MONROE SOLUTIONS GROUP INC.
v.
DEPARTMENT OF PUBLIC WORKS AND GOVERNMENT SERVICES
File No. PR-2014-053

Order and reasons issued
Wednesday, June 10, 2015

TABLE OF CONTENTS

ORDER

• STATEMENT OF REASONS
  • SUMMARY
  • PROCEDURAL HISTORY
  • OVERVIEW OF THE PROCUREMENT AT ISSUE
  • TRIBUNAL ANALYSIS
  • ORDER

 

IN THE MATTER OF a complaint filed by Monroe Solutions Group Inc. pursuant to subsection 30.11(1) of the Canadian International Trade Tribunal Act, R.S.C., 1985, c. 47 (4th Supp.);

AND FURTHER TO a decision to conduct an inquiry into the complaint pursuant to subsection 30.13(1) of the Canadian International Trade Tribunal Act;

AND FURTHER TO a notice of motion filed pursuant to rule 24 of the Canadian International Trade Tribunal Rules, S.O.R./91-499, by the Department of Public Works and Government Services requesting an order ceasing the inquiry.

BETWEEN

MONROE SOLUTIONS GROUP INC. Complainant

AND

THE DEPARTMENT OF PUBLIC WORKS AND GOVERNMENT SERVICES Government Institution

ORDER

Pursuant to paragraph 10(a) of the Canadian International Trade Tribunal Procurement Inquiry Regulations, the Canadian International Trade Tribunal orders the dismissal of the complaint because it has determined that the complaint has no valid basis.

Peter Burn
Peter Burn
Presiding Member

 

STATEMENT OF REASONS

SUMMARY

1. On February 12, 2015, Monroe Solutions Group Inc. (Monroe) filed a complaint with the Canadian International Trade Tribunal (the Tribunal) under subsection 30.11(1) of the Canadian International Trade Tribunal Act^[1] concerning a Call for Proposals (CFP) under Solicitation No. EN578-14BCIP/A by the Department of Public Works and Government Services (PWGSC) for the provision of innovative pre‑commercial goods and services.
2. Monroe’s grounds of complaint are that PWGSC relied on ambiguous evaluation criteria and misapplied the evaluation criteria set out in the CFP in evaluating Monroe’s proposal.
3. For the reasons that follow, the Tribunal has determined that there is no valid basis to the grounds of complaint. Accordingly, the complaint is dismissed.

PROCEDURAL HISTORY

4. On June 19, 2014, PWGSC issued a CFP for the following:

a) Research and Development (R&D) innovative pre-commercial goods and services, referred to as “innovations”, that are in late stage development; and,

b) Support services such as installation, training and testing support services for the above pre‑commercialized innovations procured for the federal government.

5. The original bid closing date was September 16, 2014. This was subsequently extended to September 17, 2014, by amendment No. 005 to the CFP.
6. Monroe submitted a proposal, the nature of which is confidential. On December 5, 2014, Monroe was informed that its proposal had not been selected to continue to the second stage of the pre-qualification process. Monroe filed an objection with PWGSC that same day.
7. On December 18, 2014, Monroe filed its first complaint with respect to this solicitation process.^[2] However, that complaint was found to be premature on the basis that Monroe had not yet received a response to its December 5, 2014, objection.
8. On February 12, 2015, Monroe filed the current complaint, which was accepted for inquiry on February 13, 2015.
9. On March 19, 2015, PWGSC filed a motion requesting an order ceasing the inquiry.

OVERVIEW OF THE PROCUREMENT AT ISSUE

10. Monroe’s complaint concerns the fifth CFP issued under the Build in Canada Innovation Program (BCIP). According to the BCIP information page on PWGSC’s Web site, the BCIP was “[c]reated to bolster innovation in Canada’s business sector . . . helps companies bridge the pre-commercialization gap by procuring and testing late stage innovative goods and services within the federal government before taking them to market . . . .”^[3] The BCIP has two components, standard and military. The priority areas under the standard component are environment, health, safety and security, and enabling technologies. The priority area under the military component is protecting the soldier.
11. The approximate total funding available for contracts under this CFP is $24 million. The maximum funding available for any individual contract resulting from the CFP is $500,000 for the standard component, and $1 million for the military component.
12. The CFP sets out a multi-level screening process for inclusion in the BCIP. Part 4 of the CFP, titled “Evaluation Procedures”, is divided into two stages. At the first stage, proposals are evaluated against a set of “mandatory” criteria and then against a set of “screening” criteria. The mandatory criteria are that the proposal must relate to either one of the standard or military priority areas and must not exceed the funding threshold for the relevant component. In addition, the proposal must concern an innovation that has not been sold commercially, is provided by Canadian bidders, includes at least 80 percent Canadian content and for which the business submitting the proposal owns the intellectual property rights.
13. The screening criteria are whether the innovation is ready for commercialization (the “Technology Readiness Level”) and whether the business submitting the proposal has the capacity to commercialize the innovation.
14. At the second stage, the proposals are evaluated against a further series of point-rated criteria, including an assessment of whether the innovation is advancement on the state of the art. The top-ranked proposals, by score, are placed in the pre-qualified pool of proposals until all the funding is exhausted. However, the pre-qualification of the proposal is an “approval in principle” and is not a guarantee that a contract will be awarded. To be awarded a contract, proposals must also be successful in the process described in Part 5 of the CFP.
15. The contract award process described in the CFP is also a multi-stage process. First, the pre-qualified proposals are matched with an appropriate testing department within the government, which participates on a voluntary basis. Once a testing department has been identified, PWGSC helps the department and the author of the proposal negotiate a statement of work (SOW). According to the CFP, “[t]he SOW must represent a benefit to Canada.” The SOW is then incorporated into a draft resulting contract between PWGSC and the author of the proposal, which then enter into negotiations regarding the contract terms and conditions, pricing and cost breakdown, and the provision by the author of the proposal of price support to “substantiate” the costs to Canada. If both parties agree on the contents of the contract, it is finalized, and the contract is awarded.

TRIBUNAL ANALYSIS

16. PWGSC’s motion raises two potential grounds for dismissal. PWGSC’s primary argument is that Monroe’s complaint is not in respect of a “designated contract”, which is one of the conditions that complaints must meet in order for the Tribunal to conduct an inquiry, as set out in section 7 of the Regulations. PWGSC submits that the BCIP is a government assistance program and not a government procurement.
17. PWGSC relies on Article 518 of the Agreement on Internal Trade,^[4] which carves out “any form of government assistance” from the definition of “procurement”, to support this argument, and which provides as follows:

procurement means the acquisition by any means, including by purchase, rental, lease or conditional sale, of goods, services or construction, but does not include:

(a) any form of government assistance such as grants, loans, equity infusion, guarantees or fiscal incentives; or

(b) government provision of goods and services to persons or other government organizations.

18. In the alternative, PWGSC argues that there is a designated contract formed at the end of the process described by the CFP, but it is not subject to the competitive disciplines of the trade agreements, on the basis that it is a sole-source contract.
19. The Tribunal cannot accept PWGSC’s first argument. Ultimately, the process described above results in the award of contracts for the supply of innovative goods or services to the government departments that will be testing them. This would appear to fit within the definition of “procurement” set out above and with the definition of “designated contract” set out in the CITT Act and the Regulations. The BCIP cannot be characterized as only a government assistance program, because the government does derive a benefit from it (indeed, the CFP requires that the SOW represent a benefit to Canada). Traditionally, the types of “government assistance” enumerated in the definition are one-sided, with only the recipient of the assistance deriving any concrete benefit. Instead, the agreement entered into under the CFP most resembles a contract as commonly understood in law, i.e. a mutually beneficial arrangement where goods or services are acquired in return for valuable consideration.
20. However, the Tribunal accepts PWGSC’s alternative argument. While there is a “designated contract” that is created, the circumstances of this process appear to fit within the terms of Article 506(12)(h) of the AIT which provides as follows:

12. Where only one supplier is able to meet the requirements of a procurement, an entity may use procurement procedures that are different from those described in paragraphs 1 through 10 in the following circumstances:

. . . 

(h) for the procurement of a prototype or a first good or service to be developed in the course of and for a particular contract for research, experiment, study or original development, but not for any subsequent purchases.

21. The process described in the CFP has the rather unique result that the types of innovative goods and services available in the pre-qualified proposals inform the needs of the government, through the test department matching process, instead of responding to an already identified government requirement. By definition, therefore, only one supplier, the author of a given proposal, will be “able to meet the requirements of a procurement”, and the condition set out in Article 506(12) is met.
22. The procurement of innovative goods or services for the purpose of helping companies test and evaluate them also seems to fit with the circumstance described in Article 506(12)(h) of the AIT. The requirement that the contract not concern any subsequent purchases is also met, as the BCIP does not guarantee the purchase of the innovative products by the testing department, or any other branch of government, once they become commercially available.
23. Monroe’s grounds of complaint were that PWGSC relied on undisclosed evaluation criteria and misapplied the evaluation criteria when evaluating its proposal. Tribunal jurisprudence establishes that these grounds of complaint are based in Article 506(6) of the AIT which provides that “. . . [the] tender documents shall clearly identify the requirements of the procurement, the criteria that will be used in the evaluation of bids and the methods of weighting and evaluating the criteria.”^[5]
24. Since Article 506(12) of the AIT permits the use of “procurement procedures that are different from those described in paragraphs 1 through 10” of Article 506, it follows that PWGSC was not bound to respect the procedural requirement set out in Article 506(6) when evaluating proposals made in response to this CFP. As a result, Monroe’s complaint has no valid basis.

ORDER

25. Pursuant to paragraph 10(a) of the Regulations, the Tribunal orders the dismissal of the complaint because it has determined that the complaint has no valid basis.