Annual Report March 31, 2016- 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, the CCOFTA, the CPAFTA, the CHFTA or the CKFTA, or any other applicable trade agreement, 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 the applicable trade agreements.

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 a 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 published 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 should, by statute, 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, circumstances and outcome of the case.

Procurement Complaints

Summary of Selected Determinations

During the fiscal year, the Tribunal issued 70 decisions on whether to accept complaints for inquiry and 25 final decisions on complaints that were accepted for inquiry, for a total of 95 decisions. Eight cases were still in progress at the end of the fiscal year, one of which was still under consideration for being accepted for inquiry.

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.

PR-2015-011—Arctus Inc.

In this procurement inquiry, Arctus Inc. (Arctus) filed a complaint with the Tribunal under subsection 30.11(1) of the CITT Act with regard to a solicitation for the provision of services for the conduct of a large-scale suspended matter monitoring demonstration project at sea using multispectral satellite imagery during an actual dredging project.

Firstly, Arctus alleged that the evaluation of the experience of its proposed resources was undertaken incorrectly. In this regard, Arctus asserted that the evaluators should have undertaken an on-line search of its proposed resources instead of limiting themselves to the contents of its bid. Secondly, Arctus alleged that some of the evaluation criteria were not relevant or were improperly weighted. In this regard, Arctus asserted that it was incorrect to require the orthorectification of images because this is a process that is not relevant to coastal waters and, further, that in any event the same points should not have been awarded to the “atmospheric corrections” step as was awarded to the “orthorectification” step. Thirdly, Arctus alleged that members of the evaluation committee did not have the necessary scientific expertise to analyze the bids received.

The Tribunal considered the requirement—contained in multiple trade agreements—that procuring entities provide potential suppliers with all the information necessary to permit them to submit responsive tenders, including the criteria which will be used for evaluating and awarding the contract. In addition, the Tribunal considered the stipulation—also found in multiple trade agreements—that to be considered for contract award, a proposal must conform to the essential requirements set out in the solicitation documentation.

With regard to Arctus’ assertion that the evaluators should have undertaken an on-line search of its proposed resources, the Tribunal noted that the onus regarding conformity to the essential requirements rests with Arctus, and since Arctus did not provide adequate information, the evaluators acted reasonably in assessing Arctus’ bid. In light of this finding, the Tribunal concluded that it was unnecessary to rule on the other grounds of the complaint.

This procurement inquiry was reiterative, in that it affirmed the rule that bidders are required to submit bids that conform to all of the essential requirements of solicitation documents, and cannot instead place an onus on the soliciting institution to undertake investigations with the objective of securing information not made available by such bidders.

PR-2014-048—Pomerleau Inc.

In this procurement inquiry, Pomerleau Inc. (Pomerleau) filed a complaint with the Tribunal under subsection 30.11(1) of the CITT Act with regard to a solicitation for the provision of construction management services. The solicitation was conducted by Brookfield Johnson Controls Canada LP (BJCC), a private party, on behalf of the Department of Public Works and Government Services (PWGSC).

Pomerleau alleged that its bid was improperly found to be non-compliant because provisions of the solicitation were misinterpreted or misapplied, that undisclosed criteria were used during the evaluation and that unwarranted clarifications were sought. In essence, Pomerleau asserted that the solicitation allowed it to include profit and overhead costs in the hourly rates for its proposed resources or, alternatively, that the solicitation was ambiguous on the issue.

In response to Pomerleau’s complaint, PWGSC filed a motion to dismiss on the basis that the Tribunal did not have jurisdiction to inquire into the complaint. In addition, PWGSC failed to disclose documents, contravened the Tribunal’s deadlines and informed the Tribunal—after expending the time it was allotted to respond to Pomerleau’s complaint—that it was unable to respond to the substantive grounds of the complaint because BJCC, and not it, was involved in the procurement process. Besides the above, PWGSC was ordered by the Tribunal to file submissions on the merits of Pomerleau’s complaint.

In its reasons, the Tribunal found it necessary to catalogue the procedural recalcitrance of counsel for PWGSC and to remark that “[n]o government institution should place the Tribunal in that situation again.” In addition, with regard to PWGSC’s motion to dismiss on the basis that the Tribunal did not have jurisdiction, the Tribunal noted that it had jurisdiction since the solicitation remained an instance of public procurement, with BJCC simply playing the role of PWGSC. The Tribunal also found that the solicitation was not—as PWGSC and BJCC asserted—a subcontract, since BJCC was not itself under contract to provide construction services to PWGSC but, instead, was acting as its agent with regard to the procurement of those services. In essence, the Tribunal concluded that public procurement conducted via a private party is public procurement nonetheless.

Concerning the merits of the complaint, the Tribunal concluded that it was not valid because Pomerleau, by including profit and overhead costs in the hourly rates for its proposed resources, actually failed to comply with the stated requirements of the solicitation. The revenue-generating structure of the solicitation was clear in that there was to be no mark-up of the direct labour cost but, instead, overhead costs related to supplying that direct labour were to be met indirectly through the construction manager’s fee.

PR-2015-026—Raytheon Canada Limited

In this procurement inquiry, Raytheon Canada Limited (Raytheon) filed a complaint with the Tribunal under subsection 30.11(1) of the CITT Act with regard to a solicitation on behalf of the Department of National Defence for the provision of an Integrated Soldier System Project (ISSP) pertaining to over 4,000 soldier-wearable communications suites, complete with required accessories, support equipment, contract management, training, logistic and engineering support. Raytheon alleged that PWGSC did not evaluate its bid fairly and that it evaluated the “availability” of its ISSP suite instead of its “performance”.

In attempting to substantiate its complaint, Raytheon asserted that there must have been “latent defects” that compromised the evaluation. Raytheon admitted that “. . . there is insufficient information available to pinpoint precisely what those latent defects are . . . .” As Raytheon bore the onus of making the case that the solicitation process was not conducted in accordance with the trade agreements, the Tribunal declined to find for Raytheon in the midst of such a paucity of evidence. Further, the Tribunal found that Raytheon’s allegations were untimely in that Raytheon knew, or reasonably should have known, about the grounds of its complaint during the bid submission process. Thus, it was incumbent upon Raytheon, in keeping with the Canadian International Trade Tribunal Regulations, to file a complaint within the established time frame instead of adopting a “wait and see” stance.

Raytheon requested that a portion of the evaluation undertaken by PWGSC be subjected to ex-post facto analysis by an expert, with the objective of unveiling purported latent defects Raytheon alleged to exist regarding the evaluation. The Tribunal rejected this request, noting that it reviews procurement processes against the standard of reasonableness and affords a large amount of deference to evaluators. In addition, the Tribunal found that Raytheon’s proposed use of an expert was an improper attempt at justifying the “wait and see” stance it had adopted.

The Tribunal also found that Raytheon’s allegation that PWGSC did not evaluate its bid fairly was entirely bald and unsubstantiated, and with regard to the “availability” versus “performance” allegation, the Tribunal found as follows: “. . . Raytheon is stating that its ISSP suite could not be evaluated until any and all shortcomings dealing with “availability” had been ironed out. Raytheon’s position on this ground must be rejected, as that is not an evaluation, but testing and development for market readiness.”

Judicial Review of Procurement Decisions