Annual Report March 31, 2012 - Chapter IV

Introduction

Potential suppliers that believe that they may have been unfairly treated during a procurement solicitation covered by NAFTA, the AIT, the AGP, the CCFTA, the CPFTA or CCOFTA may file a complaint with the Tribunal. The relevant provisions of the Canadian International Trade Tribunal Procurement Inquiry Regulations allow a complainant to first make an attempt to resolve the issue with the government institution responsible for the procurement before filing a complaint.

The Tribunal's role is to determine whether the government institution followed the procurement procedures and other requirements specified in NAFTA, the AIT, the AGP, the CCFTA, the CPFTA or CCOFTA.

When the Tribunal receives a complaint, it reviews it against the legislative criteria for filing. If there are deficiencies, the complainant is given an opportunity to correct them within the specified time limit. If the Tribunal decides to conduct an inquiry, the government institution is sent a formal notification of the complaint and a copy of the complaint itself. If the contract has been awarded, the government institution, in its acknowledgement of receipt of complaint letter, provides the Tribunal with the name and address of the contract awardee. The Tribunal then sends a notification of the complaint to the contract awardee as a possible interested party. An official notice of the complaint is also published on MERX, Canada's electronic tendering service, and in the Canada Gazette. If the contract in question has not been awarded, the Tribunal may order the government institution to postpone the award of any contract pending the disposition of the complaint by the Tribunal.

After receipt of its copy of the complaint, the relevant government institution files a response called the Government Institution Report. The complainant and any intervener are sent a copy of the response and given an opportunity to submit comments. Any comments received are forwarded to the government institution and other parties to the inquiry.

Copies of any other submissions or reports prepared during the inquiry are also circulated to all parties for their comments. Once this phase of the inquiry is completed, the Tribunal reviews the information on the record and decides if a public hearing is necessary or if the case can be decided on the basis of the information on the record.

The Tribunal then determines whether or not the complaint is valid. If it is, the Tribunal may make recommendations for remedies, such as re-tendering, re-evaluating or providing compensation to the complainant. The government institution, as well as all other parties and interested persons, is notified of the Tribunal's decision. Recommendations made by the Tribunal are, by statute, supposed to be implemented to the greatest extent possible. The Tribunal may also award reasonable costs to the complainant or the responding government institution depending on the nature and circumstances of the case.

Procurement Complaints

Summary of Activities

In 2011-2012, the Department of Public Works and Government Services (PWGSC) issued approximately 15,487 contracts valued at between $25,000 and $2 billion each, for a total value of $13 billion. The 62 complaints that the Tribunal received in the fiscal year pertained to 53 different contracts and represented a value of over $300 million.

Summary of Selected Determinations

During the fiscal year, the Tribunal issued 61 decisions on whether to accept complaints for inquiry, 12 final decisions on complaints that were accepted for inquiry and 4 decisions in cases remanded to the Tribunal by the Federal Court of appeal for a total of 77 decisions. Three cases were still in progress at the end of the fiscal year. The table at the end of this chapter summarizes these activities.

Of the complaints investigated by the Tribunal in carrying out its procurement review functions, certain decisions stand out because of their legal significance. Brief summaries of a representative sample of these cases are included below. These summaries have been prepared for general information purposes only and are not intended to be of any legal value.

PR-2010-086—Entreprise Marissa Inc.

The Tribunal held a public hearing in this case. There were 2 participants in this inquiry. The official record consisted of 33 exhibits.

The complaint was filed by Entreprise Marissa Inc. (Marissa) concerning an invitation to tender by PWGSC for the maintenance dredging of the St. Lawrence Seaway in the North Traverse sector, between Saint-Jean-de-l'Île-d'Orléans and Cap Gribane, and the Bécancour sector, which extends from Bécancour to Batiscan. Marissa alleged that one of the mandatory requirements of the invitation to tender was overly restrictive and created an “unnecessary obstacle” that prevented it from tendering, which, according to Marissa, was contrary to the fair procurement principles set out in the AIT.

According to Marissa, the condition requiring that the dredge be equipped with doors in the hull had never been stipulated previously in any of the invitations to tender for dredging, notwithstanding that the obligation to perform dredging had existed for 27 years. Marissa alleged that the addition of the condition had the effect of restricting competition without valid reason.

The Tribunal held a hearing in Ottawa on April 20, 2011. Marissa called its president and a geological engineer as witnesses, and PWGSC called an expert in dredging. Marissa argued that doors in the hull were hardly advantageous to the environment and called into question the preference for underwater doors found in the environmental impact study. PWGSC responded that, by adding the requirement for doors in the hull, it was merely stipulating what was already the industry norm and that it needed to comply with the environmental impact study.

The Tribunal found no basis to conclude that the subject requirement had been added with a view to eliminating Marissa from the process or that PWGSC discriminated against Marissa or its services. Stipulating requirements in tender documentation that were necessary for the achievement of PWGSC's objectives but which also had the effect of eliminating a potential supplier did not constitute an unnecessary obstacle to trade. Interpreting the AIT without accounting for the Government's needs is unacceptable. The Tribunal concluded that the complaint was not valid.

PR-2011-017—BRC Business Enterprises Ltd.

The Tribunal considered this case on the basis of written submissions. There were 2 participants in this inquiry. The official record consisted of 18 exhibits.

The complaint was filed by BRC Business Enterprises Ltd. (BRC) concerning a procurement by PWGSC for the supply, delivery and installation of freestanding furniture on an as-and-when-required basis. BRC alleged that PWGSC improperly declared non-compliant its offer in response to the Request for a Standing Offer (RFSO) and failed to evaluate its offer in accordance with the express terms of the solicitation documents.

In issue was the application of the RFSO. Article 1.1.1 of Part 4 of the RFSO stated the follows: “Mandatory Criteria must be submitted with the offer or within 5 business days upon request from the Contracting Authority. (Failure to do so will render the offer non-responsive).” Annex C to the RFSO, “TEST REPORT FORMS for Freestanding Office Desk Products and Components” stated the following: “. . . TEST REPORT FORMS MUST ALSO BE COMPLETED FOR EACH SERIES OFFERED AND SUBMITTED WITH YOUR PROPOSAL. FAILURE TO DO SO WILL RENDER YOUR [FIRM'S] PROPOSAL NON-COMPLIANT AND NO FURTHER EVALUATION WILL BE UNDERTAKEN.”

When submitting its offer, BRC also submitted its test report. However, the dimensions of the lateral file stipulated in the test report differed from those stipulated in the RFSO, and PWGSC sought clarification. Not satisfied with BRC's answers, PWGSC evaluated BRC's offer as being non-compliant.

BRC submitted, in effect, that it did not matter that the test was incomplete because the RFSO did not require it at the time of closing but rather only five business days following a request therefor. The Tribunal found that it was consistent with the remainder of the RFSO and with the well-established principle that the onus is on the offeror to demonstrate compliance with mandatory criteria.

The Tribunal found no basis to conclude that, by declaring BRC's bid non-compliant with regard to the Category 2 freestanding furniture on the basis of article 1.1.1 of Part 4 of the RFSO, PWGSC acted in a manner that was inconsistent with the provisions of the RFSO or with any of the applicable provisions of the trade agreements. The Tribunal concluded that the complaint was not valid.

PR-2011-041—FreeBalance Inc.

The Tribunal considered this case on the basis of written submissions. There were 2 participants in this inquiry. The official record consisted of 14 exhibits.

The complaint was filed by FreeBalance Inc. (FreeBalance) concerning a procurement (Solicitation No. 1000299304) by the Canada Revenue Agency (CRA) for the modernization of its revenue management system. More specifically, the CRA proceeded to procure, on a sole-source basis, from SAP Canada Inc. (SAP), the activation key to the SAP Public Sector Collection and Disbursement (PSCD) module, which forms part of an SAP software solution that was already running on the system. FreeBalance alleged that the CRA provided insufficient information for the sole-source justification and for the rejection of its statement of capabilities submitted in response to the Advance Contract Award Notice (ACAN).

The Tribunal found that the evidence disclosed that the CRA issued an ACAN and, in effect, evaluated FreeBalance's statement of capabilities as if it were a proposal in response to a fully detailed RFP. In so doing, the CRA used the ACAN procedure to avoid a competitive process. Accordingly, the Tribunal found that the CRA conducted a limited tendering process that was not justified under Article 506(12) of the AIT, Article 1016(2) of NAFTA, Article XV(1) of the AGP, Article 9.1 of the CCFTA or Article 1409.1 of the CPFTA, or was not otherwise consistent with the trade agreements. The Tribunal concluded that the complaint was valid.

Judicial Review of Procurement Decisions

Decisions Appealed to the Federal Court of Appeal

Disposition of Procurement Complaints