policy and Development, separate from the command chain.

RESPONSE TO PEER REVIEWER 1: Agree, incorporated relevant information.

There is a Values and Ethics Code for the Public Sector (fairly general) and the DND and CF Code of Values and Ethics, which applies to both civilian employees and military personnel and is publicly available. The Code is detailed, setting out general values as well as specific approaches to issues such as gifts and hospitality and post-employment activities; it also refers to the Policy on Conflict of Interest and Post Employment as a source of specific regulations. The Code also refers to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, although it doesn't cover bribery directly.

The Code is considered to be a directive which applies to all employees; breaches can be met with administrative and disciplinary sanctions up to termination of employment, and with sanctions foreseen in the Code of Service Discipline for military personnel, directive DAOD 5016-0 (Standards of Civilian Conduct and Disciplin), and under the National Defence Act. The Chief Review Service is responsible for the implementation and monitoring of the Act and the associated Defence Ethics Programme.

There is evidence that breaches of the Canadian Forces' Code of Conduct are effectively addressed, and that the results of prosecutions are made publicly available. The Code states that breaches can be addressed through administrative and disciplinary sanctions up to termination of employment, as well as with sanctions foreseen in the Code of Service Discipline for military personnel, directive DAOD 5016-0 (Standards of Civilian Conduct and Discipline), and under the National Defence Act if the breach is also a criminal offence. The Chief Review Service is responsible for the implementation and monitoring of the Act and the associated Defence Ethics Programme.

Administrative actions are not made publicly available to protect the privacy of the member. However, if they are charged with an offence under the National Defence Act, the results are made publicly available. Information about all past and upcoming Court Martial cases can be accessed by the public through the Chief Military Judge's website.

There have been high-profile recent prosecutions for misconduct. Most notably, Naval Intelligence Officer Sub-Lt. Jeffrey Paul Delisle sold military secrets related to the Stone Ghost Computer system to Russian Military intelligence (CBC) from 2007 until he was eventually arrested in 2011.

RESPONSE TO PEER REVIEWER 1: Agree, incorporated relevant information.

For military personnel, the Canadian Defence Academy includes ethics training as part of the Leadership Development continuum, rather than as a standalone course. Code of conduct training--which includes anti-corruption as a value--is ingrained in all officer and non-commissioned officer training. This training is typically called ethics and morality training, and is repeated constantly throughout the careers of military and civilian staff. While military personnel view ethics training as covering corruption risks, the training is not necessarily tailored to &quoute;anti-corruption&quoute; and may not alert military staff to specific areas of corruption risk. Some positions which are likely to encounter corruption on a regular basis, such as Logistics Officers responsible for provisioning Canadian Forces under deployment, are given special training on how to avoid corruption.

Civilian staff are encouraged to take an online course and learning materials, including a film and in-depth case studies, are available (the latter are online and include some studies on conflict of interest issues). However, though training--including ethics training-- repeated throughout the careers of military and civilian staff, the assessor was not able to discover if training is provided on at least an annual basis and whether it is compulsory for all staff (the publicly available website encourages DND staff and military personnel to complete an online course, but it is not clear how wide the training is).

RESPONSE TO PEER REVIEWER 1: Agree, score changed to 2.

The National Defence Act states that offences defined under the Canadian Criminal Code (which include corruption and bribery) are to be prosecuted through service courts (section 130). Section 180 stipulates that, unless otherwise decided and for specific reasons, the proceedings of the Court Martial are to be public, and the Canadian Forces publish information on all court martials online.

There have been high-profile recent prosecutions for misconduct, most notably the case of a Naval Intelligence Officer who sold military secrets related to the Stone Ghost Computer system to Russian Military intelligence (CBC) from 2007 until he was eventually arrested in 2011. Canadian media has followed the case closely. Another high profile public prosecution of a high-ranking member of the Canadian military is that of Colonel Russell Williams, who was convicted of sexual assault and murder (Thornhill). More recently, the former Commanding Officer of Canadian Forces Base Wainwright, Alberta was found guilty of sexual assault and sentenced in April 2014.

Facilitation payments occurring within Canada are covered under the articles of the Criminal Code relating to bribery and corruption. Since the Code prohibits the giving and receiving of any benefit by public officials, it can be construed to include facilitation payments.

Bribery of foreign officials is covered under the Corruption of Foreign Public Officials Act (CFPOA). The CFPOA is enforced by the Royal Canadian Mounted Police (RCMP), which in 2008 established the International Anti-Corruption Unit (IACU) to focus on investigating and preventing international corruption. The IACU was replaced in 2013 by the RCMP's new National Division.

Canada has a limited track record of effectively enforcing this legislation, with only three convictions occurring since its passage in 1999. Transparency International and the OECD have criticized Canada's anti-corruption legislation for failing to cover crimes committed by Canadians and Canadian companies abroad, and for making exceptions for &quoute;facilitation payments,&quoute; or &quoute;small payments made to a foreign public official for the purpose of securing the performance of administrative acts of a 'routine nature' that are part of the official’s duties or functions.&quoute;

In recent years Canada has amended this legislation to address these shortcomings. Bill S-14, An Act to Amend the Corruption of Foreign Public Officials Act, passed in 2013, strengthened the penalties available under the CFPOA, committed Canada to removing the facilitation payments loophole (though at a later date to be determined by the federal cabinet), and added nationality jurisdiction (crimes committed abroad by Canadians) to the pre-existing territorial jurisdiction (crimes committed in Canada). Nationality jurisdiction is critical because facilitations payments of foreign officials are almost by definition made outside of Canadian territorial jurisdiction. Canada recently reported that there are presently 35 active investigations underway pursuant to the CFPOA.

Sanctions prescribed by the Criminal Code include up to fiver years' imprisonment; the CFPOA stipulates imprisonment of up to 14 years and fines determined by judges.

As of August 2015, the facilitation payments exemption has not been removed from the CFPOA, hence the score of 2 has been selected.

More generally, Canadian military doctrine includes integrity as one of the country's core military values. This commitment &quoute;obligates CF members to the highest possible levels for honesty, uprightness of character, honour, and the adherence to ethical standards. Additionally, integrity demands that the actions of all CF members are consistent with established codes of service conduct and institutional values.&quoute; As an illustration, the Canadian Forces' Statement of Defence Ethics includes the following principles which apply to corruption: &quoute;DND employees and CAF members shall serve the public interest by: i) Acting at all times with integrity, and in a manner that will bear the closest public scrutiny; an obligation that may not be fully satisfied by simply acting within the law. ii) Never using their official roles to inappropriately obtain an advantage for themselves or to advantage or disadvantage others. iii) Taking all possible steps to prevent and resolve any real, apparent or potential conflicts of interest between their official responsibilities and their private affairs in favour of the public interest.&quoute;

The CF Code of Values and Ethics states that a chapter on values in operations will be developed, however, it does not appear to be available at the time of research.

The Canadian Forces Land Operations Manual makes specific references to corruption while on international missions. In particular section 208 of the Manual makes specific reference to corruption among the local population, noting that &quoute;for example, corrupt behaviour by the local constabulary cannot be chalked up to cultural eccentricity and ignored&quoute;. The Manual also describes corruption as one of the challenges to achieving the desired end state of the operation.

RESPONSE TO PEER REVIEWER 1: Added relevant sources.

Training for Canadian Forces commanders includes modules on leadership and ethics, which are interpreted by military officials as covering corruption, but may not deal directly with corruption risks on operations. The Canadian Forces' Statement of Defence Ethics identifies integrity as a key principle, stating that &quoute;DND employees and CAF members shall serve the public interest by: i) Acting at all times with integrity, and in a manner that will bear the closest public scrutiny; an obligation that may not be fully satisfied by simply acting within the law. ii) Never using their official roles to inappropriately obtain an advantage for themselves or to advantage or disadvantage others. iii) Taking all possible steps to prevent and resolve any real, apparent or potential conflicts of interest between their official responsibilities and their private affairs in favour of the public interest.

There has also been an effort to provide pre-deployment training which outlines what kind of corruption they may encounter during their deployment and what their response should be. For instance, the Canadian Forces Land Operations Manual, section 208, specifically refers to corruption experienced in field operations, stating that &quoute;corrupt behaviour by the local constabulary cannot be chalked up to cultural eccentricity and ignored.&quoute;

Civilian staff are encouraged to take an online course and learning materials, including a film and in-depth case studies, are available (the latter are online and include some studies on conflict of interest issues). The CF Instructor's Manual on ethics contains case studies dealing with corruption on operations, but it has not been possible to verify whether this is mandatory for all commanders at all levels.

The assessor was not able to find examples of mishandling of corruption issues, which is one of the reasons why the score of 3 was selected.


RESPONSE TO PEER REVIEWER 1: Score of 3 maintained - now in line with answer to Q52, which was raised to 3.

While there is not a specific group of corruption monitors in the Canadian Forces, there are regular and frequent inspections of deployed troops through the Canadian Forces' chain of command. Before administrative or disciplinary action is taken, there is an investigation. The adjudicating officer will then ask questions such as whether it is a first-time offence, whether it was malicious, whether there was personal benefit, whether it was a gross error of judgement, etc. Based on these questions, a determination will be reached of whether administrative or disciplinary action will take place.

The Canadian Military Police officers are tasked with supporting CF missions through 'policing and operational support' and investigating incidents involving criminal offences, both in Canada and abroad. However, the assessor was unable to find information about whether they are specifically monitoring corruption risk or violations of the Code of Values and Ethics. However, in a high-profile case of a general removed from his position in 2010 for sexual misconduct, the issue came to light as a result of regular inspections of conduct, which were then reported through the chain of command. According to the retired senior Canadian military official interviewed, regular inspections are an ongoing part of Canadian Forces operations while deployed. In this, the violation was reported to his commanding officer, through the chain of command.

RESPONSE TO PEER REVIEWER 2: AGREE. Additional information about specific group of corruption monitors. Accordingly, changed score from 3 to 1, as suggested.

The Canadian Forces are generally not responsible for contracting while deployed on operations. Major contracts are subject to civilian oversight and management, as they would be in Canada. These contracts are managed by Public Works and Government Services Canada (PWGSC) and the Department of National Defence. One exception is Logistics Officers, who are responsible for securing food, provisions, and water during deployments. These officers receive special training on how to perform local provisioning while minimizing the risk of corruption. The National defence and the Canadian Armed Forces Website states that a Logistics Officer will &quoute;attend the Canadian Forces School of Administration and Logistics...for a common introductory course on logistics support. Then Logistics Officers will undergo logistics training relating to the branch of the service to which they have been assigned&quoute; and that there may be opportunities &quoute;to develop specialized skills through formal courses and on-the-job training.&quoute;

The CF training manual includes case studies on contracting; therefore, there is reason to believe that this is an issue which does appear in training for officers. However, it was not possible to verify whether specific anti-corruption training for operational contracting was provided for relevant staff. David Perry (2009) noted that it wasn't clear whether the CF had sufficient experience contracting personnel to manage operational contracting.

RESPONSE TO PEER REVIEWER 2: Useful sources added. Given there are no specific guidelines or training addressing corruption risks in contracting in operations, score 2 has been awarded.

The Canadian Forces do not engage PMCs domestically; they are used exclusively on foreign operations, most notably in Afghanistan, where their use increased substantially. As one 2010 report noted: &quoute;The Canadian Forces pointed out that private security guards - Afghans hired by the contractors - are never used in offensive operations. Like all NATO countries...Canada relies on private firms under contract with NATO to provide security for supply convoys through Pakistan.&quoute; In addition, the CF used private security companies to secure strategic lift (Perry).

The main mechanisms of oversight are domestic laws where the PMCs operate (for instance in Afghanistan), and contract language with the Canadian government. These contracts with PMCs in conflict zones are subject to oversight and scrutiny by the Department of National Defence and PWGSC. One exception may be Canadian special forces units, which may have PMCs working for them which are not subject to the usual oversight. (this is likely to represent a small percentage of overall PMCs operating on behalf of the Canadian Forces). However, shortcomings in the contracts - including their conclusion by inexperienced staff and lack of tenders for particular assignments - suggest that this is not an effective oversight method (Perry, Brewster 2012).

A spokesperson for the Canadian Department of Foreign Affairs said in 2011 that &quoute; the department has no plans to draft an oversight policy and believes the current reporting mechanisms - applied through contract language - are sufficient.&quoute; However, the official opposition's foreign affairs critic called it &quoute;appalling [that] Ottawa had no mechanism to govern hired guns.&quoute;

No specific examples of corruption by PMCs have been found.

RESPONSE TO REVIEWERS: Score of 2 selected on the basis of additional information.

Canada has a range of legislation covering defence and security procurement, including the National Defence Act, the Department of Industry Act, the Financial Administration Act, the Defence Production Act, and the Department of Public Works and Government Services Act. In addition, aspects of defence procurement are covered in WTO provisions as well as NAFTA legislation. Canada also has an intra-national trade agreement, the Agreement on Internal Trade (AIT), which relates to defence procurement. The Public Works and Government Services Canada Supply Manual, the Treasury Board's Procurement Review Policy and the Department of National Defence's Project Approval Guide and Project Approval Directive all provide governance structures for military procurement as well.

This body of legislation includes specific corruption clauses. Canada's WTO, NAFTA and AIT obligations allow for redress to the Canadian International Trade Tribunal (CITT), which provides independent scrutiny.

There is a distinction between whether the defence procurement cycle process is disclosed and whether details of individual procurement decisions are disclosed. In Canada, the process of defence procurement is fully disclosed. The specifics of the defence procurement cycle can be found in the Public Works and Government Services Canada manual, for instance in Annex 1, which lays out the respective responsibilities of PWGSC and the Department of National Defence in the defence procurement cycle. The Manual contains directions to conduct a life-cycle analysis of the project, including maintenance and repair costs, and covers the contracting process. The need to conduct life-cycle analysis in the acquisition process is mandated by the Treasury Board of Canada, and the Board's Policy on the Management of Materiel defines 'life-cycle' as encompassing the entire process from the setting of requirements to disposal and/or replacement of assets.

Some items with national security implications may be handled differently, but the process for those procurements is publicly available as well. Specifically, single sourcing may be used when &quoute;The need is one of pressing emergency in which delay would be injurious to the public interest&quoute; (PWGSC, The Procurement Process).

There are many analyses (for instance Williams, 2014; Defence and Security, 2009) which outline the defence procurement cycle, including its shortcomings. There have also been several examples (see Leblanc and Chase) where specific aspects of defence procurements are kept from the public. In general, however, there is a policy in place to disclose defence purchases (see, for instance, Canadian Forces), and the process itself is disclosed in detail.

RESPONSE TO PEER REVIEWER 1: Score maintained. Failure to disclose specific purchases is a different issue to that of disclosing the process, and the process is available in detail.

Various departments within the Government of Canada play a role in defence procurement oversight. The Auditor General is empowered to conduct audits of government programs, including defence procurement. The Financial Administration Act empowers the Treasury Board to ultimately approve funding for Department of Defence procurement proposals and projects; the Treasury Board Secretariat ensures that procurement proposals are in compliance with Treasury Board submission guidelines. The House Standing Committee on National Defence provides parliamentary oversight of Defence, including procurement projects.

The Canadian government has published a Defence Procurement Strategy (DPS) which has resulted in new mechanisms of oversight. These include the publication of a Defence Acquisitions Guide in June 2014, the establishment of a third-party Defence Analytics Institute, the creation of an independent third-party challenge for military requirements within the Department of National Defence (the panel, created in June 2015, is to verify the requirements for all procurement projects above 100 million CAD and for select projects of lesser value), and the creation of a Defence Procurement Secretariat within Public Works and Government Services Canada.

The Office of the Procurement Ombudsman provides an additional layer of independent oversight, resolving particular disputes and reviewing government contracting procedures. OPO reports and summaries on investigations can be found online.

While these measures may improve oversight once they are well established, there have been several recent lapses in Canada's current procurement oversight system. As a Fraser Institute report put it: &quoute;The troubles of the sole-sourced F-35 purchase have been well chronicled in the media. Skyrocketing development costs, unclear price figures, poor oversight, and a damning Auditor General’s report resulted in the entire purchase being halted and oversight being stripped from the DND and given to the Department of Public Works and Government Services (DPWGS).&quoute; Questions have also been raised about the procurement process of Canada's Arctic patrol vessels (see Policy Alternatives).

RESPONSE TO REVIEWERS: Incorporated relevant information.

The Canadian government has committed to making procurement plans more widely known and information on current and future procurement processes is widely available (DAG, Canadian Forces). The recently published Defence Procurement Strategy was augmented by a Defence Acquisition Guide (DAG) published in June 2014. The DAG &quoute;will ensure industry and potential bidders are aware of the Department’s long-term investment areas&quoute; (Government of Canada) and it lays out future acquisition projects for the next 20 years. So far, the DAG has been updated annually (first edition in June 2014 and the second edition in June 2015).

In the meantime, however, there have been several examples (see Leblanc and Chase) where specific aspects of defence procurements are kept from the public. Specifically, with respect to the procurement of the F35 Joint Strike Fighter, an Auditor General report found that the Department of National Defence misled the costs of the program in its statements to parliament.

RESPONSE TO PEER REVIEWER 1: Added relevant information.

Public Works and Government Services Canada publishes an Integrity Framework, which bars suppliers from doing business with PWGSC if they have been convicted of any of a number of crimes, including fraud, collusion, bid-rigging, bribery, and income tax evasion, among other offences. The Canadian government's general procurement rules, including anti-corruption clauses, apply to bids related to Department of National Defence and Canadian Forces projects.

Public Works and Government Services Canada, jointly responsible for defence sector procurement, publishes a Procurement Code of Conduct. Defence Construction Canada, a crown corporation responsible for managing defence sector construction projects in Canada, also publishes a Procurement Code of Conduct. Both Codes of Conduct stipulate that &quoute;Vendors must respond to the government's solicitations in an honest, fair and comprehensive manner, accurately reflect their capacity to satisfy the requirements stipulated in the bid/offer/arrangement or contract documents, and submit bids/offers/arrangements and enter into contracts only if they will fulfil all obligations of the contract.&quoute; Anti-corruption requirements are typically included in bids/offers/arrangements/contracts issued by the Canadian government.

These provisions, however, do not amount to a requirement that companies contracting with the government have a comprehensive ethics and compliance programme. There is a requirement of providing comprehensive information on the company's record in terms of obeying the law, any convictions for bribery, fraud, etc., and a requirement to speedily update any changes in the company directorship (as company directors being convicted for corruption-related offenses is also grounds for debarment); the Integrity Framework states that debarred supplies could be reinstated if they undertake 'remedial action', but it is not clear what this amounts to. The Integrity Framework also refers to suppliers, making bidding companies responsible for not contracting with suppliers who had committed corruption-related offences, but there is no requirement of a compliance programme. Overall, the arrangements appear to fall short of a requirement for a compliance, ethics and anti-corruption programme, which is the criterium here.


RESPONSE TO PEER REVIEWER 1: Agree. Score changed from 4 to 2 following more detailed analysis.

According to an interview with a former Canadian Military Procurement Specialist, defence procurements flow from the Canada First Defence Strategy (CFDS) in a very clear manner and the Defence Acquisition Guide 2015 refers to the Strategy as a foundational document for procurement projects. The CFDS is publicly available.

However, the CFDS (released in 2008) is now quite dated, and the government has conceded that it no longer reflects current fiscal realities, with &quoute;defence officials quietly declared it unaffordable in 2011, only three years into what was supposed to be a 20-year run.&quoute; (Berthiaume, 2015). Indeed as one report noted, the government has been promising to update the Canada First Defence Strategy since 2012 (Berthiaume). Analysts (see, for instance Pugliese) suggest that the CFDS needs significant amendments to bring its plans into line with current conditions. Moreover, as the CFDS refers to the necessity for the CF to be able to conduct a full spectrum of operations, it provides limited guidance regarding prioritisation (Ivison). In a report on Canada's National Shipbuilding Procurement Strategy, the Auditor General stated that the dated CFDS and the fairly general nature of the requirements contained in the Strategy risk the creation of an 'ambition-capability gap' in the procurement process.


RESPONSE TO PEER REVIEWER 1: Agree. Score changed from 4 to 3. Score 2 would be too low as most procurement does fall within the wide specifications of the CFDS.

Canada's defence purchases are based on clearly identified requirements. As a Canadian Military Procurement Specialist noted in an interview, there are &quoute;no opportunistic or unplanned purchases.&quoute; While the Department of Public Works and Government Services has the overall responsibility for managing contracting and the overall procurement process in defence procurement, it is the Department of National Defence which sets the specific requirements for materiel. Defining the SOR is an integral part of the procurement process as defined by the Department of Public Works and Government Services.

However, it should be noted that there have been very public controversies relating to the manner in which requirements were defined. Canada's most high profile defence procurement controversy, the purchase of the F-35 Joint Strike Fighter, related to a sole-sourcing contract.The level of secrecy involved in this procurement, as well as misleading cost estimates which were questioned by the Office of the Auditor General, resulted in the government being declared in contempt of parliament in 2011. The Auditor General's report in 2012 &quoute;lambasted the military's opaque process to buy F-35 fighter jets to replace the aging CF-18 fleet.&quoute; (Beeby, 2015). Questions are also being raised about the brief amount of time between when the statement of operational requirements (SOR) was written and when Defence Minister Peter MacKay announced the purchase: &quoute;it would normally take one to two years after a statement of operational requirements is issued to hold a competition to find a product and sign a contract with a supplier&quoute; (CBC news, 2012).

As a result of the controversy, the federal government &quoute;which backed off $45-billion plans to buy the controversial F-35 Lightning in 2012, had ordered a reassessment of what Canada needs in a fighter and what’s available on the world market.&quoute; (Chase, 2014).

RESPONSE TO PEER REVIEWER 1: Agree, score changed from 4 to 3.

The Canadian legal framework and international agreements (NAFTA, the Competition Act), as well as government policies (PWGSC Manual) stipulate that procurement should be conducted as an open competition, with specific exceptions.

However, a recent report by the Canadian parliament noted that while &quoute;competitive tendering is the norm, the Government Contracts Regulations (GCRs) recognize the legitimate need for the Government to sometimes enter into sole-source contracts.&quoute; As this report noted, over the five-year period 2002/03 to 2006/07, on average some 80% of the value of contracts awarded by PWGSC on behalf of DND was the result of competitive processes (Parliament of Canada, 2008). But the report also there are cases where single sourcing was appropriate, for instance to repair or upgrade existing equipment where intellectual property is an issue or where only one supplier of a particular good or service exists. The Office of the Procurement Ombudsman conducts investigations into allegations of favouritism or inappropriate single-sourcing. Its reports are available online.

One distinction to note in Canadian procurement is that the government defines three categories: open competition, sole sourcing, and what is called public advance contract award notice (ACAN). In an ACAN process, the government declares its intention to contract on a sole source basis with a given company, but invites other companies to appeal if they feel they can meet the requirement. If such an appeal takes place, the procurement reverts to an open competition. Canada includes ACAN contracts as competitive procurements, and under this definition there is very little sole sourcing.

Another caveat that should be added is that the most high profile recent procurement controversy in Canada related to a sole-sourcing contract for the F-35 Joint Strike Fighter. The level of secrecy involved in this procurement, as well as misleading cost estimates which were questioned by the Office of the Auditor General, resulted in the government being declared in contempt of parliament in 2011. The Auditor General's report in 2012 &quoute;lambasted the military's opaque process to buy F-35 fighter jets to replace the aging CF-18 fleet.&quoute; (Beeby, 2015). As a result of the controversy, the federal government &quoute;which backed off $45-billion plans to buy the controversial F-35 Lightning in 2012, had ordered a reassessment of what Canada needs in a fighter and what’s available on the world market.&quoute; (Chase, 2014).

In January 2015, the government decided to apply sole-sourcing to a contract to build a fleet of warships, a decision which critics said did not reflect the conditions which could justify sole-sourcing, such as there only being one company fulfilling the relevant requirements (Ivison).

RESPONSE TO PEER REVIEWER 1: Agree, score changed from 4 to 3.

The assessor was not able to find conclusive evidence as to when and how tender boards are used in actual defence and security procurement (e.g. by DND and PWGSC). One former Canadian Military Procurement Specialist noted that Canada does not use tender boards in the areas of defence and security procurement, with the exception of construction contracts handled by Defence Construction Canada, where there is evidence that tender boards may be used.

The available evidence is scattered and does not provide a comprehensive picture of use of tender boards or equivalent institutions. The PWGSC Supply Manual appears to place the main authority and responsibility for contract signing with departmental contracting officers. It also states that for procurement projects requiring approval from an Assistant Deputy Minister, more than one PWGSC employee needs to be involved in the evaluation of the tender prices. The TBS 'Contracting Policy' (para 11.1) 'encourages' departments to establish a review process for all competitive procurement; this could take the form of central review boards or advisory groups. The Policy states that the appropriate financial officer should act as chairperson, with officers for personnel and materiel participating in the process. It also states that those with a conflict of interest should recuse themselves. However, this is not obligatory.

It appears that the DND's Senior Review Board does play a role somewhat similar to a tender board, however, this is not clear from publicly available evidence. Senior Project Advisory Committees (SPACs), convened for Major Crown Projects, also play a part in reviewing procurement, and does the Treasury Board Secretariat in cases specified by the Financial Administration Act.

All public employees need to abide by the Treasury Board of Canada’s Values and Ethics Code for the Public Sector. All procurement decisions are subject to independent review by the Office of the Procurement Ombudsman following complaints from suppliers.

Overall, it appears that some structures akin to tender boards are in use, albeit not regularly, and that some regulations do apply to them, although they are not specific. Hence the score of 2 was selected.

Under section 47 of the Canadian Competition Act, collusion is a criminal offence: &quoute;for two or more bidders,
in response to a call or request for bids or tenders, to agree that one or more will refrain from bidding, to
agree to withdraw a submitted bid, or to agree among themselves on bids submitted, without making the
agreement known to the person calling for bids. In Canada, firms and individuals convicted of bid-rigging
face fines in the discretion of the court and/or imprisonment for up to fourteen years.&quoute; (OECD, 2010). The Competition Act establishes a Competition Bureau &quoute;which is responsible for the enforcement of the act.&quoute; (OECD, 2010). These provisions cover all industries in Canada, including for instance construction, IT services, and defence and security.

In practice, collusion between bidders is also punishable under the terms of the PWGSC Supply Manual. This is not technically legislation but does represent procurement practice in Canada. As the PWCSG Supply Manual notes, &quoute;when it is considered necessary, [PWGSC] Legal Services will assist in subsequent discussions with Competition Bureau Canada, a federal independent law enforcement agency responsible for the administration and enforcement of the Competition Act.&quoute; (PWGSC, 2014).

Canadian procurement staff are mostly organised into a single government department, the Public Works and Government Services Canada. Department of National Defence also has staff who are responsible for setting technical requirements for materiel.

The PWGSC website provides examples of training courses available to procurement staff (mostly open to staff from all government departments), indicating that staff are trained to carry out their responsibilities. A former Canadian Military Procurement Specialist interviewed confirmed that the staff were trained regularly and are provided with tools to ensure that contractors meet their obligations.The PWGSC Supply Manual lays out the role of procurement staff in managing signed contracts and monitoring fulfilment of obligations.

Other reports raise questions about the ability of PWGSC and DND to manage procurement contracts (Ivison, Brewster). Referencing procurement problems in the Canadian military, one report (Ivison, 2014) noted that: &quoute;There is plenty of blame to go around for these foul-ups — from inexperienced and credulous project management staff at DND, who were outmanoeuvred by highly motivated industry pitchmen, to military brass not prepared to risk their careers by admitting they got it wrong.&quoute; Similarly, a 2014 report from the CDA Institute found that the Department of National Defence and Public Works and Government Services Canada suffer from a lack of project managers who have successfully completed a complex procurement such as one concerns a warship or a fighter programme.The report notes that &quoute;there is practically no one left in DND with complex equipment program management experience as a result of which there is a huge possibility for costs to escalate and things to go badly wrong&quoute; (CDA Institute, 2014: 54).

Canada has a Code of Conduct for Procurement, which is based on principles set out in the Financial Administration Act and the Federal Accountability Act. This Code of Conduct provides a number of protections for vendors. For complaints by international vendors, the Canadian International Trade Tribunal (CITT) &quoute;has jurisdiction to conduct inquiries into complaints by potential vendors concerning procurement by the federal government that is covered by the Trade Agreements&quoute; (PWGSC, Procurement Code of Conduct, 2015). According to the Code of Conduct, &quoute;Any potential vendors who believe they may have been unfairly treated during the solicitation or evaluation of bids/offers/arrangements, or in the awarding of contracts subject to the Trade Agreements, may lodge a formal complaint with the CITT.&quoute;

Vendors may also appeal to the Office of the Procurement Ombudsman (OPO), which is &quoute;is an independent organization included in the portfolio of the Minister of Public Works and Government Services Canada, but operates at an arms length from the department.&quoute; Public Works and Government Services Canada administers a &quoute;Fairness Monitoring&quoute; program which independently assesses departmental activities. The ongoing reports from this program are available to the public.

The Public Servants Disclosure Protection Act prohibits public servants from retaliating against contractors who reported wrongdoing (Code of Conduct).

RESPONSE TO PEER REVIEWER 1: Incorporated relevant material.

Under the Integrity Framework, firms can be debarred from future procurements for 10 years (the term can be reduced to 5 years if improvement is shown and exceptions such as requirements of national security do apply) if they are found to have committed any wrongdoing. Both the PWGSC Supply Manual and Integrity Framework stipulate conditions whereby an individual or a firm can be barred, including past criminal offences, instances of bid-rigging and collusion, and other ethical violations. Moreover, the Criminal Code of Canada's fraud-related sections provide for criminal sanctions for corruption practices. Punishments for fraud under Section 380 of the Criminal Code are up to 14 years imprisonment.

In terms of international corruption, only four convictions have been obtained under the Corruption of Foreign Public Official Act, meaning that most companies that have faced allegations of corruption and bribery overseas would face no restrictions from Public Works in their ability to bid on federal projects in Canada. Relatedly, PWGSC's anti-corruption regulations only bar companies which have been convicted of offences. Thus, SNC-Lavalin PAE Inc. (a subsidiary of SNC Lavalin) was awarded a contract by PWGSC, even though the parent company had been barred from bidding on aid contracts by the World Bank due to a number of corruption allegations (Toronto Star, 2013).

RESPONSE TO REVIEWER 2: Score adjusted from 4 to 3. Score 2 would be too low due to the strength of regulations and sanctions foreseen

The Industry Canada website has a publicly available list of procurement contracts covered under the Industrial and Regional Benefits (IRB) program. As one example, the Industry Canada website includes information on the IRB contract for CF-18 Defensive Electronic Warfare systems with Raytheon. The website lists the Industry Canada manager, the company contact person, the contract award date, the IRB obligation period, the size of IRB obligations, and the outstanding IRB obligation remaining. This information is available for all IRB contracts. According to the IRB website, contractors are required to submit annual IRB reports to Industry Canada. These reports detail the work that have been placed with Canadian industry; the contractors only get credit for work once it has been verified by Industry Canada officials.

The government's Integrity framework imposes further requirements on contractors through demanding that they not be found guilty of corrupt activities in any jurisdiction, and that they ensure the same standards from their subcontractors. This can be construed as applying to offsets. If the supplier is convicted during the contract term, the government is entitled to terminate the contract.

However, concerns have been raised about how many of these commitments are actually fulfilled, and whether the government is able to effectively follow up on offset performance. In 2014, &quoute;Public Works Minister Diane Finley revealed Wednesday that one quarter of the $23-billion in commitments made by defence companies by the end of 2011 remained unfulfilled&quoute; (Berthiaume, 2014).

RESPONSE TO PEER REVIEWERS 1 and 2: Agree, score amended from 4 to 3. Information incorporated.

The Industry Canada website has a publicly available list of procurement contracts covered under the Industrial and Regional Benefits (IRB) program. As one example, the Industry Canada website includes information on the IRB contract for CF-18 Defensive Electronic Warfare systems with Raytheon. The website lists the Industry Canada manager, the company contact person, the contract award date, the IRB obligation period, the size of IRB obligations, and the outstanding IRB obligation remaining. This information is available for all IRB contracts. Industry Canada provides links to the offset contracts but at the time of writing many of these links were not functioning.

RESPONSE TO PEER REVIEWER 1: I am not convinced that these comments apply specifically to all offset contract.

Offset contracts are generally included in the bid evaluation process, and are therefore subject to the same level of competition regulation as the main contract. Referencing Industry Canada's Industrial and Regional Benefits program (offset contracts), the government wrote: &quoute;PWGSC manages the bidding process and is responsible to ensure that solicitation documents clearly describe the bid evaluation process and all selection criteria, including terms and conditions, Industrial Regional Benefits, operational requirements and technical requirements.&quoute;

In the case of the National Shipbuilding strategy, the The Auditor General reported that it seemed likely offsets would be needed in the original procurement negotiation process, but this obvious issue was not addressed in the terms. It was only after the contract had been signed that the issue of offsets was returned to and negotiated. This was somewhat disingenuous, as the original bid contractors stated they needed no additional capital to get their shipyards to a &quoute;ready state&quoute; for production. In fact, as the renegotiation of offsets shows, significant capital was needed to get the contractors to a ready-state.

RESPONSE TO PEER REVIEWER: Agree. Score changed from 4 to 3.

The Canadian procurement system has very consistent rules about the use of agents and intermediaries. Public Works and Government Service Canada expressly disallows the use of contingency fees in contracting; in other words, it is not permitted to pay agents or intermediaries only on the condition that the bid is successful. The reasoning is that agents and intermediaries may be more inclined to cross ethical lines if they are working on an all-or-nothing basis. Public Works and Government Services Canada's Integrity Framework lists the prior use of contingency fees as one of the offences which would render a firm ineligible for future procurements.

The Integrity Framework also requires the main contractor to ensure that subcontractors fulfil the integrity requirements such as not having been convicted of corruption-related offences.

The Lobbying Act of Canada lays out requirements for lobbyists to register themselves with the government and establishes an Office of the Commissioner of Lobbying of Canada to oversee compliance. As a former Canadian Military Procurement Specialist noted in an interview, the defence industry is well aware of these regulations.However, there are loopholes in the Lobbying Act which mean that unpaid lobbyists are not required to register These unpaid lobbyists are therefore not subject to the Code of Conduct and associated oversight. Consequently, lobbyists are able to claim that they are being paid for providing advice, rather than their lobbying efforts. Indeed, a former advisor to Prime Minister Stephen Harper was charged in 2012 with influence peddling &quoute;for taking payment from a client while promising he could win a decision from the federal government&quoute; (Democracy Watch, 2012). He was not, however, charged under the Lobbying Act &quoute;likely because Carson, and his client, have both claimed that he was not paid to lobby, only for advice&quoute; (Democracy Watch, 2012).

Public Works and Government Services Canada (PWGSC) plays a central role in managing the bidding process and ensuring that all proper documentation (including for financing) are submitted for contracts. As per their website &quoute;Public Works and Government Services Canada (PWGSC) plays an important role in the daily operations of the Government of Canada. The Department is the government's principal banker, accountant, central purchasing agent, linguistic authority, and real property manager.&quoute;

The principal aspects of the financing package surrounding major arms deals are not made publicly available prior to the signing of contracts in Canada. Some information related to the contract may be disclosed after the contract is signed (see, for instance, the announcement of a procurement contract for new trucks). However, as one former Canadian Military Procurement Specialist noted in an interview, it would be &quoute;impossible to imagine the government publicly disclosing the terms and conditions of a contract before it is signed&quoute;.

The Government of Canada has defended its procurement practices, writing in response to a Standing Committee on Defence report on procurement practices &quoute;The Government already provides as much information as it can concerning the selection of contractors to meet both defence and non-defence requirements.&quoute; The key issue, according to the government, is that it is unable to publicly release details of bids because &quoute;the bid documents and their contents are proprietary to the bidders.&quoute; The current procurement process provides several protections for bidders that the government considers adequate. Namely, PWGSC &quoute;manages the bidding process and is responsible for ensuring ensure that solicitation documents clearly describe the bid evaluation process and all selection criteria, including terms and conditions, Industrial Regional Benefits, operational requirements and technical requirements.&quoute; Moreover, &quoute;non-successful bidders are offered the opportunity to meet with PWGSC and DND representatives to review the evaluation of their bids and gain an understanding of how they were rated and why. They are also advised of the independent redress mechanisms available to them if they feel that the bid process was flawed or unfair.&quoute;

The government mentions the need for balance between complete transparency and the need to protect bidders, stating that &quoute;the Government views this system, which has been in place for many years, as providing the best combination of transparency of process and protection of bidders’ proprietary information or third-party confidential information.&quoute;

RESPONSE TO PEER REVIEWER 1: Added relevant information.

The Canadian government's contracting authority, Public Works and Government Services Canada, has publicly stated policies in place regarding the use of sub-contractors. These are laid out below:

&quoute;8.85. a. As stated in certain Standard Acquisition Clauses and Conditions (SACC) Manual general conditions (e.g. 2030) forming part of the contract, a contractor must, in this case, obtain the consent of the contracting officer before subcontracting...In this case, the contractor must certify that the proposed subcontract is subject to all of the same conditions as contained in the contract. The contracting officer will only consent if satisfied with the subcontractor and the proposed subcontract.&quoute;

A former Canadian Military Procurement Specialist stated in an interview that PWGSC consistently enforces these policies. The Country Assessor was unable to find publicly available documentation to verify this assertion. Indeed, concerns have been raised that the government struggles to verify the work of subcontractors. For instance, a 2010 internal audit conducted by the Chief Review Services assessed the adequacy of the controls in place to manage contracts involving significant sub-contracting. The audit found that terms and conditions were not consistently included in Department of National Defence contracts and that supporting documentation was often insufficient.

However, the Government of Canada has in recent years strengthened the integrity provisions required of bidders and contractors (and, crucially, subcontractors) to do business with the federal government. As one report noted &quoute;A company must ensure that all subcontracts include integrity provisions that are “no less favourable to Canada” than the provisions that will be included in the contract between the company and the federal government. This will have a flow-down effect on subcontractors, which will now be indirectly required to comply with PWGSC’s integrity provisions&quoute; (Nattrass, 2014).

In July 2015, the Government of Canada introduced a new government-wide integrity regime, which includes a list of offences which make a contractor ineligible to do business with the Government of Canada. It stipulates that any business which knowingly enters into a sub-contract with an eligible sub-contractor will be ineligible for a period of five years. However, these provisions do not amount to a requirement for sub-contractors to have fully fledged anti-corruption and compliance programmes, hence the score of 3 was awarded.

RESPONSE TO PEER REVIEWER 2: Agree, score changed from 4 to 3.

As one former Canadian Military Procurement analyst noted, Canada has perhaps the most complex legal and policy framework covering defence procurement of any country, owing to its intra-national trade agreement, the Agreement on Internal Trade. When these obligations are combined with those under the WTO, NAFTA and Canadian legislation, the scope for influence by a selling nation is in the view of this official &quoute;exceptionally limited.&quoute; Others interviewed argued, however, that Canadian defence acquisitions are commonly influenced by the selling nation - often the United States, Canada's largest trade partner. The most commonly cited recent example of US influence over Canadian procurement decisions is the Canadian agreement to purchase the F-35 Joint Strike Fighter (the decision to sole-source the fighter was announced in 2010; mired in controversy about cost calculations and efficiency of the fighter, it has not been completed as of 2015). However, official government statements put the purchase in the context of interoperability, arguing that Canada's military needed to fly planes either identical to or compatible with those used by allies. Analysts concluded that US influence, if it existed, was most likely indirect. (Tago & Vucetic)

RESPONSE TO PEER REVIEWER 2: Relevant information added.