Beginning Jan. 1, any contract worth more than $10,000 awarded to a retired public servant on a federal pension will have to be disclosed publicly.
Currently, departments and agencies must disclose contracts quarterly on their websites, but without any information about whether payments are supplementing the income of a pensioned federal bureaucrat.
The issue came to light in the summer when an investigation showed that a dozen contracts - worth some $170,000 - were improperly awarded without competition to a former public servant.
Canada's procurement ombudsman, Frank Brunetta, slammed the Canada School of Public Service for the practice, but stopped short of identifying the contract winner, except to say he previously worked for Treasury Board.
The new red-flag policy was announced Wednesday by Treasury Board President Tony Clement, who said any such contracts in his department will now need his approval before being awarded.
"Former public servants have valuable experience and in-depth knowledge and those in receipt of a pension may be awarded contracts," Clement said in a release.
"But it is important that it is done in a clear, transparent and up-front way."
Clement said all departments will also be required to inform their ministers of any such contracts.
A spokeswoman for Clement, Andrea Mandel-Campbell, said "this is an area the minister has wanted to shine more light on for some time."
"The July ombudsman's report cemented his belief that we need more transparency in regards to these contracts."
Wednesday's measure got a lukewarm review from former public servant Allan Cutler, whose career was damaged when he blew the whistle on graft during the so-called Liberal sponsorship scandal.
Cutler, who in 2008 co-founded a watchdog group called Canadians for Accountability, said the new policy still contains a major loophole.
For example, a former public servant can join a firm that bids for a contract, then assigns the work to that pensioned person without the department aware of the relationship.
Cutler says any such companies should be compelled to disclose these arrangements.
"The only way to know this is for all companies, as a standard clause, to have to declare if they have any former senior bureaucrats in receipt of a pension."
Cutler said it is common in the federal government for high-level bureaucrats to award lucrative contracts to their former senior colleagues already in receipt of a pension.
Under Treasury Board rules, there are restrictions on the amounts retired public servants on a pension can receive in federal contracts for the first year after leaving government.
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