Letter of Credit

A conflict of interest in government procurement happens when someone involved in awarding or managing a contract has personal or financial interests that could—or appear to—influence their decisions. Even the perception of bias can undermine the fairness and transparency that federal procurement depends on.

How It Works

The Treasury Board defines a conflict of interest as any situation where a public servant's private interests could influence their official duties. Real, apparent, or potential—all three categories count. A real conflict exists when there's an actual connection between your private interests and your duties. An apparent conflict looks problematic to a reasonable observer, even if there's no actual conflict. A potential conflict could develop into a real one down the road.

Under the Directive on the Management of Procurement, specifically sections 4.2.2 and 4.3.2, federal departments must monitor, prevent, identify, and report conflicts throughout the procurement cycle. Contracting officers need to adhere to both the Values and Ethics Code for the Public Sector and the Directive on Conflict of Interest at all times. The recently published Guide to Mitigating Conflicts of Interest in Procurement (2025) provides departments with a framework for handling these situations systematically.

Here's the thing: conflicts aren't limited to government employees. The Code of Conduct for Procurement requires suppliers to disclose any conflicts immediately in writing to the contracting authority. If you're bidding on a contract and discover your evaluator is your cousin, you need to report it. Non-compliance can result in your bid being deemed non-responsive or, if discovered later, contract termination.

Key Considerations

• Disclosure is mandatory. When in doubt, disclose. The government would rather manage a declared conflict than discover an undisclosed one. Waiting to see if anyone notices is the wrong approach.

• Mitigation doesn't always mean recusal. Sometimes a simple declaration and oversight mechanism is enough. Departments maintain records of how conflicts were identified and managed, which protects both the process and the individuals involved.

• Evaluators must declare conflicts before reviewing bids. This happens at the start of every evaluation process. Even past professional relationships or future employment prospects can trigger disclosure requirements under procurement integrity protocols.

• The standard is broader than you think. Under the Conflict of Interest Act, any situation where exercising official powers "provides an opportunity" to further private interests counts. You don't need to actually benefit—the opportunity alone is sufficient.

Related Terms

Procurement Integrity, Code of Conduct for Procurement, Contracting Officer

Sources

• Guide to Mitigating Conflicts of Interest in Procurement - Treasury Board Secretariat

• Code of Conduct for Procurement - Public Services and Procurement Canada

• Conflict of Interest Act - Justice Laws Website

In practice, managing conflicts well protects everyone involved. Document your decisions, disclose early, and remember that transparency is your best defense against both real conflicts and the appearance of impropriety.