ECLIPSYS SOLUTIONS INC.

ECLIPSYS SOLUTIONS INC.
v.
CANADA BORDER SERVICES AGENCY
File No. PR-2015-038

Order and reasons issued
Monday, March 21, 2016

TABLE OF CONTENTS

 

IN THE MATTER OF a complaint filed by Eclipsys Solutions 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.

BETWEEN

ECLIPSYS SOLUTIONS INC. Complainant

AND

THE CANADA BORDER SERVICES AGENCY 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.

Serge Fréchette
Serge Fréchette
Presiding Member

STATEMENT OF REASONS

BACKGROUND

  1. On November 2, 2015, Eclipsys Solutions Inc. (Eclipsys) filed a complaint with the Canadian International Trade Tribunal (the Tribunal) pursuant to subsection 30.11(1) of the Canadian International Trade Tribunal Act,[1] alleging that the Canada Border Services Agency (CBSA) breached its obligations under the trade agreements.
  2. Eclipsys’ first ground of complaint is that the CBSA allegedly procured new service-oriented architecture (SOA) interoperability software under the guise of obtaining licences under the terms of an existing supply arrangement between the Government of Canada and IBM. Eclipsys alleged that the IBM contract was not competed on the basis of SOA interoperability software and that, as a result, the CBSA effectively conducted an illegal sole-source procurement. Eclipsys alleged that the CBSA should instead have either purchased licences from it under its existing supply arrangement or issued a new Request for Proposal (RFP) for the requirement.
  3. Eclipsys’ second ground of complaint is that the CBSA’s decision-making process was biased, as former IBM employees were retained by the CBSA to evaluate the relative merits of the IBM software versus the Oracle software proposed by Eclipsys. Eclipsys also argued that a disproportionate number of CBSA information technology (IT) procurements were directed to IBM.
  4. As a remedy, Eclipsys requested that the contract be terminated and awarded to Eclipsys, or that Eclipsys be awarded compensation “in excess of $100K”[2] for its time and materials expended in preparing its offer to the CBSA, as well as lost profit.

PROCUREMENT PROCESS

  1. In June 2012, following the issuance of an RFP on behalf of Statistics Canada, Eclipsys was awarded a contract for the provision of Enterprise Interoperability and Service Platform (EISP) software, which includes SOA interoperability software, and associated services (Contract No. 45045 110061/001/EEM). The contract contains a clause that allows the Government of Canada to add additional clients at any time, including any government department, corporation or agency covered by the Financial Administration Act.[3]
  2. Beginning in October 2012, Eclipsys entered into discussions with the CBSA regarding the latter’s requirements for SOA interoperability software and to explore whether the software available under the EISP contract would meet the CBSA’s needs. These discussions continued over the following two and a half years.
  3. On June 3, 2015, Eclipsys submitted a proposal, including pricing, for the CBSA to obtain licences under the EISP contract. Revised pricing was submitted on June 12, 2015.
  4. On June 24, 2015, Eclipsys met with CBSA officials, who informed Eclipsys that its proposal was under consideration, along with an option to obtain IBM licences under another, unspecified, existing contract. Eclipsys requested further information regarding the IBM contract and expressed its concern that the original RFP for the IBM contract had not included SOA interoperability software. According to Eclipsys, the CBSA “. . . promised full transparency . . .”[4] but provided only minimal information regarding the IBM contract.
  5. On October 1, 2015, the CBSA advised Eclipsys that it had obtained the IBM software via a transfer of unused licences from another government department. Eclipsys again requested further details regarding the IBM contract. On October 6, 2015, in an e-mail, Eclipsys repeated its request for further information regarding the IBM contract in order to confirm whether the contract in fact covered the type of software that had been acquired. On the same day, the CBSA indicated by return e-mail that it would need time to respond to Eclipsys’ latest correspondence.
  6. Eclipsys filed its first complaint with the Tribunal regarding this matter on October 19, 2015. The Tribunal decided not to conduct an inquiry, as Eclipsys had not yet received a response to its objection to the CBSA and the complaint was therefore premature.[5]
  7. Eclipsys then filed the present complaint with the Tribunal on November 2, 2015, alleging constructive denial of relief. Eclipsys also requested that the Tribunal order the CBSA to produce the contracts that the CBSA had used to transfer the licences, as well as any documents setting out its evaluation of the merits of the two offers.
  8. The complaint was accepted for inquiry on November 6, 2015, and the CBSA was instructed to provide the documents requested by Eclipsys.
  9. On December 18, 2015, the CBSA filed its Government Institution Report (GIR), with the documents requested by Eclipsys attached.
  10. On January 8, 2016, Eclipsys filed its comments on the GIR.
  11. On January 26, 2016, the CBSA requested that it be allowed to respond to Eclipsys’ comments on the GIR, on the grounds that Eclipsys had included new evidence and raised additional arguments in its comments. The Tribunal granted this request on January 28, 2016.
  12. The CBSA filed its additional submissions on February 5, 2016. Eclipsys filed a reply to the CBSA’s additional submissions on March 14, 2016.[6]

POSITIONS OF PARTIES

  1. Eclipsys claims that the contracts that the CBSA leveraged in order to transfer the licences were not competed on the basis of the CBSA’s identified criteria for SOA interoperability and/or Business Process Management (BPM) software and that the CBSA in fact conducted an illegal sole-source procurement to obtain the required software under the guise of transferring licences under these contracts. Eclipsys also alleged that the CBSA procured additional maintenance and support services.
  2. Eclipsys alleged a lack of fairness and transparency in the CBSA’s decision-making process in contravention of the general principles of the trade agreements. Eclipsys also objected to the CBSA’s decision to use IBM software because the EISP contract that it had with Statistics Canada was identified by the Chief Information Office Branch of the Treasury Board Secretariat as one of the preferred vehicles for government organizations to use when considering the purchase of SOA interoperability software.[7] Eclipsys argued that, if the CBSA did not use the EISP contract, then it should have issued a new RFP to obtain the SOA interoperability software.
  3. Eclipsys also alleged that the CBSA is biased in favour of IBM. Specifically, Eclipsys alleged that the CBSA hired a former IBM employee who was directly involved in evaluating the relative merits of using Oracle software versus IBM software and used that position to discredit the analysis that showed that Oracle would be the preferred contractor. Eclipsys also alleged that the CBSA shows a general purchase bias towards IBM, since, over the past three years, approximately 77 percent of the CBSA’s current contracts valued over $10,000 have been awarded to IBM.
  4. The CBSA argued that the Tribunal does not have jurisdiction over the subject matter of this complaint, as it relates to contract administration. According to the CBSA, at no time did it commence a “procurement process”, as that term is understood in the trade agreements; as a result, there is no “designated contract” that has been or is proposed to be awarded by a government institution, as required by the Act and the Canadian International Trade Tribunal Procurement Inquiry Regulations.[8]
  5. According to the CBSA, instead of conducting a procurement process, the CBSA decided to transfer unused licences for the software that it required in order to obtain SOA interoperability capacity under the terms of existing contracts between government departments and IBM, which is a matter of contract administration.
  6. According to the material attached to the GIR, the unused licences that the CBSA obtained were purchased in 2007 by Communications Security Establishment (CSE) under Contract No. W2213‑08‑0956/001/QE. CSE acquired 1,600 licences for WebSphere Message Broker plus maintenance and support services for the period from December 28, 2007, to December 31, 2008.[9] This contract contained a clause that provided that the licences obtained under it were freely transferable to any other department, corporation or agency of the Government of Canada.[10]
  7. The maintenance and support services for the WebSphere Message Broker licences purchased under the CSE contract were incorporated into Contract No. EN578-070281/001/EEM, a consolidated contract between IBM and the Department of Public Works and Government Services (PWGSC), through amendment No. 041 (December 17, 2010).[11] Maintenance and support for all the licences were subsequently renewed on a monthly basis.[12]
  8. According to the CBSA, the actual licences for WebSphere Message Broker purchased by CSE under Contract No. W2213-08-0956/001/QE were incorporated into the most recent consolidated contract between PWGSC and IBM, Contract No. EN578-130071/001/EEM (November 8, 2013).[13] This contract incorporates by reference Supplemental General Condition 4003 08, which also provides that the government may transfer licences between departments.[14]
  9. Licences for IBM Integration Bus, the successor product to WebSphere Message Broker,[15] and the associated maintenance and support services were transferred from CSE to the CBSA in September 2015.[16] In addition, as part of the IBM SOA interoperability proposal, the CBSA also upgraded licences for other IBM software that it already owned.[17] The total cost for the upgrade of these other licences and for the renewal of maintenance and support services was $1,053,160 (including HST).[18]
  10. In essence, the CBSA contended that the IBM software licences were obtained entirely through the exercise of its rights under these existing contracts and that, therefore, Eclipsys’ complaint relates solely to issues of contract administration.
  11. In support of its position, the CBSA relied on the Tribunal’s decision in File No. PR-2009-056.[19] In that case, the Tribunal found that the substitution of an upgraded product for the one originally bid was clearly provided for in the terms of the contract and that the matter therefore related to contract administration, over which the Tribunal has no jurisdiction.[20]
  12. With respect to Eclipsys’ allegations of bias, the CBSA argued that the fact that one employee worked for IBM does not indicate bias and pointed out that the same employee also had experience deploying Oracle products. Further, the CBSA submitted that the internal analysis documents that it provided show that Eclipsys and IBM’s proposals were assessed on their merits and that there was no effort made to discredit Eclipsys’ proposal.
  13. In its reply to the GIR, Eclipsys claimed that the evidence on file shows that the CBSA did define a requirement and, in so doing, commenced a “procurement process”, as defined by the trade agreements, but did not then conduct this procurement in a fair, open and competitive manner. Eclipsys also raised a number of issues with the material attached to the GIR.
  14. Eclipsys also raised issues with the costs associated with the transfer, including the alleged necessity to reinstate the maintenance and support services associated with the licences.
  15. Finally, Eclipsys claimed that it was not appropriate for the CBSA to use the licences obtained under the CSE contract, as the procurement for those licences was subject to the national security exception and was therefore not openly competed.
  16. In response to the issues raised by Eclipsys in its reply to the GIR, the CBSA noted that many of these had to do with the CBSA’s discussions around the use of an IBM contract with Shared Services Canada, which ultimately was found not to be an appropriate vehicle for the purchase of the required software and was not used to obtain the licences for the software at issue.
  17. The CBSA also disputed the accuracy of Eclipsys’ contention that 77 percent of CBSA IT purchases were directed to IBM and noted that, in any case, the fact that a particular bidder has been successful in past procurements is irrelevant, unless Eclipsys is claiming that all those past procurements were subject to bias, in which case it should have raised those concerns in a timely manner.
  18. Finally, the CBSA noted that it is not clear that the national security exception was invoked to acquire the original CSE licences and that, in any case, this would not preclude the government from subsequently administering the contract.
  19. In reply to the CBSA’s additional submissions, Eclipsys repeated its objection to the lack of fairness and transparency surrounding the CBSA’s decision to use the IBM contracts and alleged that the CBSA had not acted in good faith in making this decision. Eclipsys again raised issues with the CBSA’s consideration of the IBM contract with Shared Services Canada, as well as with the upgrade of the CBSA’s existing BPM licences. Eclipsys also alleged that, by using different contracts to obtain the licences required to implement its SOA interoperability requirement, the CBSA was engaging in contract splitting, which is contrary to Treasury Board policy.
  20. To the extent that Eclipsys’ final submissions raised issues that were not included in Eclipsys’ complaint and were not necessary to rebut the CBSA’s additional submissions, they were not considered.

TRIBUNAL’S ANALYSIS

  1. The trade agreements, such as the North American Free Trade Agreement,[21] limit the Tribunal’s jurisdiction to “any aspect of the procurement process”, a process defined as beginning “. . . after an entity has decided on its procurement requirement and continu[ing] through the contract award”.[22]
  2. The Tribunal has consistently limited its inquiries to elements of the procurement cycle, up to and including contract award. However, the Tribunal has also found that, if substantial changes are made to mandatory requirements rendering them completely contradictory to the original specifications, complaints could fall within its jurisdiction, in that they are not simple matters of contract administration.[23] As the Tribunal explained in File No. PR-2012-006,[24] “. . . it is not a simple matter of contract administration if, by accepting products that are different from those that were proposed in a bid and that do not comply with the requirements of the solicitation, the procuring entity effectively initiates a new procurement process with different mandatory criteria without a proper call for tenders.”[25]
  3. The Tribunal has generally drawn a line between the procurement process and contract administration by considering whether the procuring entity took actions that effectively changed the terms of the mandatory requirements after the contract had been awarded, for example, by accepting goods that were either substantially different from, or contradictory to, the mandatory requirements of the original solicitation. In those exceptional cases where such actions had taken place, the Tribunal found that it could inquire into whether the procuring entity effectively conducted a new procurement process for a different good or service and thereby claim jurisdiction over the complaint as a result.
  4. In line with the above principles, in order for the Tribunal to have jurisdiction over this matter, the Tribunal must determine that the CBSA, through the acquisition of licences for upgraded software, in fact obtained something substantially different from what was contemplated by the original RFP.
  5. Alternatively, if the CBSA was simply exercising its rights under the existing contracts, then the matter relates solely to contract administration, and the Tribunal has no jurisdiction, as found, for example, in Microsoft.
  6. The Tribunal will only consider Eclipsys’ second ground of complaint if it finds that it has jurisdiction because the complaint does not relate solely to contract administration.

Did the CBSA Conduct an Illegal Sole-source Procurement?

  1. It is not possible to characterize the subject matter of this complaint as relating to anything other than contract administration. Fundamentally, Eclipsys’ complaint relates to the CBSA’s choice between two existing contractual vehicles (the existing EISP contract with Oracle/Eclipsys versus existing contracts with IBM) to acquire SOA interoperability software.
  2. Although Eclipsys has framed its complaint as relating to an illegal, sole-source procurement and claimed that the IBM contracts were not initially competed on the basis of SOA interoperability software, it has offered no proof that this was actually the case. Further, the evidence on the record shows that a variety of different software products can be used to achieve SOA interoperability and that the IBM software obtained under the original CSE contract, as well as the product ultimately obtained by the CBSA, is among those products.[26] In short, there is no evidence on the record that supports Eclipsys’ claim that the CBSA obtained a substantially different product from what was bid under the original RFP.
  3. Furthermore, the evidence supports the CBSA’s claim that the transfer of licences between government departments was provided for under the terms of both the original contract between CSE and IBM and the contract between IBM and PWGSC that was in place at the time of the transfer.
  4. As noted above, the product bid and obtained under the CSE contract was WebSphere Message Broker, but the product obtained by the CBSA through the licence transfer is IBM Integration Bus. Arguably, if the upgrade from WebSphere Message Broker to IBM Integration Bus resulted in the CBSA obtaining something substantially different from what was bid in the original procurement process, this could amount to an illegal, sole-source procurement.
  5. However, according to the uncontested evidence submitted by the CBSA, IBM Integration Bus contains all the same functionality as WebSphere Message Broker.[27] In addition, both the original CSE contract and the current consolidated contract with PWGSC contain clauses that require IBM to provide licences for any upgraded version of the originally purchased software.[28]
  6. The fact that the CBSA incurred costs associated with the licence transfer does not, in and of itself, make this a procurement process. Potential costs for upgrading software and for the annual renewal of maintenance and support services are also contemplated by the contract.[29]
  7. Finally, the Tribunal notes that the consideration of various procurement options, including the CBSA’s consideration of the potential issuance of a new RFP or the exploration of whether the contract between IBM and Shared Services Canada could be leveraged to fulfill the CBSA’s needs, does not constitute a “procurement process” within the meaning of the trade agreements.
  8. In light of the foregoing, the Tribunal finds that the complaint relates to contract administration and does not concern a “procurement process”, as that term is understood in the trade agreements. Consequently, the Tribunal does not have jurisdiction to continue its inquiry.
  9. As indicated above, since the Tribunal does not have jurisdiction over this complaint, it will not address Eclipsys’ claims of bias.

ORDER

  1. 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.

COSTS

  1. Eclipsys has not made any submissions with respect to costs. The CBSA has requested that the complaint be dismissed with costs.
  2. As the successful party, the CBSA would ordinarily be entitled to its costs. However, the Tribunal notes that Eclipsys was not provided with any information about the IBM contracts until they were produced as part of this proceeding, despite repeated requests to CBSA officials. While the terms of the CSE contract are confidential, a redacted version or a more detailed explanation could have been provided earlier. It is possible that, had Eclipsys received this information when it had requested it from the CBSA, this complaint could have been avoided.
  3. In light of this fact, no costs will be awarded to either party.
 

[1].      R.S.C., 1985, c. 47 (4th Supp.) [Act].

[2].      Exhibit PR-2015-038-01A at 8, Vol. 1.

[3].      R.S.C., 1985, c. F-11.

[4].      Exhibit PR-2015-038-01A at 5, Vol. 1.

[5].      Eclipsys Solutions Inc. (26 October 2015), PR-2015-032 (CITT).

[6].      Due to administrative oversight, Eclipsys did not receive the CBSA’s additional submissions until March 9, 2016. As a result, Eclipsys was given until March 14, 2016, to submit a reply.

[7].      Exhibit PR-2015-038-01C at 12, Vol. 1.

[8].      S.O.R./93-602 [Regulations].

[9].      Exhibit PR-2015-038-14 at para. 5, Vol. 1A.

[10].    Exhibit PR-2015-038-14A (protected), tab 1 at 17 (clause 3.11), Vol. 2A.

[11].    Exhibit PR-2015-038-14 at para. 8, Vol. 1A; Exhibit PR-2015-038-14B (protected), tab 17, Vol. 2B.

[12].    Exhibit PR-2015-038-14 at para. 8, Vol. 1A. Presumably, CSE had also continued to renew maintenance and support on a monthly basis between 2008 and 2010.

[13].    Exhibit PR-2015-038-14 at para. 9, Vol. 1A. The copy of this contract filed by the CBSA does not appear to contain any reference to these licences; however, elsewhere in the submissions, the CBSA noted that the documentation for these licences was kept separate because of national security considerations.

[14].    Exhibit PR-2015-038-14 at para. 10, Vol. 1A; Exhibit PR-2015-038-14D, tab 6, Vol. 1C.

[15].    Exhibit PR-2015-038-14 at para. 19, Vol. 1A.

[16].    Exhibit PR-2015-038-14B (protected), tabs 15, 16, Vol. 2A.

[17].    Amendment No. 028 to Contract No. EN578-130071/001/EEM (September 30, 2015), Exhibit PR-2015-038-14B (protected), tab 15, Vol. 2A.

[18].    Exhibit PR-2015-038-14 at para. 27, Vol. 1A.

[19].    Microsoft Canada Co., Microsoft Corporation, Microsoft Licensing, GP and Softchoice Corporation v. Department of Public Works and Government Services (12 March 2010) (CITT) [Microsoft].

[20].    Ibid. at para. 51.

[21].    North American Free Trade Agreement between the Government of Canada, the Government of the United Mexican States and the Government of the United States of America, 17 December 1992, 1994 Can. T.S. No. 2, online: Department of Foreign Affairs, Trade and Development <http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-... (entered into force 1 January 1994) [NAFTA].

[22].    Article 1017(1)(a) of NAFTA.

[23].    AdVenture Marketing Solutions Inc. v. Department of Public Works and Government Services (31 March 2011), PR-2010-074 (CITT), where the Tribunal found that the acceptance by PWGSC of plastic USB drives instead of the required stainless steel USB drives was not a simple matter of contract administration but rather a new procurement process; Canyon Contracting v. Parks Canada Agency (19 September 2006), PR-2006-016 (CITT) at para. 25, where the Tribunal found that the acceptance by Parks Canada of a bid indicating the use of aluminum round poles instead of the required I-beam aluminum support posts was a substantial change of a requirement of the RFP and that, in so doing, Parks Canada had initiated a new procurement.

[24].    Secure Computing LLC v. Department of Public Works and Government Services (23 October 2012) (CITT).

[25].    Ibid. at para. 48.

[26].    Exhibit PR-2015-038-14B (protected), tabs 7, 8, Vol. 2B.

[27].    Exhibit PR-2015-038-14 at para. 19, Vol. 1A.

[28].    Exhibit PR-2015-038-14A (protected), tab 1 at 9, Vol. 2A; Exhibit PR-2015-038-14A (protected), tab 5 at 10, Vol. 2B.

[29].    Exhibit PR-2015-038-14A (protected), tab 5 at 11 (clause 1.5[j]) and 26 (clause 6.5), Vol. 2B.