HEWLETT-PACKARD (CANADA) CO.

HEWLETT-PACKARD (CANADA) CO.
v.
SHARED SERVICES CANADA
File No. PR-2016-043

Determination and reasons issued
Monday, March 20, 2017

TABLE OF CONTENTS

 

IN THE MATTER OF a complaint filed by Hewlett-Packard (Canada) Co. 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

HEWLETT-PACKARD (CANADA) CO. Complainant

AND

SHARED SERVICES CANADA Government Institution

DETERMINATION

Pursuant to subsection 30.14(2) of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal determines that the complaint is not valid.

The parties had mixed success. Hewlett-Packard (Canada) Co. succeeded in defending against Shared Services Canada’s motion to strike, some grounds of which had already been rejected in earlier decisions by the Canadian International Trade Tribunal, but Shared Services Canada prevailed on the merits.

Therefore, pursuant to section 30.16 of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal has decided not to award costs to any party.

Serge Fréchette
Serge Fréchette
Presiding Member

Tribunal Panel: Serge Fréchette, Presiding Member

Support Staff: Eric Wildhaber, Counsel
Dustin Kenall, Counsel

Complainant: Hewlett-Packard (Canada) Co.

Counsel for the Complainant: Richard Swan
George Reid
Jessica Roberts

Government Institution: Shared Services Canada

Counsel for the Government Institution: Ian Mcleod
Roger Flaim
Susan Clarke
Kathryn Hamill

Please address all communications to:

The Registrar
Secretariat to the Canadian International Trade Tribunal
333 Laurier Avenue West
15th Floor
Ottawa, Ontario  K1A 0G7

Telephone: 613-993-3595
Fax: 613-990-2439
E-mail: citt-tcce@tribunal.gc.ca

STATEMENT OF REASONS

BACKGROUND

  1. On November 11, 2016, Hewlett Packard (Canada) Co. (HP) 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] concerning a Request for Proposal (RFP) (Solicitation No. 2B0KB-123816/C) issued by Shared Services Canada (SSC) for the lease of a government-wide, high performance computing solution (HPC) to advance atmospheric and related scientific research.
  2. HP submits that SSC improperly determined that its proposal failed to meet two mandatory requirements of the RFP and that, but for these evaluation errors, it would have been entitled to the award of the resulting contract as the highest-ranked bidder. HP seeks the cancellation of the contract (awarded to IBM Canada Ltd. (IBM)) or, alternatively, a re-evaluation of the proposals, a re-tender of the contract or compensation for its lost profit. HP also seeks its costs in preparing its proposal and proceeding with this complaint.
  3. On November 16, 2016, having determined that it met the requirements under subsection 30.11(2) of the CITT Act and the conditions set out in subsection 7(1) of the Canadian International Trade Tribunal Procurement Inquiry Regulations, the Tribunal initiated an inquiry into the complaint.[2]
  4. On December 15, 2016, SSC moved for the Tribunal to dismiss the complaint as untimely and for lack of jurisdiction. On January 10, 2017, the Tribunal denied the motion, with reasons to be issued with the Tribunal’s statement of reasons on the merits of the complaint.
  5. For the reasons that follow, the Tribunal finds that HP’s complaint is not valid.

PROCUREMENT PROCESS

Timeline

  1. The HPC consists of a supercomputer, global storage cloud, high-speed local/storage area networks, batch scheduling environment, pre- and post-processing clusters, vendor supported solution (hardware, operating system and software development environment), associated training and conversion assistance services, and maintenance and support services for the solution.[3]
  2. The HPC is to be used by Environment and Climate Change Canada (Environment Canada) to process meteorological data used, inter alia, to provide strategic support to the Department of National Defence (DND) missions worldwide, to allow Health Canada to assess the transportation and dispersion of nuclear and other hazardous materials released into the atmosphere, and to provide severe weather warnings to air traffic controllers and other transportation officials.[4]
  3. Having determined its requirements after issuing a Request for Information on October 31, 2012, SSC commenced the procurement process by publishing an Invitation to Qualify (ITQ) on October 4, 2013, which was revised on May 15, 2014. Four vendors qualified. On November 24, 2014, these vendors were provided copies of the RFP which, due to national security concerns, was not published on Canada’s electronic tendering service (buyandsell.gc.ca) or otherwise made public.[5]
  4. The closing date of the RFP was June 29, 2015. Ultimately, only three vendors (HP, IBM and another bidder) submitted proposals.
  5. The RFP technical evaluation team—which comprised eight evaluators from SSC and one from Environment Canada, as well as a facilitator from SSC and an observer from Communications Security Establishment (CSE)—met on June 30, July 2 and July 3, 2015, to review the technical bids.
  6. The financial bids were reviewed by the contracting authority, the Procurement and Vendor Relationships (PVR) Branch of SSC.[6]
  7. A memorandum dated July 3, 2015, reports that the technical evaluation team found that the third bidder’s proposal was non-compliant and that, between HP and IBM, HP had submitted the highest-ranked, compliant proposal. The team therefore recommended that HP be selected for the pre-award benchmark, the final test before contract award.[7]
  8. However, by July 6, 2015, PVR had identified potential non-compliance issues regarding HP’s bid with respect to the identification of subcontractors and its completion of the financial bid forms.[8] Discussions of the compliance of HP’s financial bid continued on July 28 and 29, 2015.[9] Discussions of the compliance of the supply chain information continued into August 2015.[10]
  9. On August 12, 2015, SSC e-mailed the bidders to inform them that it was still “in the final phase of evaluating proposals”.[11]
  10. In accordance with SSC’s standard practice, the evaluation had been delayed by the federal election between August 4, 2015, and October 19, 2015.[12]
  11. In the meantime, SSC initiated the Integrity Framework verification process and was notified by Public Works and Government Services Canada (PWGSC) on September 30, 2015, that HP was non-compliant with the Integrity Framework.[13]
  12. In sum, by October 28, 2015, SSC had determined that there were three potential grounds for non-compliance:

    i. The new, unapproved equipment and subcontractor identified on HP’s supply chain information form and relied on in its proposal;

    ii. HP’s failure to properly demonstrate how its prices in Annex B6 came from Annex B1; and

    iii. The Integrity Framework violation.[14]

  13. As a result of the above deficiencies in HP’s proposal, IBM remained the only compliant bidder; therefore, SSC initiated the pre-award benchmark process, which IBM passed, resulting in it being awarded the contract on May 27, 2016, after approval from Treasury Board.[15]
  14. On June 22, 2016,[16] which was then nearly a year after the bids had been submitted, SSC advised HP that it had decided to award the HPC contract to IBM and that HP’s proposal had been disqualified because it failed to meet two mandatory requirements regarding the provision of pricing information (section 3.3.1) and the identification of subcontractors (sections 4.3.4.13 and 4.3.4.14)—SSC had earlier abandoned the Integrity Framework non-compliance finding after being notified by HP on February 26, 2016, that PWGSC had cleared the violation after a corporate reorganization.[17]
  15. On June 29, 2016, HP objected to SSC’s decision and requested further information by letter.[18] SSC responded by a letter dated October 28, 2016, providing certain additional information but maintaining its decision.[19] HP then filed its complaint with the Tribunal on November 11, 2016.

National Security Exception

  1. The RFP did not itself invoke a National Security Exception (NSE) to the trade agreements, but did reference (at section 1.2) an earlier NSE invocation:[20]

    On May 28, 2012, the Government of Canada announced on the Government Electronic Tendering Service that it had invoked the National Security Exception under the trade agreements in respect of procurements related to email, networks and data centres for Shared Services Canada. As a result, this requirement is subject to the National Security Exception.

  2. The May 28, 2012, NSE announcement (the Blanket NSE) referred to in the RFP was published as a tender notice on the government’s electronic tendering service.[21] The announcement informs potential suppliers that PWGSC had invoked a blanket NSE for all procurements for SSC related to e-mail, network/telecommunications, data centre systems, infrastructure and services. The Blanket NSE states that while the NSE “will apply to a variety of procurements, which may involve different procurement strategies . . . . PWGSC and SSC anticipate that [it] . . . may involve the pre-selection of suppliers who, among other things, meet certain security clearance criteria . . . [and] [a]ccess to information about certain SSC procurements . . . may also be restricted . . . .”[22]
  3. The Blanket NSE was made by PWGSC after a written request from SSC’s Senior Assistant Deputy Minister, sent by a letter dated April 27, 2012. The letter set out SSC’s justification for the NSE, specifying that the Government of Canada’s e-mail, network and data centre systems had “repeatedly been the target of espionage and attack by foreign government and other hostile parties.”[23] It included an Annex A, which describes SSC’s mandate in cybersecurity, the nature of cyber-attacks, and provided examples of their potential impact on national security including with respect to the operations of the Department of National Defence, the Canada Border Services Agency, Citizenship and Immigration Canada, emergency response protocols during a terrorist attack, satellite surveillance, and security of public events. Annex A concluded that the most feasible and effective strategy to combat cyberattacks was to restrict access to and information regarding certain procurements to certain trusted suppliers. Notably, it made no statements or conclusions about the procurement review process, either before the courts or at the Tribunal. Although the Blanket NSE itself did not relate to any specific procurement, the Blanket NSE was preceded by a specific NSE invocation by PWGSC on August 6, 2010, relating to any future procurement of supercomputers for Environment Canada.[24]
  4. In July 2012, SSC’s Senior Assistant Deputy Minister and Chief Financial Officer of Corporate Services confirmed the invocation of the Blanket NSE on behalf of SSC, which had, after the Shared Services Canada Act received Royal Assent on June 29, 2012, taken over responsibility for the types of procurements (e.g. information technology related) covered by the Blanket NSE.[25]

TRADE AGREEMENTS

  1. HP submits that SSC’s conduct is in breach of the Agreement on Internal Trade[26] (Articles 504 and 506), the North American Free Trade Agreement[27] (Articles 1008, 1013 and 1015) and the World Trade Organization’s Agreement on Government Procurement (Articles IV, X, XV and XVI).[28]
  2. The trade agreements provide that, to be considered for contract award, a tender must conform to the essential requirements set out in the tender documentation and require that procuring entities award contracts in accordance with the criteria and essential requirements specified in the tender documentation.
  3. In particular, Articles 1015(4)(a) and (d) of NAFTA provide that “[a]n entity shall award contracts in accordance with the following: (a) to be considered for award, a tender must, at the time of opening, conform to the essential requirements of the notices or tender documentation . . . (d) awards shall be made in accordance with the criteria and essential requirements specified in the tender documentation . . . .” Articles XV(4) and (5) of the AGP similarly provide as follows: “4. To be considered for an award, a tender shall . . . comply with the essential requirements set out in the notices and tender documentation . . . [and] 5. the entity shall award the contract . . . based solely on the evaluation criteria specified in the notices and tender documentation . . . .” Finally, Article 506(6) of the AIT provides that “[t]he 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.”
  4. Because it challenges SSC’s determination of non-compliance in relation to two mandatory criteria, HP’s complaint raises issues regarding the evaluation and awarding of contracts in the procurement process governed by Articles 506 of the AIT, 1015 of NAFTA and XV of the AGP.

TRIBUNAL ANALYSIS

Reasons for Denial of SSC’s Motion

  1. The Tribunal begins its analysis by providing its reasons for denying SSC’s motion to dismiss the complaint. SSC had argued that the Tribunal lacked jurisdiction to hear the complaint because of the Blanket NSE. SSC also argued that the complaint is untimely on the basis that it would have been filed more than 10 working days after the Blanket NSE was brought to HP’s attention.
  2. This matter does not raise a question of jurisdiction. Rather, it raises the following narrow questions of law. First, does SSC need to articulate a reason why a Canadian supplier’s AIT right of access to the Tribunal should be denied? Second, does SSC need to articulate a reason why it believes it necessary on national security grounds to exclude the disciplines of the trade agreements requiring that proposals be evaluated according to specified tender requirements and procedures?
  3. The Tribunal answers both questions in the affirmative. Because the Blanket NSE invocation articulates no reason whatsoever for revoking suppliers’ right to recourse at the Tribunal or their right to an evaluation of their proposals by SSC that is consistent with the requirements and procedures SSC itself has stated it will follow in the tender documents, the Tribunal denied SSC’s motion.
  4. SSC conceded that the NSE provisions require it to articulate, in writing, the specific national security concern related to the procurement (or, in the case of the Blanket NSE, the group of procurements), that the NSE invocation be approved by the appropriate government institution official and that the scope of the exclusions be made clear. However, SSC denies that it must articulate a plausible reason, or even any at all, why a discipline of the trade agreements (including recourse to the tribunal) should be excluded to promote that national security interest. It submits that because the NSE provisions lack any limiting language, the Tribunal lacks objective criteria to conduct a review of the government institution’s decision.
  5. The Tribunal disagrees, and has previously rejected the position taken by SCC. SSC, in effect, treats the NSE as a general licence to void potential suppliers’ right to seek review of government procurement actions at the Tribunal. The Tribunal cannot but underscore, again, that the NSE provisions of the trade agreements serve as a carefully designed safety valve. They do not allow for the wholesale and indiscriminate jettison of a Canadian supplier’s right to have the Tribunal inquire into their concerns when they feel aggrieved by the procurement-related decisions of a government institution. SSC’s stance is wrong because it ignores the text and purpose of the trade agreements and the Tribunal’s mandated role as set out by Parliament and the courts.
  6. The treaties’ preambles announce the objectives of fostering transparency and non-discrimination, and of discouraging arbitrary practices in procurement by requiring government institutions to abide by published requirements and evaluation criteria. Access to an independent procurement review mechanism is a cornerstone of ensuring those objectives.
  7. The Tribunal has consistently held, in accordance with the principles of interpretation of domestic legislation[29] and treaties,[30] that the trade agreements should be interpreted consistent with their objects and purposes.[31] Included among those principles is the rule that exceptions are to be “interpreted in light of their underlying rationale and not be used to undermine the broad purpose of the legislation”.[32]
  8. Under the AIT government institutions explicitly bear the “burden of establishing that the [NSE] exception applies” [emphasis added]. The French text of the AIT emphatically requires that a government institution “doit prouver”, i.e. must prove, that the exception applies.[33] The Tribunal reads the AIT as saying that in order to discharge that burden in a non-arbitrary manner, a government institution must, at a minimum, articulate a plausible reason for excluding any of the disciplines of the trade agreements that a given NSE proposes to set aside—the same applies when the wholesale exclusion of all of these disciplines is sought, as the case is here. Indeed, in the present instance, SSC has, despite invoking the NSE order to exclude all disciplines of the trade agreements, provided actual rationales to support the exclusions only for certain of those disciplines but notably not for the discipline of recourse to the Tribunal and the discipline of evaluating proposals based on the specified tender requirements and procedures.
  9. In short, SSC claims a right to circumvent the Tribunal’s review mechanism without the need to provide any rationale whatsoever. What’s more, SSC is claiming a right to evaluate proposals (and, consequently, award resulting contracts) based on criteria other than the requirements and procedures specified in the tender documents. The Tribunal believes that such claims are contrary to Canada’s obligations under the applicable trade agreements because it is tantamount to seeking a licence to act arbitrarily. For instance, endorsing it would be in violation of the explicit burden of proof imposed on a party invoking an exception under the AIT. It would also be in derogation of the Tribunal’s role as the preferred forum for adjudicating procurement complaints; indeed, the Tribunal, with its investigation procedures that are designed to be expeditious, accessible, confidential and, crucially, designed to minimize disruption to the procurement process, is the bid challenge mechanism that has been chosen by Parliament. That choice cannot be set aside without justification.
  10. Because SSC refused to meet the evidentiary burden required by the AIT, it has also failed to acknowledge any accountability in this regard, and its motion was therefore denied on that basis.
  11. As mentioned above and examined below, SSC again attempted here to revisit this issue, despite it having been settled by previous cases at the Tribunal, which were not challenged in the courts.
  12. Nevertheless, in an attempt to leave no doubt as to where it stands on the issue of the invocation of the NSE and the question of jurisdiction, the Tribunal will recall below how it previously dealt with this question. The sections that follow deal, in turn, with the Tribunal’s role in the area of federal procurement review, with previous decisions relating to NSE claims, and provide an analysis of the text of the NSE provisions in the context of the structure and purpose of the trade agreements (and particularly the AIT) as a whole. Finally a consideration of discrete points raised by SSC in its motion is also provided: none of the arguments it raises are novel; all could have, or ought to have, been raised at the time of previous litigation on this same issue.

Jurisdiction of the Tribunal

  1. SSC submits that where the NSE has been invoked “for all purposes” as in the present case, no disciplines under the trade agreements apply to the procurement; according to SSC, the Tribunal would, as a result, lack jurisdiction to inquire any further beyond assuring itself that the NSE has actually been invoked, in full, and by the proper government institution official. In response, HP observes that these arguments were previously rejected by the Tribunal, first in Eclipsys[34] and, more recently, in M.D. Charlton.[35]
  2. HP is correct. In Eclipsys and M.D. Charlton the Tribunal settled the question of whether the NSE presents a jurisdictional bar to review or is merely an interpretive question regarding the requirements of the trade agreements. The Tribunal fails to understand what reason, if any, tactical or other, would motivate SSC to making this argument anew given the Tribunal’s previous and unambiguous pronouncements on the same question. The Federal Court of Appeal recently confirmed that when a government institution seeks to relitigate a settled question not distinguishable on the facts, it must offer submissions that are “not simply a rerun”.[36] The holdings in Eclipsys and M.D. Charlton were not challenged on judicial review,[37] and SSC has raised no new arguments for why the Tribunal should deal with the interpretation of the NSE provisions in a way other than it already did in those matters.
  3. The Tribunal’s starting point remains that it has jurisdiction to review procurement processes relating to a “designated contract”.[38] In such cases, it must determine whether a “procurement was conducted in accordance with the requirements”[39] of the trade agreements. Here, there is no question that the procurement is for a “designated contract” in terms of the normal criteria of monetary value, covered institution, and covered goods and services. Rather, SSC simply argues that once it has invoked an NSE and excluded all the disciplines of a trade agreement, no standards remain for the Tribunal to apply in reviewing a government institution’s conduct or decisions during a procurement process.
  4. SSC conflates the matter of the substantive content of a trade agreement provision such as the NSE, which is a question of law, with a question of jurisdiction. The Supreme Court of Canada has defined the latter as being “. . . in the narrow sense of whether or not the tribunal had the authority to make the inquiry. In other words, true jurisdiction questions arise where the tribunal must explicitly determine whether its statutory grant of power gives it the authority to decide a particular matter.”[40] The Supreme Court has further cautioned that “[t]rue questions of jurisdiction are narrow and will be exceptional”.[41]
  5. The Federal Court of Appeal has held that the Tribunal’s “interpretation and application of a provision in its home statute [is] not a ‘true question of jurisdiction or vires . . . [but rather] . . . is presumptively subject to reasonableness review”.[42] On the topic of the Tribunal’s jurisdiction in procurement matters, the Federal Court of Appeal and the Supreme Court of Canada have explained that the trade agreements[43]

    . . . may be regarded as “doors” into the jurisdiction of the CITT. A potential complainant in respect of a procurement may pass through a “door” and thereby gain access to the CITT complaint procedure, by demonstrating that the subject-matter of the procurement is within the scope of one of the trade agreements and that the activity contemplated by that potential complainant is covered by, or within the scope of, that agreement.

  6. The “doors” referenced are the articles of the trade agreements as cited in subsection 3(1) of the Regulations; that is, inter alia, Article 1001 of NAFTA, Article 502 of the AIT and Article II of the AGP.[44] These are the “scope and coverage” articles of the agreements; they define the types of goods and services and procurement entities covered by the trade agreements. They are also part of the definition of “designated contract” and, consequently, determine which procurement processes fall within the Tribunal’s jurisdiction.
  7. These articles of the trade agreements do not exclude a designated contract from the Tribunal’s jurisdiction when an NSE is invoked; in fact, they make no reference to the NSE provisions at all. Thus, the scope and requirements of the NSE provisions are simply a question of law, not jurisdiction, i.e. no different from the scope and requirements of any other provisions of the trade agreements.
  8. As such, the NSE provisions must be read in the context of the general principles adopted in the trade agreements and the implementing legislation and regulations. These principles govern the interpretation of the agreements in their entirety, including specific NSE provisions, and are also reflected in the Tribunal’s legislative scheme and mandate as articulated by the courts. On the basis of these principles and the reasons explained below, the Tribunal reiterates that there are standards for the Tribunal to apply in reviewing a government institution’s purported invocation of an NSE provision.

The Tribunal’s Role Under the Regime of the Trade Agreements

  1. Each of the trade agreements provides that it will be interpreted to promote transparency and will provide for the impartial, effective and timely resolution of complaints regarding the procurement process.[45] The Tribunal is the impartial, effective and timely dispute resolution mechanism envisioned by the trade agreements and Parliament through the CITT Act and Regulations.[46] The courts have recognized that, in its procurement review function, the Tribunal considers “complex legal and factual issues that demand specialized expertise in the fields of economics, business and procurement practices.” This is a “complex exercise [that] demands unique expertise and experience and is the everyday work of the Tribunal”.[47] For nearly thirty years, the Tribunal has grown and established its expertise in interpreting and applying the trade agreements and adjudicating the often complex procurement disputes that are covered by those agreements.  
  2. The courts have repeatedly stated that they will defer to the Tribunal’s interpretations of the trade agreements unless these interpretations are unreasonable.[48] The courts have indicated, too, that the Tribunal was uniquely placed to consider federal procurement challenges governed by the trade agreements as the preferred forum of first instance.[49] The administrative scheme adopted by Parliament contemplates the resolution of disputes involving the trade agreements (and often their related million- or billion-dollar procurements involving often voluminous, complex and sensitive requirements) on an expeditious and accessible basis in the first instance at the Tribunal.
  3. The Federal Court of Appeal has held that the interpretation of relevant provisions governing the procurement review process should not be narrowly construed; rather it should instead take into account the purpose of the regulatory regime created by Parliament. Specifically, in Almon, the Court wrote as follows:[50]

    [23] The purposes of this regulatory regime, deduced from the above provisions, are as follows:

    (1) Fairness to competitors in the procurement system. A fair procurement system that applies one set of transparent rules to all bidders increases confidence in the system, and encourages increased participation in competitions. This maximizes the probability that the government will get good quality goods and services that meet its needs, at minimum expense to the taxpayer. In short, fairness gives taxpayers value for the taxes they pay.

    (2) Ensuring competition among bidders. When bidders are placed on a level playing field and compete, it is more likely that government will get good quality goods and services that meet its needs, at minimum expense to the taxpayer. Competition also gives taxpayers value for the taxes they pay.

    (3) Efficiency. This speaks directly to the government getting good quality goods and services at minimum expense. This also speaks to the need for a procurement system to run in a timely, practical manner without causing unnecessary expense.

    (4) Integrity. A procurement process with integrity increases participants’ confidence in the procurement system and enhance their participation in it. This increases the probability that government will get good quality goods and services that meet its needs, at minimum expense to the taxpayer. A procurement process with integrity also gives taxpayers value for the taxes they pay.

    These four purposes, and the overarching concept of value for taxpayers, are essential aspects of good governance. Important as they are, they must be at the front of the Tribunal’s mind when it finds facts, evaluates their significance, interprets its legislation, applies that legislation to the facts, and grants remedies.

    [Italics in original, underlining added for emphasis]

  4. As recognized in Almon, when adjudicating disputes concerning federal procurements governed by the AIT (which applies only to Canadian suppliers), the Tribunal must be ever mindful that it fulfills its institutional role of ensuring fairness, competition, efficiency and the integrity of the procurement system. None of these goals is served by interpreting the AIT (or the other trade agreements for that matter) in a manner that completely ousts recourse to the Tribunal. At a minimum, the Tribunal finds that it cannot discharge its duty when a government institution has failed to articulate how litigating a complaint at the Tribunal is a threat to national security but litigating a challenge at the federal courts—which, SSC suggests, would retain jurisdiction—is not.[51]
  5. The Tribunal’s statutory framework strongly protects confidential information by, inter alia, creating indictable and summary offences for unauthorized use of confidential information.[52] The Tribunal’s history of successfully protecting confidential information in all of its mandates is well known. In TPG Technology Consulting Ltd., the Tribunal wrote as follows:[53]

    The Tribunal possesses 30 years of specialized experience in the conduct of government procurement review. Over that period, the Tribunal has examined a wide gamut of issues, including in regard to complex procurement processes that regularly have contract values into the hundreds of millions of dollars, or more. It has the powers of a superior court of record in regard to the “. . . attendance, swearing and examination of witnesses, the production and inspection of documents. . . .” It regularly orders the production of documents necessary to properly inquire into a matter and, from time to time, holds oral hearings only when issues of credibility need to be tested. In addition, the Tribunal is bound to complete its review of a matter in 45 days, in the case of the “express option”, 90 days under a normal procedure or 135 days in the case of proceedings that have been extended. The advantages of this system, including in regard to expediency and costs, are often compelling to many complainants seeking the consideration of their grievances.

  6. Again, SSC has articulated no rationale, let alone any benefit to HP or to itself, that could justify the ousting of recourse to the Tribunal, much less the requirement that its evaluation of proposals be consistent with the requirements and procedures that SSC itself has chosen to include in the tender documents. To be clear, the issue in this matter is access by Canadian suppliers with approved security clearances to the Tribunal’s recourse mechanism in order to challenge SSC’s alleged failures to follow its own published evaluation criteria. This matter does not concern the exclusion of other disciplines of the trade agreements (e.g. regarding non-discrimination against foreign suppliers or publication of statements of work or technical requirements).
  7. In fact, it may be that SSC is incapable of articulating any rationale whatsoever for excluding the basic requirements of the AIT that are (i) the access to the Tribunal by Canadian suppliers and (ii) the respect of published evaluation criteria. Because that appears to be the case, that absence of rationale is fatal to SSC’s position. The Tribunal would be failing to discharge the duty that Parliament has entrusted to it if it were to ignore the burden of proof established in the text of the AIT and the principle that exceptions must not be interpreted to undermine the general purpose of legislation. To adopt SSC’s position would be tantamount to the Tribunal granting SSC a licence to act arbitrarily.
  8. HP is a Canadian supplier with the requisite security clearance to bid on the solicitation and be awarded the resulting contract, if compliant;[54] its right to access the Tribunal’s procurement review mechanism under the AIT and Parliament’s implementing legislation and regulations cannot be ousted arbitrarily and without any rationale. Again, because none was provided, SSC’s motion was denied. This outcome aligns, as well, with the Tribunal’s case law, reviewed below.

Case Law Review

  1. The Tribunal’s first examination of the NSE provisions occurred nearly twenty years ago in Lotus.[55] There, the Tribunal recognized the government institution’s discretion to invoke the NSE in Article 1018(1) of NAFTA to remove a particular procurement from the scope of that trade agreement’s disciplines. However, it also concluded that to “fulfil its mandate as a reviewing body”, it needed to[56]

    . . . interpret and apply those [NSE] provisions, i.e. construe them, to determine if a procurement has been conducted in a manner consistent with them. In the Tribunal’s view, this includes determining whether the national security exceptions have been invoked in the context of a particular complaint.

  2. SSC pointed to Lotus as acknowledging that the government institution “has a discretion to declare the subject matter of a particular procurement as relating to national security and, in so doing, may remove that matter from the obligations of the bid challenge”.[57] Indeed, as it has stated repeatedly in the past, the Tribunal continues to acknowledge that the decision to declare that a procurement affects national security is a matter of policy for a government institution. For its part, SSC acknowledges the jurisdiction and propriety of the Tribunal requiring the government institution to demonstrate that it has properly invoked the NSE in terms of ensuring that it has actually been invoked, that the invocation excludes the relevant trade discipline at issue in the complaint (or all of them if so claimed), and that it has been invoked by the proper government institution official.[58] Implicit in that analysis is that the government institution must, in effect, articulate in a concrete manner, a national security issue that is rationally connected to the exclusion of a trade discipline.
  3. This is not a novel proposition or demand from the Tribunal, but what in fact SSC has already demonstrated with regard to the other trade disciplines in the NSE invocation requests that it included in its motion materials. Both the April 27, 2012, request to PWGSC and the July 6, 2012, request to SSC contain a six-page Annex A that explains in detail the cybersecurity threats posed to Canada’s e-mail, network and data centre systems and articulates a nexus between that threat and the need to limit the eligible bidders to Canadian suppliers and to limit the publication of the procurements’ requirements, two key disciplines of the trade agreements.[59] Thus, asking SSC to do precisely the same exercise in regard to its decision to exclude the disciplines of recourse to an impartial adjudicator (the Tribunal) and of following its own tender requirements and procedures is consistent with the SSC’s existing practice of justifying the exclusion of other disciplines.
  4. In both Eclipsys and M.D. Charlton, the Tribunal examined the requirements of the NSE provisions at length. In Eclipsys, which also involved the Blanket NSE, the Tribunal indicated that SSC should consider[60]

    . . . whether wholesale exclusion of all of the disciplines of the trade agreements, including the AIT, is always truly necessary for national security reasons. In most instances, Canadian suppliers, such as Eclipsys, would understandably expect that not all of the disciplines of the trade agreements would have to be excluded in order to preserve Canada’s national security interests.

    The Tribunal cannot but emphatically stress that, as noted above, the NSE provisions of the trade agreements require that government institutions limit the NSE only to the extent necessary to protect the national security interests. This means that government institutions should conduct an objective assessment and exclude only specific provisions of the trade agreements that cannot be upheld without compromising national security.

    [Emphasis added]

  5. The Tribunal also advised SSC that the 2012 letters invoking the Blanket NSE were lacking in transparency and justification:[61]
    In light of the above, the Tribunal invites SSC to question the appropriateness, in relation to the trade agreements, of its reliance on a generically worded letter invoking the NSE dating from 2012. Neither this letter nor any of the other documentation submitted by SSC in this case gives any indication that SSC considered whether or not the specific circumstances of this procurement justify the manner in which the NSE was invoked. . . . In short, the evidence in the Tribunal’s possession does not disclose any justification for why all of the disciplines of the trade agreements had to be excluded in order to protect national security.
  6. The Tribunal found that the “NSE remains an exception to the principle of open competition that is at the heart of the disciplines of the trade agreements” [emphasis added], which “imposes a burden to ensure that the exception is used with care and that it is restricted to only what is truly necessary to preserve national security interests.” Further, invoking the NSE to block review of the government institution’s procurement decisions “leaves potentially unanswered doubts lingering as to the transparency and fairness of the impugned procurement” and saps “confidence in the integrity of the procurement system, and the overarching objectives of the trade agreements”.[62]
  7. In M.D. Charlton, the Tribunal reiterated its interpretation of the transparency requirements for invoking an NSE:[63]

    33. The Tribunal has stated that the trade agreements leave the identification of the national security interest to the sole discretion of the responsible government institution. However, the Tribunal has also found that the language of the trade agreements suggests that the government institution should curtail the application of the disciplines of the trade agreements only to the extent necessary for the protection of the national security interest identified with respect to the particular procurement. This means that government institutions should conduct an objective assessment and exclude only specific provisions of the trade agreements that cannot be maintained without compromising national security.

    [Emphasis added]

  8. There, the Tribunal found that PWGSC had breached the trade agreements because it had gone too far. Indeed, PWGSC’s client, the RCMP, had “clearly identified that the only action necessary to protect the national security interest was the non-disclosure of the technical specifications of the night vision binoculars to be procured” [emphasis added]. Yet, PWGSC went beyond that articulated need by excluding all the disciplines of the trade agreements, including review before the Tribunal, without articulating any “nexus” at all between those exclusions and the national security interest identified; in particular, the Tribunal found that[64]

    . . . PWGSC provided no rationale to justify the extent of the means that it took to achieve that objective. The need for the wholesale jettisoning of potential suppliers’ access to all the disciplines of the trade agreements, including to the Tribunal’s review mechanism, was not justified by PWGSC. No nexus was given between the extent of the means taken in order to achieve the limited stated objective (no concern whatsoever was given to the fact that this resulted in the wholesale circumvention of the trade agreements) and the resultant nullification or impairment of the undertakings that they contain, including by barring access to the Tribunal’s procurement review mechanism.

    [Emphasis added]

  9. That precise issue had never been dealt with by the Tribunal previously because it had never been raised until M.D. Charlton.
  10. Now that it has been, however, the Tribunal was presented with no reason to revisit its finding in M.D. Charlon upon relitigation of the same issue by SSC in the present instance.
  11. The Tribunal notes that SSC argues that M.D. Charlton is contrary to the Federal Court of Appeal’s decision in Opsis.[65] That view is incorrect. In Opsis the applicant sought judicial review of the Tribunal’s finding that a specific NSE invocation letter dated August 6, 2010, issued by SSC’s predecessor, applied to existing as well as future procurements regarding supercomputers and the facilities that housed them. SSC has included in its motion materials in the current proceedings the same letter as was in issue in Opsis and the preceding letter dated June 15, 2010, from Environment Canada seeking the invocation. The only question before the court in Opsis was the proper interpretation of the August 6, 2010, letter and its scope. The Federal Court of Appeal was not presented with—and did not decide—the question of whether the NSE provision at issue in that case precluded the Tribunal from considering whether the government institution had articulated a rational connection between the disciplines it had excluded and the national security concerns it had identified, which is precisely the issue raised in the motion at issue in the current proceedings.[66] Furthermore, the Federal Court of Appeal never had to consider the Tribunal’s reasoning in this regard as reflected in the more recent cases of Eclipsys and M.D. Charlton.
  12. Fundamentally, when counting the events around Eclipsys, and later those surrounding the litigation of M.D. Charlton, and again those that took place during the inquiry into the present matter, PWGSC and SSC collectively had three opportunities to explain: (i) how preventing recourse to the Tribunal’s procurement review mechanism by a Canadian supplier with the requisite security clearance is necessary based national security concerns and (ii) how providing a government institution with unfettered discretion to arbitrarily conduct a procurement process without following stated evaluation criteria similarly furthers or is even related to any national security concerns. Those calls to accountability have gone unanswered. The Tribunal must draw the adverse inference that no such rationales exist. The Tribunal underscores that it did not pose here a demanding or searching question. Ultimately, if a government institution choses silence, or is unwilling or incapable of articulating a reason why the issues identified above are necessary for national security reasons, then the Tribunal is of the opinion the associated trade agreement disciplines cannot be successfully excluded by invoking an overly broad NSE.

Understanding the NSE Provisions of the Trade Agreements

  1. The NSE provisions of NAFTA, the AGP, and the AIT are reproduced in the appendix to this determination. SCC submits that the relevant NSE provisions do not incorporate any objective test for requiring the government institution to articulate a plausible reason for using a blanket exception and excluding recourse to the Tribunal. The Tribunal considers that, aside from ignoring the regulatory and administrative law context articulated above, this submission ignores the interpretive framework of the agreements.
  2. As noted, each of the agreements requires that a timely, effective and impartial review mechanism exist that interprets the agreements in a transparent, credible and impartial manner. The Tribunal finds that the NSE provision cannot be transparently, credibly and effectively enforced without the government institution providing a plausible reason for excluding a trade agreement discipline, in particular the discipline concerning access to the very body charged by Parliament with procurement review.
  3. The AIT is explicit and unambiguous. Annex 1813 of the AIT (Interpretation of Agreement) instructs in subpart 11 that “[a] Party asserting that a measure or proposed measure is subject to an exemption or exception under this Agreement has the burden of establishing that the exemption or exception applies” [emphasis added]. The French version explicitly states that the party invoking an exception has the duty to prove (“doit prouver” [must prove]) that an exception applies. Article 200 (Definitions of General Application) provides that a “measure includes any legislation, regulation, directive, requirement, guideline, program, policy, administrative practice or other procedure”.
  4. The Blanket NSE is a decision by a Senior Assistant Deputy Minister of SSC that purports to exclude all trade agreement disciplines on a categorical and perpetual (or at least five-year) basis with respect to a sizeable number of procurements by SSC. As such, the Blanket NSE is a measure that SSC has asserted to be an exception under the AIT (the NSE). Consequently, SSC bears the burden of establishing that the exemption applies. Fundamentally, that burden cannot be discharged without, at a minimum, articulating a plausible reason for preventing suppliers from having recourse to the Tribunal’s procurement challenge procedures.
  5. Using almost identical language each time, each of the NSE provisions of the trade agreements reiterate that “nothing . . . shall be construed to prevent” the government institution from “taking any action” that “it considers necessary” to protect “national security”. Requiring the federal government institution to provide a reason for denying suppliers recourse to the Tribunal does not “prevent” the government institution from taking action it considers necessary to protect national security. It simply requires the government institution to articulate a reason for proceeding in the manner it proposes. In other words, it requires the government institution to discharge its evidentiary burden and in that sense it is consistent with both the letter and intent of the regulatory regime of procurement review as set out in the AIT and recognized by the Federal Court of Appeal. Again, simply put, the AIT instructs that a party invoking an exception has the burden to demonstrate that it applies.
  6. In further argument, SSC contrasts the language of the NSE provisions with that found in other provisions of the agreements, which articulate specific limitations on the government institution’s discretion to depart from the disciplines of the trade agreements (e.g. based on certain defined “legitimate objectives”), specifically, Articles 404, 506(11) and 506(12) of the AIT, and Article 1016 of NAFTA, excerpted or summarized in the appendix to these reasons. The Tribunal is not persuaded by that argument. The scope of an exception and the more or less broad circumstances in which one as opposed to another may be invoked are considerations that are different from accepting that an exception may be invoked without any justification whatsoever, however minimal.[67] In particular with respect to the intra-Canadian AIT, the parties’ inclusion of the burden of proof clause shows that it was not their intent that the federal government be provided carte blanche in avoiding the disciplines accepted on a reciprocal basis by the other parties (the provinces).
  7. In the Tribunal’s view, accountability to this minimal requirement is fundamental in light of the plenary nature of the Blanket NSE, which covers almost 200 GSINs of goods and services. According to its affiant, SSC excluded from coverage of the trade agreements over 1,000 SSC procurements in the 2016/2017 fiscal year alone.[68] As stated previously, if a government institution’s discretion in this regard is left unchecked, the Tribunal believes that such a level and scope of exclusionary power is so significant that it could constitute a de facto nullification and impairment of the benefits of the trade agreements by arguably subtracting SSC entirely as a covered entity.[69] In the Tribunal’s view, such licence is not permissible.

Operational Challenges

  1. SSC asserts that if the trade agreements are interpreted to require a party to identify and exclude only those disciplines necessary to protect the national interest, then “extremely serious operational challenges would arise”.[70] SSC submits that the specific security measures at stake will not be known upfront because procurement requirements are constantly evolving, even during the procurement process; the preparation and approval process for the invocation of an NSE is lengthy and involves many stakeholders; and it is not feasible for senior officials of SSC to revise and update the NSE request on a procurement by procurement basis.
  2. The Tribunal reiterates that SSC and PWGSC have already articulated the nexus between their national security concerns and certain of the disciplines (other than recourse to the Tribunal) in their NSE invocation letters. Accordingly, the Tribunal is left wanting for a reason why it would be burdensome to provide a similar rationale regarding recourse to the Tribunal to ensure procurement processes conform to the government institution’s own chosen tender requirements and procedures. SSC cannot assert at once that the procurements are all sufficiently alike to raise national security concerns but too diverse to share a nexus between those concerns and the trade agreement disciplines. Moreover, that nexus will be tested only on a case-by-case basis as complaints to the Tribunal may arise. Therefore, logistically, SSC could continue to issue omnibus exemptions, while bearing the risk that in any individual procurement challenge the nexus between the national security interest and the discipline the government institution purports to exclude will be tested (and possibly found wanting).
  3. Regardless, the Tribunal finds that SSC’s objection is not responsive to the question presented in the motion examined here. SSC’s logistical concerns are only triggered if the government institution is prohibited from proceeding by way of blanket (omnibus) NSE invocations. The Tribunal need not resolve that question in this case, as it is sufficient for it to conclude that, regardless of the propriety of the omnibus nature of the Blanket NSE, the NSE has not been properly invoked to exclude recourse to the Tribunal in this case because SSC has not met its burden under the AIT to articulate a reason for excluding recourse to the Tribunal.

Administrative Discretion

  1. SSC submits that the decision to invoke the NSE is an administrative decision (akin to the Crown’s determination of its requirements and technical specifications) made outside the procurement process, reviewable only by the courts.
  2. This argument misstates the framework of the law of procurement review. Bidding requirements and technical specifications are a matter of Crown discretion as well, but they are also reviewable by the Tribunal when they violate provisions of the trade agreements. Likewise, here, the decision that a procurement affects national security is a matter of Crown discretion, but the trade agreements are nevertheless engaged because SSC is, in the context of a specific complaint regarding a particular procurement process, invoking an exception under the trade agreements to preclude normal recourse to the procurement review procedures of the Tribunal. It is the Tribunal’s duty to interpret the trade agreements; therefore, it is within the Tribunal’s jurisdiction to review whether SSC has properly invoked the NSE provisions to exclude recourse to the Tribunal.

Timeliness

  1. SSC asserts that HP’s complaint is untimely because it did not challenge the NSE invocation within 10 working days of either the announcement of May 28, 2012, or, at the latest, the publication of the RFP on November 25, 2014, referencing the announcement of May 28, 2012.
  2. HP submits that the NSE invocation in the letter from PWGSC dated May 25, 2012, had, in fact, expired on its own terms by March 31, 2014. SSC submits that it did not because the SSC letter dated July 12, 2012, contained no such time restriction. SSC is correct that its confirmation letter did not include the same explicit time restriction, although the Tribunal notes that the letter does provide that SSC’s “decision to invoke the National Security exception is in keeping with the decision reached by Mr. Tom Ring”, suggesting that it may have implicitly incorporated by reference that deadline.[71]
  3. Regardless, the Tribunal need not resolve this factual issue, as the Tribunal finds that HP’s complaint is not challenging the NSE invocation—rather, it challenges only SSC’s determination of the non-compliance of HP’s proposal with two mandatory requirements. Section 6 of the Regulations establishes the deadline for filing a complaint. It provides that a complaint must be filed “not later than 10 working days after the day on which the basis of the complaint became known or reasonably should have become known to the potential supplier”, or, if the supplier has made a timely objection to the procuring entity, “within 10 working days after the day on which the potential supplier has actual or constructive knowledge of the denial of relief”. It is uncontested that HP’s complaint is timely in terms of its objection to SSC’s determination of non-compliance having been made in timely fashion to SSC, and then its complaint to the Tribunal being filed in timely fashion after receiving SSC’s denial of relief.
  4. SSC, however, also proposes that HP, and every other supplier, must challenge an NSE invocation that excludes recourse to the Tribunal when such invocation is published, rather than when they have a substantive ground of complaint with the Tribunal.
  5. As HP observes, this position is consistent neither with the Regulations nor the interests of the procurement review process. The Regulations set the deadline for filing from the day on which the “basis of the complaint became known”—here, HP is not challenging the Blanket NSE; rather, SSC has raised it as an affirmative defence which it is SSC’s burden to establish as per the AIT. Adopting SSC’s position would produce results inconsistent with the efficiency and integrity of the procurement review process. Bidders would be required to challenge NSE invocations even if they preceded the publication of an RFP, delaying and complicating the procurement process. No individual bidder would have a live interest in doing so. Moreover, the Tribunal would have no designated contract to examine. Finally, it would also result in the de facto immunization of all SSC procurements currently covered by the Blanket NSE until that invocation is renewed, revoked or expires.
  6. The purpose of the deadlines in the Regulations is to prevent bidders from delaying and obstructing the procurement process by taking a “wait and see” approach to bringing challenges when they are immediately adversely impacted by an aspect of the process but want to defer the challenge until the very end, once they have learned whether they have won the procurement. Here, the interest in discouraging dilatory complaints is in issue only when a bidder directly challenges an aspect of the procurement process resulting from an NSE invocation (such as a restriction of eligible suppliers or specifications that prejudices that bidder).
  7. For the reasons above, excluding recourse to the Tribunal to bring a claim that an evaluation is inconsistent with specified tender requirements and procedures is not an aspect of an NSE invocation that requires immediate challenge to the Tribunal.
  8. To recap, because SSC has failed to articulate any rationale for abrogating suppliers’ right to bring a complaint to the Tribunal that the SSC breached its own specified tender requirements and procedures, it has failed to meet its burden of proof to establish that the NSE has been properly invoked. As such, the Tribunal denied SSC’s motion to dismiss and now turns to the merits of HP’s complaint.

Merits of the Complaint

  1. HP challenges SSC’s determination that HP’s proposal was non-compliant with two mandatory criteria of the RFP. First, HP argues that it properly completed the financial bid forms accompanying its proposal by providing pricing on the option-to-purchase form that was based on, if not calculable from, its pricing on the deliverables form. Second, HP argues that it properly relied on a subcontractor in its proposal, who had not been pre-approved by SSC.
  2. This complaint, though factually complex, turns on simple, long-standing legal principles of procurement review. First, the Tribunal does not generally substitute its judgments for that of the evaluators, unless the evaluators have not applied themselves in evaluating a bidder’s proposal, have ignored vital information provided in a proposal, have based their information on undisclosed criteria or have otherwise not conducted the evaluation in a procedurally fair way.[72] Second, the responsibility for ensuring that a proposal is compliant with all essential criteria of a solicitation ultimately resides with the bidder.[73]

Did HP Properly Complete Annex B6 of the Financial Bid Forms as per Section 3.3.1?

  1. The Tribunal addresses first the issue of non-compliance regarding the pricing information provided by HP.
  2. Part 3.3, Section II: Financial Bid instructed bidders on how to prepare their pricing information. Section 3.3.1 of the RFP required that bidders “must submit their financial bid in accordance with the Financial Bid Presentation Sheets contained in Annexes B1 through to B8” and “must include a single, firm, all-inclusive price quoted in Canadian dollars in each cell requiring an entry in the pricing tables”.[74] Section 3.3.2 provides that the “financial bid must include all costs for the requirement . . . . The identification of all necessary equipment, software, peripherals, cabling and components required to meet the requirements of the bid solicitation and the associated costs of these items is the sole responsibility of the bidder.”[75]
  3. For this complaint, the relevant annexes are Annex B6 (Option to Purchase Nodes, Storage and Network Products) and Annex B1 (List of Deliverables). Note 2 to Annex B6 provided that “Equipment listed in this annex are the same as the deliverables identified in B1. Therefore, prices in Columns E and F must come from Annex B1”.[76] Even though this was only an instruction in an annex, it was a mandatory requirement by virtue of section 4.2.1 and the use of the word “must” in both section 3.3.1 and Note 2.[77]
  4. In Annex B1, HP identified two deliverables in Column B, Row 1 (“Solution HW [hardware] & SW [software]”) and Row 2 (“Solution Hosting Facility”), and their associated pricing in Columns G through O.[78] For the deliverable “Solution HW & SW”, HP wrote “Attach A” under Column C (“Model Type and/or Part Number”). This attachment included a further breakdown of goods and services but did not include their individual pricing information.
  5. In Annex B6, SSC had already prepopulated seven rows of deliverables (various nodes, storage and network core switches under “Hardware Products” and two software licenses options under “Software Products”) which bidders could not change.[79] The pricing for these deliverables was to be input under Column E (“FIRM UNIT PURCHASE PRICE (FROM B1)”) and Column F (“ESTIMATED TOTAL HOSTING PRICE OVER LIFE OF CONTRACT (from B1)”).[80]
  6. It is not self-evident from HP’s proposal how or if the prices in Columns E and F for the seven deliverables in its Annex B6 “come from” the prices of the two deliverables in its Annex B1. Further, HP provided no explanation in its proposal on this question. Thus, SSC was entirely reasonable in concluding that HP’s Annex B6 did not comply with Note 2 to Annex B6. As noted above, it is well established that the Tribunal does not interfere with reasonable evaluations save in exceptional circumstances, none of which are present in this matter.
  7. HP submits that the prices it provided in Annex B6 “were driven by the prices [it] provided in Annex B1”. It admits that these “prices required some calculation” but argues that Note 6 of Annex B1 permitted it to provide a single, cumulative price for a group of products, as it did for each of “Solution HW & SW” and “Solution Hosting Facility” without itemizing each product’s individual price in the attachment.[81] Note 6 provides as follows: “Bidders should list all items to be provided in Column B (A 1-27 to D 1-27). If 27 rows are NOT enough, please use a row to list a number of items – for example: Row A 33 would point to attachment A which would include a number of items, Row A 63 would then point to attachment B which again, would include a large(r) number of items.”[82] HP argues that it could have connected (or that it should have been allowed to link) the cumulative pricing on Annex B1 to the subcomponent pricing on Annex B6 had SSC requested clarification.
  8. It was HP’s onus to ensure it responded clearly and unambiguously to the mandatory requirements. Although Note 6 does not explicitly remind bidders to provide pricing, that is necessarily implied by the context of Annex B1, which is an item-by-item list with quantities and pricing of each product, as well as by Note 2 of Annex B6 and the headings of columns E and F of Annex B6, which state that pricing must come from Annex B1. It is impossible to demonstrate that a proposal meets this requirement unless there is some way to link the unit purchase price of each of the seven deliverables in Annex B6 (e.g. “Purchase of supercomputer compute nodes of Initial Solution”) with the list of deliverables in Annex B1. This is why the other two bidders included formulas for pricing.[83]
  9. The Tribunal finds that the prices that HP provided in Annex B6 cannot be matched with the prices it provided in Annex B1. The Tribunal also finds that the deliverables that SSC prepopulated in Annex B6 cannot even be matched with the deliverables HP identified in Annex B1 or even its attachment A to Annex B1.[84] In these circumstances, the Tribunal is incapable of finding any reason why a clarification ought to have been requested by SSC. Indeed, HP would have been capable of providing no measure of clarification sufficient to save its bid. Only new information, from outside the four corners of HP’s bid, would have been of assistance—and, of course, such new information would have constituted improper bid repair.[85]
  10. HP submits that Annex B6 does not state that the bidder must explicitly show “how” the prices come from B1, nor does it require individual item-level pricing (as opposed to pricing for the seven categories of prepopulated deliverables in Annex B6 that references back to deliverable pricing in Annex B1). HP notes that Annexes B3, B4, B7, B9 and B10 each also pull pricing from Annex B1 and include similar notes requiring that values “come from B1” or include imbedded formulae linking to B1 or both, but SSC has not raised any compliance objections to those other annexes from HP’s proposal. It also notes that the financial evaluation is nevertheless based on cumulative total prices, not individual prices, suggesting that this requirement is pointless.
  11. These arguments are unavailing. The fact that HP’s proposal may condition additional instances of non-compliance not spotted or relied on by SSC does not prove that the instance of non-compliance SSC did cite is unfounded. Bidders do not have standing to argue that results should be overturned because the government institution has not discovered every blemish on a bid. HP’s point would have more impact if SSC had made an overt, contradictory finding or statement that could not be reconciled with its determination, but no such express finding or statement appears in the record. Further, the only effect of such a finding or statement would be to remove the normal deference accorded to evaluators’ judgments; the Tribunal would still independently assess what the requirements objectively demanded.
  12. Here, the Tribunal finds that the SSC’s interpretation and application of the requirement at issue is not only reasonable but correct. Without HP’s proposal self-evidently showing or at least explaining how the B6 prices come from B1, SSC cannot verify that they in fact do. HP does not deny that it was a mandatory requirement that B6 prices come from B1, but it has not explained how SSC could have verified that HP had met that criteria (other than simply taking HP’s word or accepting new information after bid closing) in the absence of some explanation provided in HP’s proposal. Further, the language used in the requirement is not “based on” or “related to” but “come from”—indeed, the relevant pricing columns in B6 specifically remind bidders that the pricing included should be “from B1”. The fact that the other bidders understood and complied with the requirement is not dispositive but does support the conclusion that the wording is not objectively confusing, vague or ambiguous.
  13. HP relies on a previous Tribunal case, namely File No. PR-2007-084, Cifelli Systems Corporation v. Department of Public Works and Government Services [Cifelli], for the proposition that it is irrelevant that other bidders completed Annex B6 and B1 in the manner preferred by SSC. It also relies on File No. PR-99-020, IBM Canada Ltd., in which the Tribunal stated that “in the absence of a clear format for providing information, in the opinion of the Tribunal, some latitude must be given to bidders”.
  14. The Tribunal sees various distinctions between those cases and those in the present inquiry. Cifelli involved a complainant proposing in an RFP to supply Windows XP Home Edition rather than Windows XP Professional when the tender documents only referenced “Windows XP”.[86] There is no similar vagueness or ambiguity presented by the RFP’s requirements here. In IBM Canada Ltd., the Tribunal upheld IBM’s complaint because it found that the tender documents permitted bidders to express prices “in a variety of ways” and because IBM’s unit prices could be readily calculated through basic mathematical exercises from the information included in its proposal and the tender documents.[87] Here, there was no mathematical formula SSC could have used to link HP’s B6 prices to its B1 prices at all because that information was omitted from HP’s proposal.
  15. HP also alleges that SSC went “hunting” for a compliance issue with HP’s bid, pointing to SSC’s purported failure to seek clarification from HP despite internal SCC consideration of that step.[88] HP argues that its disqualification was based on the issue of its initial non-compliance with the Integrity Framework.[89]
  16. The Tribunal has reviewed the evaluation record and finds no bad faith, bias or otherwise unprofessional conduct on SSC’s part. The record shows that SSC identified the non-compliance issues as early as July 2015. The 2015 federal election delayed the evaluation from August through September, but as of October 2015, SSC had clearly identified the three problems with HP’s proposal. It does appear that once the Integrity Framework violation arose in September, SSC did not follow up any further on the two bid-related compliance issues, given that they appeared to be moot. But once HP was cleared of the Integrity Framework violation, SSC returned in March 2016 to the issue of compliance with the pricing submission and the supply chain information.[90] Ideally, SSC should have advised HP of its determination in the fall of 2015 when it had all the information it required. SSC has not explained why it deferred notifying HP, but one possibility could be that it was waiting until IBM had gone through the pre-award benchmark process; if IBM had failed it, there would be no eligible bidders left. That could have been a reason for the Tribunal not affording SSC its normal deferential standard of review, but it would not have been grounds for declaring HP’s bid compliant, as, ultimately, the Tribunal has found that SSC correctly determined that HP’s bid was non-compliant. 
  17. Finally, HP notes that SSC claims that the PVR Branch of SSC served as the contracting authority responsible for, inter alia, “conducting the financial evaluation”, while the technical evaluation team was responsible for evaluating the technical bids, mandatory criteria and requirements.[91] HP submits that it was the PVR Branch, not the technical evaluation team, that determined that HP had failed the mandatory financial criteria.
  18. This argument too, however, is not relevant to the analysis. The RFP says nothing about how the evaluation work will be divided other than that “[a]n evaluation team of representatives of Canada will evaluate the bids” (s.4.1.2). Thus, HP had no right to any specific configuration. Further, HP has not identified any unfairness in the manner in which the technical evaluation team or the PVR Branch made the final determination. Regardless, it does not appear that the price submission requirement was necessarily part of the technical evaluation: in the RFP, technical bid contents are detailed under section 3.2 and financial bid contents (including the annexes), under section 3.3; technical evaluation is described under section 4.2 and financial evaluation under section 4.3.
  19. In light of the above, this ground of complaint is not valid. 

Did HP Improperly Add a Subcontractor to its Supply Chain Security Information?

  1. The Tribunal now addresses the issue of non-compliance regarding the supply chain information provided by HP and relied upon in its proposal.
  2. By a fixed date set in advance of the closing deadline for proposals, bidders were required (as per sections 3.2.9 and 3.2.10 of the RFP) to provide, on a “Form B”, a Supply Chain Security Information (SCSI) submission that include a list of products and subcontractors that “could be used to perform any part of the Work”. The SCSI submission would be evaluated under section 4.3.4 of the RFP for any security concerns. SSC could request additional information, to which the bidder must respond in 2 working days (section 4.3.7.1). In the event of a security concern, SSC was required to notify the bidder in writing, identify the concern and request any further information (section 4.3.7.4). The bidder would then have one opportunity to submit a revised SCSI submission within 10 calendar days of notice of this deficiency (section 4.3.7.5). SSC would then conduct a second evaluation but not any further evaluations (section 4.3.7.6). All bidders were to be notified in writing whether their SCSI submission had been approved (section 4.3.7.12).
  3. Section 4.3.7.13 required that bidders could only include in their proposals products and subcontractors identified in an approved SCSI submission. Section 4.3.7.13 provides as follows:

    4.3.7.13 Any Bidder that has qualified under this SCI will be required to propose a solution consistent with the final version of the Supply Chain Security Information it submitted in its response to this SCI (subject to revision only pursuant to the paragraph below). Except pursuant to the paragraph below, no alternative or additional Products or subcontractors may be proposed in the Bidder’s solution. This is a mandatory requirement of this solicitation process. The proposed solution during any subsequent bid solicitation does not need to contain all the Products within the final Supply Chain Security Information.

  4. Section 4.3.7.14 describes the one exception to this rule; it provides as follows:

    4.3.7.14 Once a bidder has been qualified in response to this SCI, no modifications are permitted to the Supply Chain Security Information except under exceptional circumstances, as determined by Canada. Given that not all the exceptional circumstances can be foreseen, whether changes may be made and the process governing those changes will be determined by Canada on a case-by-case basis.

    [Emphasis added]

  5. The initial submission date for Form B was December 10, 2014, but at bidders’ request this was extended to January 2, 2015.[92] HP filed its Form B on January 1, 2015.[93] The other three qualified bidders also filed their Form B by the January 2 deadline.[94] On January 12, 2015, however, HP wrote to SSC indicating it had “received updated information from one of our solution partners, and [that it] would like to add this additional detail consisting of line-item storage configuration to our SCSI form”, noting that the “solution partner was already included in HP’s SCSI form”.[95] On January 13, 2015, SSC forwarded a question to HP from the SCSI evaluation team noting that HP had identified IBM as a subcontractor and asking it to “confirm if any portion of the work will be provided by another company (other than IBM) that may have acquired IBM’s infrastructure management business”.[96]
  6. On January 14, HP wrote back to SSC as follows:[97]

    We will no longer require IBM on our subcontractors list, they have not given us permission to leverage HPSS so we will propose an alternate solution – you can remove both the HPSS line item from the products list, and IBM from our subcontractors list with Form B.

    We would be happy to resubmit an updated version of HP’s Form B, removing the 2 line items above and adding the additional level of detail referred to in our question earlier this week to keep the form clean, or will otherwise look for your guidance on these additions.

  7. On February 4, 2015, HP wrote again to SSC, reminding it that it had “a revised Form B ready to send back right away, or submit together with [its] RFP response, but was looking to confirm [SSC] guidance on how [SSC] would like [it] to proceed”.[98] SSC wrote back the same day advising HP to “[h]old on to [its] revised Form B until further notice”.[99]
  8. On April 29, 2015, SSC e-mailed HP to advise it that its proposed Form B SCSI submission had been approved as follows:[100]

    Further to our subject process, this note is to confirm that the formal review of proposed hardware and software listed as part of your Form B SCI associated with the subject RFP has been completed (as of April 22, 2015) and is approved for the proposed HPC Solution.

    Please proceed with your proposed solution, noting that any changes made to the components of your Form B must be brought to the attention of the undersigned for review.

  9. The same day, HP responded to the notice as follows:[101]

    We do have some changes to our solution components due to technology lifecycle over the duration of bid extensions, the changes are not dramatic, same product family, etc. Could you please let me know if you’d prefer a reworked original Form B, or simply a list of new items which would not have already been approved through SCI.

  10. Later that day, SSC replied the following: “A list of new items and deleted items should do.”[102]
  11. On June 11, 2015, HP wrote to SSC submitting a revised SCSI Form B, as follows:[103]

    As requested below, attached is our updated SCSI HPC2014 Document Form B for HP’s proposed HPC2014 solution. I have highlighted the small number of additions in yellow, these are minor changes due to latest and greatest technology becoming available within the extended timeframe, and the additions are within the same product families already approved by SSC.

  12. On June 22, 2015, SSC issued Amendment 16 to the RFP, reminding bidders to comply with section 4.3.4.13 of the RFP regarding ensuring that the products and subcontractors identified in their proposal had been preapproved through the SCSI Form B process.[104]
  13. The e-mail transmitting Amendment 16 contained a duplicate warning, which provided as follows:[105]

    QRs are reminded that only the equipment that has been reviewed via the SCI process and approved on email dated April 22, 2015 [sic – correct date is April 29] is what must be offered in your bids.

  14. On June 23, 2015, HP and SSC held a telephone conversation, regarding which SSC followed up by way of an e-mail to HP on June 25, 2015, which provided as follows:[106]

    To confirm our discussion of Tuesday (June 23rd), I appreciate that you are trying to identify the best solution for Canada’s requirements, but the supply chain integrity process, specifically, section 4.3.4.13 requires Bidders to propose a solution consistent with the final version of their approved SCSI. As a result, SSC cannot commence a re-evaluation of your SCSI data at the present time. However, in accordance with clause 7.10.1, should HP be the successful bidder, there is a process to modify your SCSI information going forward.

  15. On June 29, 2015, the bid period closed, and the evaluations proceeded as discussed above, with HP being disqualified for identifying a new subcontractor in its Form B that was not approved in its original Form B.
  16. HP submits that the disqualification is unfair for a number of reasons. HP alleges that IBM and another bidder were allowed to consolidate their bids and file an amended Form B after the January 2, 2015, deadline. HP submits that SSC treated it unfairly by forcing it to adhere to the original Form B and by deferring its request to revise its submission for almost six months. This was allegedly prejudicial to HP because if HP updated its product list (as it did), it risked disqualification, but if it maintained it, its bid would have been non-compliant or uncompetitive.[107]
  17. SSC submits that the determination that HP submitted a non-compliant bid by proposing an unapproved subcontractor is reasonable because it violated a clear mandatory requirement. The Tribunal agrees. The RFP contemplated only two situations in which a Form B could be revised pre-contract award: (1) in a second submission following a notice of security concern under section 4.3.7.6; and (2) “under exceptional circumstances, as determined by Canada” under section 4.3.7.14. It is uncontested that the first situation does not apply to this case: SSC did ask HP for information about IBM but it never notified HP that its Form B was rejected for security reasons and that HP should file a revised Form B. This is what happened to IBM and why IBM was quite fairly allowed to amend. Further, HP was disqualified for adding a new subcontractor, not new products, to its SSCI Form B; the reason being that SSC’s computer security team found that the new products were either essentially the same devices previously vetted or were products not “network aware” and, therefore, outside the scope of the security review process.[108] Thus, HP’s complaint regarding unfairness in developing a competitive bid is groundless.
  18. In the absence of SSC rejecting its original Form B, the proper and only way for HP to have added a new subcontractor was to make a formal amendment request under section 4.3.7.14 and demonstrate the “exceptional circumstances” supporting its request to amend past the SCSI submission deadline. HP never cited section 4.3.7.14 nor did it make a case for exceptional circumstances—the only explanation HP gave for wanting to substitute another subcontractor for IBM was that HP had not received “permission” from IBM. That is hardly exceptional circumstances given that minimum due diligence would have required that HP assure itself of IBM’s full co-operation and availability before submitting its Form B (either by way of contractual guarantees or otherwise, in which case it would have had recourse to the courts for a breach of contract even if not relevant to the procurement challenge process). While it is unfortunate that SSC did not immediately bring this section to HP’s attention and ask it to make such submissions (rather than deferring the issue repeatedly and unhelpfully), that does not constitute any type of waiver or estoppel in breach of the trade agreements. It was not SSC’s duty to in effect act as HP’s advisor in drawing its attention to the relevant recourse provisions in the RFP, and nothing SSC said or wrote was so egregious that it prevented or absolved HP from the responsibility of invoking those provisions itself. This is not the situation where a government institution refuses to follow an RFP procedure and thereby prevents a bidder from bidding effectively, but one in which the burden is on the bidder to demonstrate exceptional circumstances and the bidder failed to do so.
  19. HP submits that by providing it instructions on April 29, 2015, to submit “a list of new and deleted items”, SSC waived the requirement that HP’s Form B remain unchanged from the version SSC had qualified on that same date. HP argues that it relied on this (and the June 25, 2015, e-mail referring to an ability to modify its SCSI information as per section 7.10.1 of the RFP should it be the winning bidder) as permission to base its proposal on the new products and subcontractor included in its revised Form B.
  20. The Tribunal does not agree that SSC waived any requirements or that it could have waived them for the benefit of one bidder, but, regardless, this point is inconsequential. SSC never instructed or asked HP to provide a list of new subcontractors, and it was on that basis (not new equipment) that HP was disqualified. Further, HP cannot rely on the e-mail of June 25, 2015, either, as it referred to section 7.10.1 of the RFP. That section contemplated modification of supply chain information post-contract award. It did not permit bidders to rely on unapproved subcontractors in their proposals.
  21. HP also argues that SSC never approved any of HP’s subcontractors on its original Form B because SSC’s e-mails of April 29 and June 22, 2015, referred to approval of “hardware and software” and “equipment” respectively, but not “subcontractors”. HP submits that SSC cannot rely on sections 4.3.7.13 and 4.3.7.14 to disqualify HP because SSC failed to assess its subcontractors.[109]
  22. The Tribunal is not persuaded by this argument either. HP has cited no authority-in-law, generally or in the RFP, for a bidder having a right to challenge the government institution’s security review process for being too lenient or lax on the bidder itself. HP might have had a valid challenge had SSC rejected its Form B for security reasons that were unreasonable or not supported by evidence (or, vice versa, had SSC qualified a manifestly unqualified competitor’s list), but there is no principle that supports the proposition that SSC cannot rely on sections 4.3.7.13 and 4.3.7.14 to disqualify HP for relying on an amended Form B, because SSC did not itself properly vet HP’s subcontractors in its original Form B, which SSC approved. Regardless, simply because SSC did not call HP’s subcontractors between January and April of 2015 is not proof that the SSC did not vet them earlier or in other ways.
  23. HP further submits that SSC’s evaluators are due no deference. HP argues that SSC acted arbitrarily by accepting the revised product list but not the new subcontractor. It further argues that SSC acted arbitrarily by failing to disclose the correspondence between HP and SSC to the evaluators to explain the reason why HP submitted a revised Form B. It also objects that most of the record shows that the decision makers on this issue were SSC’s legal department, the PVR Branch or Treasury Board, but not the technical evaluation team.
  24. For the reasons already discussed above, none of these arguments are supported by the record. The subcontractor was an entirely new, different supplier than the previously approved one (IBM); in contrast, SSC found the new equipment to be essentially the same. Further, that the evaluators did not see the correspondence between HP and SSC is irrelevant, because there was no waiver or estoppel resulting from that correspondence (even assuming such claims are cognizable under the trade agreements) relevant to the analysis. If HP wanted a variance, it was obliged to seek an amendment for exceptional circumstances under section 4.3.7.14. That was the only way it could change its SCSI information after the January 2, 2015, deadline for filing the SCSI submission. It is also irrelevant which government employees evaluated HP’s proposal, as the RFP only promised that representatives of the Government of Canada would evaluate the proposal. That is what happened. HP has identified no unfairness turning on who evaluated the bid. In any event, the Tribunal has concluded that HP was correctly disqualified. This was not a question of applying one’s judgment or discretion to a requirement that could be interpreted in various reasonable ways. This was a clear, binary and mandatory (procedural) criterion: either HP was compliant or it was not. The RFP was very clear what the circumstances were for making an amendment. Thus, if SSC had allowed HP to file an amended Form B, SSC would have been in breach of its fairness duties to the other bidders unless HP demonstrated exceptional circumstances. HP has filed no evidence and made no arguments that its decision to remove IBM and add a new subcontractor was based on exceptional circumstances.
  25. In light of the above, this ground of complaint is not valid.

DETERMINATION

  1. Pursuant to subsection 30.14(2) of the CITT Act, the Tribunal determines that the complaint is not valid.

COSTS

  1. Both parties requested costs in relation to the proceeding. HP requested reimbursement of its complaint costs. SSC requested that costs be awarded in accordance with the Tribunal’s Procurement Costs Guideline, although it did not specify at what level of complexity.
  2. The parties had mixed success. HP succeeded in defending against SSC’s motion to strike, some grounds of which had already been rejected in earlier decisions by the Tribunal, but SSC prevailed on the merits.
  3. Therefore, pursuant to section 30.16 of the CITT Act, the Tribunal has decided not to award costs to any party.

APPENDIX

NSE PROVISIONS OF TRADE AGREEMENTS

NAFTA, Section D: General Provisions, Article 1018: Exceptions

1. Nothing in this Chapter shall be construed to prevent a Party from taking any action or not disclosing any information which it considers necessary for the protection of its essential security interests relating to the procurement of arms, ammunition or war materials, or to procurement indispensable for national security or for national defense purposes.

2. Provided that such measures are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between Parties where the same conditions prevail or a disguised restriction on trade between the Parties, nothing in this Chapter shall be construed to prevent any Party from adopting or maintaining measures:

(a) necessary to protect public morals, order or safety;

(b) necessary to protect human, animal or plant life or health;

(c) necessary to protect intellectual property; or

(d) relating to goods or services of handicapped persons, of philanthropic institutions or of prison labor.

AGP, Article III – Security and General Exceptions

1. Nothing in this Agreement shall be construed to prevent any Party from taking any action or not disclosing any information that it considers necessary for the protection of its essential security interests relating to the procurement of arms, ammunition or war materials, or to procurement indispensable for national security or for national defence purposes.

2. Subject to the requirement that such measures are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between Parties where the same conditions prevail or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent any Party from imposing or enforcing measures:

(a) necessary to protect public morals, order or safety;

(b) necessary to protect human, animal or plant life or health;

(c) necessary to protect intellectual property; or

(d) relating to goods or services of persons with disabilities, philanthropic institutions or prison labour.

AIT, Part VI – Final Provisions, Chapter 18 – Final Provision, Article 1804: National Security

Nothing in this Agreement shall be construed to:

(a) require the Federal Government to provide, or allow access to, information the disclosure of which it determines to be contrary to national security; or

(b) prevent the Federal Government from taking any action that it considers necessary to protect national security interests or, pursuant to its international obligations, for the maintenance of international peace and security.

OTHER EXCEPTIONAL PROVISIONS OF TRADE AGREEMENTS

AIT, Article 506(11)(e)

11. An entity of a Party may use procurement procedures that are different from those described in paragraphs 1 through 10 in the following circumstances, provided that it does not do so for the purpose of avoiding competition between suppliers or in order to discriminate against suppliers of any other Party:

. . .

(e) where compliance with the open tendering provisions set out in this Chapter would interfere with a Party’s ability to maintain security or order or to protect human, animal or plant life or health;

[Emphasis added]

Part III – General Rules: articulates the general rules to be applied in Part IV of the AIT covering procurements. These include non-discrimination (Article 401), right of entry and exit (Article 402), and the barring of obstacles to internal trade (Article 403).

Article 404: provides for exceptions based on “legitimate objectives”, defined in Article 200 as including “public security and safety” and “public order”; it provides as follows:

Where it is established that a measure is inconsistent with Article 401, 402 or 403, that measure is still permissible under this Agreement where it can be demonstrated that:

(a) the purpose of the measure is to achieve a legitimate objective;

(b) the measure does not operate to impair unduly the access of persons, goods, services or investments of a Party that meet that legitimate objective;

(c) the measure is not more trade restrictive than necessary to achieve that legitimate objective; and

(d) the measure does not create a disguised restriction on trade.

Article 504: contains a complicated scheme for when parties, and the federal government in particular, can depart from the disciplines based on legitimate objectives.

NAFTA

Article 1016: provides that a party may, under certain conditions, “. . . use limited tendering procedures . . . provided that such limited tendering procedures are not used with a view to avoiding maximum possible competition or in a manner that would constitute a means of discrimination between suppliers of the other Parties or protection of domestic suppliers.”

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

[2].  S.O.R./93-602 [Regulations].

[3].  Exhibit PR-2016-043-01 at para. 2, tab C-3, Invitation to Qualify, p. 5, Vol. 1.

[4].  Exhibit PR-2016-043-16 at para. 2, exhibit 1, Invitation to Qualify: Annex A, pp. 18-23, Vol. 1C. Exhibit PR-2016-043-11, exhibit F, p. 2, Vol. 1C.

[5].  Exhibit PR-2016-043-16 at paras. 4-5, Vol. 1C.

[6].  Ibid. at para. 26.

[7].  Exhibit PR-2016-043-01, tab A-11, memo dated 3 July 2015, Vol. 1.

[8].  Exhibit PR-2016-043-16A (protected), exhibit 30, Vol. 2B.

[9].  Ibid., exhibit 31.

[10].  Ibid., exhibit 32.

[11].  Exhibit PR-2016-043-01, tab A-12, e-mail dated 12 August 2015, Vol. 1.

[12].  Exhibit PR-2016-043-16 at para. 58, Vol. 1C.

[13].  Exhibit PR-2016-043-16A (protected), exhibit 33, Vol. 2B.

[14].  Ibid., exhibit 34.

[15].  Exhibit PR-2016-043-16 at paras. 62, 65-66, Vol. 1C.

[16].  Ibid., exhibit 37.

[17].  Ibid., exhibit 35.

[18].  Ibid., exhibit 38.

[19].  Ibid., exhibit 41.

[20].  Ibid., exhibit 3, s. 1.2, p. 5.

[21].  Exhibit PR-2016-043-11, exhibit C, Vol. 1C.

[22].  Ibid.

[23].  Ibid., exhibit A.

[24].  Ibid., exhibit G.

[25].  Ibid., exhibit E.

[26].  18 July 1994, C. Gaz. 1995.I.1323, online: Internal Trade Secretariat <http://www.ait-aci.ca/agreement-on-internal-trade/> [AIT].

[27].  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].

[28].  Revised Agreement on Government Procurement, online: World Trade Organization <http://www.wto.org/?english/docs_e/legal_e/rev-gpr-94_01_e.htm> (entered into force 6 April 2014) [AGP].

[29].  Interpretation Act, R.S.C., 1985, c. I-21, s. 12.

[30].  United Nations, Vienna Convention on the Law of Treaties, 23 May 1969, section 3, article 31(1).

[31].  See, for instance, Brookfield LePage Johnson Controls Facility Management Services (6 September 2000), PR-2000-008 and PR-2000-021 (CITT) at 17.

[32].  Ruth Sullivan, Construction of Statutes (5th ed.), p. 484. See also Krayzel Corp. v. Equitable Trust Co., [2016] 1 SCR 273 (CanLII) at para. 50 (holding that an “exception to the general rule . . . must be read narrowly and limited to what is necessary to fulfill its purpose”); and Macdonell v. Quebec (Commission d’accès à l’information), [2002] 3 SCR 661 (CanLII) at para. 18 (acknowledging that as long as language of the statute is not plain, “when the legislature makes a general rule and lists certain exceptions, the latter must be regarded as exhaustive and so strictly construed”).

[33].  AIT, Annex 1813 (Interpretation of Agreement), s. 11 (“A Party asserting that a measure or proposed measure is subject to an exemption or exception under this Agreement has the burden of establishing that the exemption or exception applies.”).

[34].  Eclipsys Solutions Inc. v. Shared Services Canada (16 February 2016), PR-2015-039 (CITT) [Eclipsys] at paras. 16-19.

[35].  M.D. Charlton Co. Ltd. v. Department of Public Works and Government Services (10 August 2016), PR-2015-070 (CITT) [M.D. Charlton] at paras. 24-29.

[36].  Canada (Attorney General) v. Bri-Chem Supply Ltd., 2016 FCA 257 (CanLII) at para. 53.

[37].  PWGSC abandoned its application for a judicial review of M.D. Charlton, and SSC never sought review of Eclipsys.

[38].  Subsection 30.11(1) of the CITT Act restricts the Tribunal’s inquiries to procurement processes relating to a “designated contract”, defined under section 30.1 of the CITT Act as “. . . a contract for the supply of goods or services that has been or is proposed to be awarded by a government institution and that is designated or of a class of contracts designated by the regulations. . . .” Subsection 3(1) of the Regulations defines “designated contract” as “any contract or class of contract concerning a procurement of goods or services or any combination of goods or services, as described in [the applicable trade agreements] . . . that has been or is proposed to be awarded by a government institution. . . .”

[39].  Regulations, s. 11.

[40].  Dunsmuir v. New Brunswick, 2008 SCC 9 (CanLII) at para. 59.

[41].  Alberta (Information and Privacy Commissioner) v. Alberta Teachers’ Association, 2011 SCC 61 (CanLII) at para. 39.

[42].  C.B. Powell Limited v. Canada (Border Services Agency), 2011 FCA 137 (CanLII) at paras. 21-22.

[43].  Northrop Grumman Overseas Services Corp. v. Canada (Attorney General), 2009 SCC 50 (CanLII) at para. 17; Canada (Attorney General) v. Northrop Grumman Overseas Services Corp., 2008 FCA 187 (CanLII) at paras. 50, 85.

[44].  Canada (Attorney General) v. Northrop Grumman Overseas Services Corp., 2008 FCA 187 (CanLII) at paras. 50, 85.

[45].  See Article 101 (Mutually Agreed Principles) of the AIT, which requires “full disclosure” and affirms the “need” for “accessible, timely, credible and effective” dispute settlement mechanisms; Article IV(4) of the AGP requiring that the “procuring entity shall conduct covered procurement in a transparent and impartial manner that: (a) is consistent with this Agreement” and Article XVIII (Domestic Review Procedures) of the AGP providing that each party “shall provide a timely, effective, transparent and non-discriminatory administrative or judicial review procedure” for procurement challenges; and Article 102 (Objectives) of NAFTA, which requires parties to “interpret and apply the provisions of this Agreement in the light of its objectives set out in paragraph 1” which include “transparency”, “fair competition” and “effective procedures for the implementation and application of this Agreement, for its joint administration and for the resolution of disputes”, and Article 1017 (Bid Challenge) of NAFTA requiring that each party “adopt and maintain bid challenge procedures for procurement”, including a reviewing authority to “expeditiously investigate the challenge”.

[46].  Siemens Westinghouse Inc. v Canada (Minister of Public Works and Government Services), 2001 FCA 241 (CanLII) [Siemens] at para. 23 (“it is clear that Parliament meant this expert tribunal to be responsible for overseeing the procurement activities of the government”).

[47].  Siemens at paras. 21-22.

[48].  And, previously, patently unreasonable, prior to its elimination as the most deferential review standard. Siemens at para. 23.

[49].  TPG Technology Consulting Ltd. v. Canada, 2014 FC 933 (CanLII) at paras. 94-109, aff’d by 2016 FCA 279.

[50].  Canada (Attorney General) v. Almon Equipment Limited, 2010 FCA 193 (CanLII) [Almon] at para. 23.

[51].  In a heading of its motion titled “Availability of the Courts in Judicial Review”, SSC suggests that the federal courts would retain jurisdiction to review a government institution’s NSE invocation. Exhibit PR-2016-043-10 at paras. 44-46, Vol. 1C. However, it does not articulate the national security rationale for excluding access to the Tribunal to ensure evaluations conform to the SSC’s own chosen tender requirements and procedures when access to the courts will continue regardless and when the Tribunal’s procedures are as confidential as those of the courts and subject to even stricter deadlines for filing claims and issuing judgments.

[52].  Sections 45-49 of the CITT Act. CITT, Confidentiality Guidelines (2014), online: http://www.citt-tcce.gc.ca/en/Confidentiality_guidelines_e.

[53].  TPG Technology Consulting Ltd. (7 December 2016), PR-2016-045 (CITT) at para. 16.

[54].  Exhibit PR-2016-043-16 at para. 7, Vol. 1C. Exhibit PR-2016-043-01 at para. 58, Vol. 1.

[55].  Lotus Development Canada Limited, Novell Canada, Ltd. and Netscape Communications Canada Inc. (14 August 1998), PR-98-005, PR-98-006 and PR-98-009 (CITT) [Lotus] at pp. 9-10.

[56].  Lotus at p. 11.

[57].  Ibid. at p. 10.

[58].  Exhibit PR-2016-043-10 at para. 16, Vol. 1C.

[59].  Exhibit PR-2016-043-11, exhibits A and D, Vol. 1C.

[60].  Eclipsys at paras. 37-38.

[61].  Ibid. at para. 40.

[62].  Ibid. at paras. 41-42.

[63].  M.D. Charlton at para. 33.

[64].  Ibid. at para. 35.

[65].  Opsis, Gestion d’infrastructure inc. v. Canada (Public Works and Government Services), 2012 FCA 42 (CanLII) [Opsis] at para. 16.

[66].  For this same reason, the case of Irving Shipbuilding Inc. v. Canada (Attorney General), 2008 FC 1102 (CanLII), footnoted by SSC is inapposite.

[67].  For example, Article 404 requires that in pursuing the “legitimate objective” of, for example, “public security and safety” or “public order”, the measure not be, inter alia, “more trade restrictive than necessary.” Similarly, the NSE provisions explicitly require that the government institution consider the measure “necessary”, and the AIT requires the government institution to prove that necessity. Asking the government institution to provide a reason is much less onerous and intrusive than holding it to the higher standard of proving that the measure is no more restrictive than necessary.

[68].  Exhibit PR-2016-043-11 at para. 13, Vol. 1C.

[69].  All of the trade agreements provide for a mechanism to deal with a modification of coverage by a party. Those mechanisms have not been engaged by SSC. For example, Article 1022 of NAFTA requires, in the interest of transparency and reciprocity, for a party to “modify its coverage under this Chapter only in exceptional circumstances” and when it does so it “shall” notify the other parties, reflect the change in the appropriate annex and propose “appropriate compensatory adjustments to its coverage in order to maintain a level of coverage comparable to that existing prior to the modification”. Likewise, in the AIT, the exclusion of an entire department is normally accomplished transparently through the procedures articulated in its annexes, as doing so may require the consent of another party (e.g. Annexes 502.1A and 502.2A). The AGP provides for the exclusion of certain categories of goods and services procured by, inter alia, the Department of National Defence as itemized in Annexes 4 and 5. These provisions would be subverted if the government institution were to, instead of following the formal procedures for modifying coverage that were agreed to in order to ensure reciprocity is respected, achieve the mass exemption of certain classes of goods, services or entities by recourse to the NSE provisions without any restriction whatsoever.

[70].  Exhibit PR-2016-043-10 at para. 25, Vol. 1C.

[71].  Exhibit PR-2016-043-11, exhibit E, Vol. 1C.

[72].  MTS Allstream Inc. v. Department of Public Works and Government Services (3 February 2009), PR-2008-033 (CITT) at para. 26.

[73].  Integrated Procurement Technologies Inc. (14 April 2008), PR-2008-007 (CITT).  

[74].  Exhibit PR-2016-043-01, tab D-1, RFP, s.3.3.1, Vol. 1.

[75].  Ibid., s.3.3.2.

[76].  Exhibit PR-2016-043-01, tab D-3, Annex B6, Note 2, Vol. 1A.

[77].  Exhibit PR-2016-043-01, tab D-1, RFP, ss.4.2.1-4.2.1.1, Vol. 1. Section 4.2.1 provides as follows: “Elements of this RFP, including all annexes, may be categorized as either ‘Mandatory’ or ‘Rated’ and are identified as follows: 4.2.1.1 Mandatory Requirements: . . . Any element of the bid solicitation that is identified with the words ‘Mandatory’, ‘must’ or ‘required’ is a mandatory requirement. Bids that do not comply with each and every mandatory requirement will be declared non-compliant and disqualified. The mandatory requirements are described in this RFP, including the Annexes.”

[78].  Exhibit PR-2016-043-01A (protected), tab E-5, HP Bid Response - Annex B1, Vol. 2.

[79].  Exhibit PR-2016-043-16 at para. 47, Vol. 1C.

[80].  Exhibit PR-2016-043-01A (protected), tab E-5, HP Bid Response - Annex B6, Vol. 2.

[81].  Exhibit PR-2016-043-01, Detailed Statement of Facts and Arguments, para. 10. Vol. 1.

[82].  Exhibit PR-2016-043-01, tab D-3, Annex B1, Note 6, Vol. 1A.

[83].  Exhibit PR-2016-043-16A (protected), exhibit 34, Vol. 2B.

[84].  Ibid., exhibit 28, Attachment A.

[85].  HP relies on language in one SSC internal e-mail where the writer states that HP “owes us an explanation/clarification as to where the B6 prices are in B1” as an admission that SSC should have sought clarification. The Tribunal finds it to be equally construable as a colloquial observation of a problem with a bid as a literal affirmation that a request for clarification is necessary. Regardless, objectively, no clarification was warranted because there is nothing in the proposal to which HP could have referred SSC to show how the B6 prices came from B1.

[86].  Exhibit PR-2016-043-20 at para. 33, comment by HP on the Government Institution Report (GIR), citing Cifelli Systems Corporation v. Department of Public Works and Government Services, PR-2007-084, at para. 21, Vol. 1E.

[87].  Exhibit PR-2016-043-20 at para. 25, comment by HP on GIR, citing IBM Canada Ltd., PR-99-020, at pp. 6-7, Vol. 1E.

[88].  HP relies on an e-mail dated July 29, 2015, that SSC sent to its legal department stating that HP “owes us an explanation/clarification as to where the B6 prices are in B1” and the fact that the evaluation team wrote to its legal department on October 28, 2015, i.e. after seeking approval to proceed to benchmark testing with IBM, that “[w]e feel we have a case for non-compliance [on HP’s financial bid]”. Exhibit PR-2016-043-20 at paras. 32-33, comment by HP on GIR, Vol. 1E.

[89].  HP argues that after this violation was ultimately “shown to be baseless”, the SSC “sought to backfill to sustain a decision that it had made on an excluded ground, and to maintain the momentum of its settled award of the contract to an incumbent”. Exhibit PR-2016-043-20 at para. 44, comment by HP on GIR, Vol. 1E.

[90].  Exhibit PR-2016-043-16A (protected), exhibit 34, Vol. 2B.

[91].  Exhibit PR-2016-043-20 at paras. 35-37, comment by HP on GIR, citing exhibit PR-2016-043-16A at para. 26, p. 12, Vol. 1E.

[92].  Exhibit PR-2016-043-16, exhibit 7, Amendment 2 to the RFP, Vol. 1C.

[93].  Exhibit PR-2016-043-01 at para. 14, Detailed Statement of Facts and Arguments, Vol. 1.

[94].  Exhibit PR-2016-043-16 at p. 13, para. 29, Vol. 1C.

[95].  Ibid., exhibit 10.

[96].  Ibid., exhibit 12.

[97].  Ibid.

[98].  Ibid., exhibit 15.

[99].  Ibid.

[100]. Ibid., exhibit 17.

[101]. Ibid.

[102]. Ibid.

[103]. Ibid., exhibit 19.

[104]. Ibid., exhibit 23, Amendment 16 to RFP.

[105]. Ibid., exhibit 24.

[106]. Ibid., exhibit 25.

[107]. Exhibit PR-2016-043-16A (protected), exhibit 32, Vol. 2B.

[108]. Ibid.

[109]. As evidence of this, HP cites the April 29 and June 22, 2015, e-mails, as well as an affidavit from Pauline Martin (a former federal government account manager for HP who managed HP’s proposal development) who states that HP’s subcontractors included on its Form B “have informed me that they were not contacted by SSC or [CSE] between January and April 2015 about the Form B SCSI process”. Exhibit PR-2016-043-01, tab B-1, Affidavit of Pauline Martin, paras. 12-13, Vol. 1.