1.0 Introduction
1.1 The Canadian International Trade Tribunal Act provides that the Canadian International Trade Tribunal may award costs in procurement proceedings. Specifically, the Tribunal can award:
- a complainant its reasonable costs incurred in preparing a response to a solicitation for a designated contract; and
- a party the costs of, and incidental to, any procurement proceeding, on a final or interim basis and the costs may be fixed at a sum certain or may be taxed.
1.2 The Tribunal and any taxation officer appointed by the Tribunal will follow the procedures described in these guidelines where costs are awarded. However, each case will be considered individually, and the guideline is not intended to replace, limit or detract from the discretion of the Tribunal or any taxation officer appointed by the Tribunal in awarding, allowing and taxing costs.
2.0 Guiding principles
2.1 These guidelines are intended to implement the following principles:
- In general, costs should be awarded to the successful party, whether it be the complainant or the government institution.
- The costs awarded normally represent a partial indemnity.
- The costs awarded are not intended to be a source of profit for the claimant.
- The assessment and taxation processes should be efficient, transparent, and fair to all parties.
3.0 Bid preparation costs
3.1 General
3.1.1 A claimant may recover bid preparation costs which the Tribunal considers to be reasonable.
3.2 Procedure
3.2.1 In support of its claim for bid preparation costs, a claimant must file with the Tribunal within 30 days of being notified that it has been awarded its bid preparation costs:
- a brief narrative summary of the work undertaken to prepare the bid; and
- detailed and itemized schedules of the costs incurred, along with supporting documentation, which may include things such as time sheets, accounting records or such other documents necessary to support a claim, such schedules being prepared having regard to the Appendix to these guidelines.
3.2.2 The Tribunal may request further documentation or submissions to substantiate a claim.
3.2.3 Upon receipt of such a claim under paragraph 3.2.1 and any additional documentation or submissions, the Tribunal must send copies to the respondent.
3.2.4 Within 20 days after receiving a claim and any additional documents or submissions, the respondent must file its response, if any, with the Tribunal, and the Tribunal must immediately provide a copy to the claimant.
3.2.5 Subject to the need for additional information, the Tribunal must, as soon as is practicable following receipt of the respondent’s submission, advise the parties which costs and what amount have been allowed.
3.3 Assessment—General
3.3.1 Bid preparation costs are the direct and indirect costs incurred by a claimant in preparing a bid for a designated contract that was the subject of the complaint and may include:
- technical costs incurred specifically in connection with bid preparation, including system and concept formulation studies and the development of engineering and production engineering data; and
- administrative costs incurred in connection with the preparation of the technical proposal documents and the technical and non-technical effort for the preparation and publication of cost data and other administrative data necessary to support a complainant’s bid.
3.3.2 All bid preparation costs claimed, whether direct or indirect, must be supported. Copies of invoices, receipts, timecards and other documentation necessary to support a claim are to be submitted when the claim is filed.
3.3.3 In the case of a claim for bid preparation costs by a claimant whose practice is to follow a consistent cost accounting practice of charging this type of cost directly to contracts, such charges may be accepted as direct costs for purposes of the claim.
A complainant whose normal practice is to account for bid preparation costs as indirect costs will be permitted to convert those expenditures to direct costs for purposes of its claim.
3.4 Direct costs
3.4.1 The following categories of direct costs can be allowed:
- Material cost: The cost of materials which can be specifically identified and measured as having been used in the preparation of the bid and which is so identified and measured in the complainant’s cost accounting system.
- Labour cost: The portion of gross wages or salaries incurred for work which can be specifically identified and measured as having been performed in the preparation of the bid and which is so identified and measured in the complainant’s cost accounting system.
- Other costs: Direct cost other than material or labour costs, but which can be specifically identified and measured as having been incurred in connection with the preparation of the bid and which are so identified and measured in the complainant’s cost accounting system.
3.5 Indirect costs
3.5.1 Indirect costs are those which have been incurred in connection with the preparation of a bid and may include:
- general and administrative expenses, including remuneration of executive and corporate officers, office wages and salaries, and expenses such as stationery, office supplies, postage and other necessary administrative and management expenses;
- Canada Pension Plan contributions, unemployment insurance premiums, contributions to such things as private pension plans, health plans and other benefits (the complainant’s contribution only);
- service expenses which are expenses of a general nature for items such as electricity and heat and expenses incurred for the operation and maintenance of assets and facilities;
- fixed/period charges which are recurring charges such as property taxes, rentals and a reasonable provision for depreciation;
- indirect materials and supplies; and
- indirect labour.
3.6 Allocation of indirect costs
3.6.1 The amount of any indirect cost claimed must be reasonably proportionate to the work expended in preparing the bid. In assessing the reasonableness of any amount claimed, the Tribunal will consider all relevant factors, including the work undertaken by the claimant in preparing the bid and the size or significance of the bid in financial or other terms, relative to the size of the overall operations of the claimant.
3.6.2 Any amount claimed as a direct cost, whether salary, material or other, must not be claimed as an indirect cost and should be specifically accounted for and, if necessary, removed from any amount claimed as part of an indirect cost.
3.7 Non-allowable costs
3.7.1 The following costs are considered non-recoverable costs for the purposes of any claim for bid preparation costs:
- entertainment expenses;
- fines and penalties;
- provisions for contingencies;
- losses on other contracts;
- losses on investments, bad debts and expenses for their collection;
- federal and provincial income taxes, surtaxes and/or related special expenses;
- legal, accounting and consulting fees in connection with financial reorganization, security issues, capital stock issues, obtaining of patents and licences and prosecution of other claims against the Crown;
- allowances for interest on invested capital, bonds, debentures, bank or other loans together with related bond discounts and finance charges;
- amortization of unrealized appreciation of assets;
- depreciation of assets paid for by the Crown; and
- expenses and depreciation of excess facilities.
3.8 Profit
3.8.1 Profit must not be included in any form as part of a claim for bid preparation costs.
4.0 Litigation costs
4.1 Description of the flat-rate system
4.1.1 For the purposes of fixing costs of, and incidental to, procurement proceedings, each case will be classified into one of three levels of complexity, based on the complexity of the procurement, the complexity of the complaint and the complexity of the proceedings. For more information and examples of how the assessment of complexity will be performed, see the Appendix.
4.1.2 The cost award is a flat rate1 that takes into account all expenses, including representation services and disbursements. The amounts associated with each level of complexity are as follows:
| Flat-rate system | |||
|---|---|---|---|
| Level of complexity | 1 | 2 | 3 |
| All-inclusive flat rate | $1,150 | $2,750 | $4,700 |
These rates ca me into effect June 1, 2014.
4.2 Procedure for invoking the flat-rate system
4.2.1 When the Tribunal issues its determination, it will award costs, if appropriate, and give a preliminary indication of the level of complexity and amount of the award.
4.2.2 Parties that believe that the preliminary indication is not appropriate may make submissions on the complexity of the case, the amount of the flat rate or the reason why the guidelines should not be followed.
4.2.3 Parties will have 10 working days from the date of the determination to make such submissions and 5 working days to respond to the submissions of the other parties.
4.2.4 If the parties make no submissions on costs, the Tribunal will confirm its preliminary indication by making a cost order.
4.2.5 If one or more parties make submissions, the Tribunal will consider them, request additional information, if necessary, and then make whatever cost order it believes is warranted.
Appendix—Assessment of the level of complexity
The Tribunal classifies procurement proceedings based on the complexity of the procurement, complaint and proceedings.
Level 1
Complexity of the procurement
- The procurement of goods involved a few standard items or a few simply defined items.
- The procurement of services involved personal services by one party or routine services by more than one party.
Complexity of the complaint
- The issue was simple and involved solving a minor technical matter prior to the evaluation of the proposals.
- The issue was an evaluation based on a simple pass-or-fail list of easily measurable features.
Complexity of the proceedings
- There was no notice of motions and there were few interveners.
- The 90-day time frame was respected.
- No public hearing was held.
Level 2
Complexity of the procurement
The procurement of goods involved many off-the-shelf items or a few complex items that may have included an element of service for installation and maintenance.
The procurement of services involved a defined service project or study, or a moderately undefined project, such as maintenance for breakdown or support, on an as required basis.
Complexity of the complaint
- The issue was more complex; for example, the matter involved ambiguous or overly restrictive specifications.
- The issue was an evaluation based on a combination of mandatory and rated requirements.
- The issue involved more than one trade agreement, in a slightly different manner.
Complexity of the proceedings
- There was one notice of motion and a few interveners.
- Some minor submissions beyond the scope of the normal proceedings were entertained.
- No public hearing was held.
Level 3
Complexity of the procurement
- The procurement of goods involved a complex item, system or facility, which may have included an element of service for installation and maintenance.
- The procurement of services involved an undefined service project or study.
- The procurement involved a construction project with many subcontractors.
Complexity of the complaint
- The issue was complex and involved many elements of an allegedly ambiguous or overly restrictive specification.
- The issue was an evaluation based on a significant evaluation grid involving a combination of mandatory and rated requirements.
- There were multiple issues touching on different required procedures.
- There were issues relating to differences between the applicable trade agreements.
Complexity of the proceedings
- There was more than one notice of motion and many interveners.
- The parties were given permission to submit additional information beyond the normal scope of the proceedings.
- The process required the use of the 135-day time frame.
- A public hearing may have been held.