HAWBOLDT INDUSTRIES
v.
DEPARTMENT OF PUBLIC WORKS AND GOVERNMENT SERVICES
File No. PR-2017-045

Determination and reasons issued
Friday, April 27, 2018

TABLE OF CONTENTS

• DETERMINATION
• STATEMENT OF REASONS
  • BACKGROUND
  • TRADE AGREEMENTS
  • ANALYSIS
    • PWGSC Failed to Guarantee Bid Confidentiality During the Procurement Process
    • PWGSC’s Improper Disclosure Precluded Fair Competition and Prejudiced Hawboldt
  • REMEDY
  • BID PREPARATION COSTS
  • COMPLAINT COSTS

 

IN THE MATTER OF a complaint filed by Hawboldt Industries 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

HAWBOLDT INDUSTRIES Complainant

AND

THE DEPARTMENT OF PUBLIC WORKS AND GOVERNMENT SERVICES Government Institution

DETERMINATION

Pursuant to subsection 30.14(2) of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal determines that

Pursuant to subsections 30.15(2) and (3) of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal recommends that the Department of Public Works and Government Services compensate Hawboldt Industries in an amount equal to ███████████████████.

Pursuant to subsection 30.15(4) of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal awards Hawboldt Industries, in addition to the compensation recommended above, its reasonable bid preparation costs.

Should the parties be unable to agree on the amount of compensation and bid preparation costs, Hawboldt Industries shall file with the Canadian International Trade Tribunal, within 40 days of the date of this determination, a submission on the issue of compensation. The Department of Public Works and Government Services will then have seven working days after receipt of Hawboldt Industries’ submission to file a response. Hawboldt Industries will then have five working days after the receipt of the Department of Public Works and Government Services’ reply submission to file any additional comments. The parties are required to serve each other and file with the Canadian International Trade Tribunal.

Pursuant to section 30.16 of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal awards Hawboldt Industries its reasonable costs incurred in preparing and proceeding with this complaint, which costs are to be paid by the Department of Public Works and Government Services. In accordance with the Procurement Costs Guideline, the Canadian International Trade Tribunal’s preliminary indication of the level of complexity for this complaint is Level 2, and its preliminary indication of the amount of the cost award is $2,750. If any party disagrees with the preliminary level of complexity or indication of the amount of the cost award, it may make submissions to the Canadian International Trade Tribunal, as contemplated in Article 4.2 of the Procurement Costs Guideline. The Canadian International Trade Tribunal reserves jurisdiction to establish the final amount of the cost award.

Jean Bédard
Jean Bédard
Presiding Member

Tribunal Panel: Jean Bédard, Presiding Member

Support Staff: Dustin Kenall, Counsel

Complainant: Hawboldt Industries

Counsel for the Complainant: Phuong T.V. Ngo
Graham S. Ragan
Julie Chung

Government Institution: Department of Public Works and Government Services

Counsel for the Government Institution: Ian McLeod
Roy Chamoun
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

1. On December 12, 2017, Hawboldt Industries (Hawboldt) filed a complaint with the Canadian International Trade Tribunal (the Tribunal) concerning a Request for Proposal (Solicitation No. W8482-156383/A) (the RFP) issued by the Department of Public Works and Government Services (PWGSC) on behalf of the Department of National Defence (DND) for the supply of 16 replacement electro-hydraulic marine cranes for the Royal Canadian Navy’s Halifax Class ships, with an option to buy an additional 14 cranes of the same design.
2. Hawboldt submits that PWGSC improperly disclosed the contract award value (from which one can easily infer Hawboldt’s bid price) to the other bidders to the RFP after informing Hawboldt that it had won the competition but before issuing a contract award. Because of errors in the evaluation process raised by the other bidders, PWGSC ultimately cancelled the RFP and decided to retender the competition. Hawboldt argues that by failing to wait until a contract was issued to Hawboldt before informing bidders of the contract value, PWGSC violated the trade agreements by failing to preserve Hawboldt’s confidential information until the close of the procurement process.

BACKGROUND

3. None of the facts below are in dispute.
4. On June 14, 2017, PWGSC issued the RFP. Over the following two months, it issued nine amendments to the RFP, none of which are relevant to this complaint.
5. On August 25, 2017, the RFP closed. Four bids were received, including one from Hawboldt.
6. On September 5, 2017, DND evaluated the bidders’ technical proposals. On September 14, 2017, DND advised PWGSC that all bidders were non-compliant in respect of the engineering review conducted for mandatory criteria M4 and M5.
7. On September 18, 2017, PWGSC sent letters to all bidders inviting them to submit additional supporting data and/or advise where in their bids the information could be located.
8. On September 27, 2017, having received responses from all bidders, DND re-evaluated the bids by updating their individual and consensus evaluation scoresheets.
9. On September 28, 2017, DND advised PWGSC that two bidders were now compliant, of which Hawboldt had the lowest-priced bid. On the same day, DND confirmed that Hawboldt had the required security clearance for contract award.
10. On October 2, 2017, after confirming Hawboldt satisfied the integrity eligibility check for contract award, PWGSC emailed Hawboldt stating that its bid would be recommended for contract award but that two pre-award due diligence checks still needed to be completed. First, PWGSC wanted to clarify Hawboldt’s intentions regarding the litigation rights clause in the resulting contract. Second, PWGSC needed to confirm Hawboldt’s pricing.
11. Hawboldt confirmed its bid pricing on the same day, and, two days later, provided PWGSC a favourable response on the litigation rights clause.
12. On October 3, 2017, PWGSC emailed DND to request an amendment to the monetary value of the procurement in order to meet Hawboldt’s bid price, which was higher than the approved requisition estimate. PWGSC did not disclose to Hawboldt that this precondition was outstanding.
13. On October 5, 2017, PWGSC sent regret letters that identified the contract award value to the other three bidders, even though it had not yet issued a contract award to Hawboldt and in fact was not authorized to do so until it received approval from DND for the requisition amendment. PWGSC would not receive the amendment until one week later on October 12, 2017.
14. On October 5 and 6, 2017, two of the unsuccessful bidders objected to the results, raising issues regarding the evaluation of mandatory criteria.
15. On October 11, 2017, further to two earlier telephone calls, PWGSC confirmed by email to Hawboldt that it had sent regret letters that included the contract award value to the other bidders.
16. On October 19, 2017, PWGSC emailed Hawboldt that the procurement was under review and requested an extension of the bid validity period, which Hawboldt granted on October 20, 2017.
17. On October 23, 2017, PWGSC held an internal review meeting to decide how to proceed. It ultimately decided that the solicitation should be cancelled and retendered on three grounds:
    1. M4, which contained 15 pages of criteria in the Statement of Work, and M5, which referenced an extensive Contract Deliverable Requirements List, were so detailed that no bidder could demonstrate compliance under the terms of the RFP;
    2. the blanks and limited comments in the evaluators’ notes made it difficult to determine what had been demonstrated or considered to allow two bidders to meet the criteria (on the second review); and
    3. the additional substantive material which had been accepted in each bid constituted impermissible bid repair.
18. On November 7, 2017, PWGSC informed Hawboldt via telephone that the solicitation would be cancelled and retendered. On this and a later call the same day, Hawboldt raised concerns regarding the fact that its bid pricing was included in the regret letters.
19. On the same day, PWGSC sent letters to all bidders notifying them that the solicitation would be cancelled and retendered.
20. On November 9, 2017, Hawboldt met with PWGSC to discuss the reason for the RFP cancellation and the implications of its bid pricing being disclosed. On November 27, 2017, Hawboldt emailed PWGSC requesting a copy of the information disclosed to the other bidders. On November 28, 2017, PWGSC sent Hawboldt a letter confirming the figure for the contract award value that had been disclosed.
21. On December 12, 2017, Hawboldt filed this complaint with the Tribunal.

TRADE AGREEMENTS

22. Section 1.2 of the RFP states that it is subject to the World Trade Organization Revised Agreement on Government Procurement,^[1] the Agreement on Internal Trade,^[2] and the North American Free Trade Agreement.^[3]
23. Hawboldt complains that, by disclosing Hawboldt’s bid price before contract award, PWGSC:
    1. failed to act in accordance with Article XV(1) of the AGP, Article 510 of the AIT, and Article 1014(3) of NAFTA by failing to guarantee the confidentiality of Hawboldt’s bid; and
    2. failed to act in accordance with Article XVII of the AGP and Articles 1008(2)(a), 1015(8), and 1019(5) of NAFTA by disclosing information that would prejudice Hawboldt’s ability to compete in future tenders, the fair competition between suppliers, and the legitimate commercial interests of Hawboldt.

ANALYSIS

PWGSC Failed to Guarantee Bid Confidentiality During the Procurement Process

24. Article XV(1) of the AGP reads as follows:

    Article XV — Treatment of Tenders and Awarding of Contracts

    Treatment of Tenders

    1. A procuring entity shall receive, open and treat all tenders under procedures that guarantee the fairness and impartiality of the procurement process, and the confidentiality of tenders.

25. Article 510 of the AIT reads as follows:

    Article 510: Confidentiality

    Nothing in this Chapter requires an entity to breach confidentiality obligations imposed by law or to compromise security or commercially sensitive or proprietary information identified by a supplier in its tender documents.

26. Article 1014(3) of NAFTA reads as follows:

    Article 1014: Negotiation Disciplines

    3. An entity shall treat all tenders in confidence. In particular, no entity may provide to any person information intended to assist any supplier to bring its tender up to the level of any other tender.

Positions of the Parties

27. Hawboldt submits that by disclosing its bid price before contract award PWGSC breached the above trade agreement provisions. Hawboldt notes in particular that the premature disclosure of its bid price is also in contravention of PWGSC’s own policy, as found in sections 7.35 and 7.45 of its Supply Manual, which read as follows:^[4]

    7.35. Notification to Unsuccessful Bidders/Offerors/Suppliers

    Contracting officers should notify unsuccessful bidders/offerors/suppliers as soon as possible after contract award and issuance of a standing offer or supply arrangement. Samples of regret letters are provided in Annex 7.1: Samples of Regret Letters.

    7.45. Disclosure of Information

    a. The following information can be released by contracting officers on a routine basis, after award of a contract or issuance of a standing offer (SO) or supply arrangement (SA):

    i. for all solicitations for goods and services, the name of the successful and unsuccessful bidders/offerors/suppliers, responsive and non responsive, together with the total evaluated price of the successful bidder/offeror/supplier and total score, if applicable. . . .

    [Emphasis added]

28. The sample regret letters (intended per the above to be issued “after contract award”) disclose the price of the awarded contract:^[5]

    The price of the awarded_________(insert “contract” or “SO” or “SA”) is $_________(insert value of awarded contract or issued SO or SA), excluding Goods and Services Tax/Harmonized Sales Tax, as applicable.

29. In response, PWGSC does not deny that it disclosed Hawboldt’s bid price information before contract award. Rather, it argues that it proceeded properly in cancelling the procurement process, Hawboldt was aware that its contract value would be published as part of the solicitation process, and PWGSC is required to publish the value of awarded contracts.
30. In reply, Hawboldt argues that PWGSC’s error wasn’t cancelling the RFP but in prematurely disclosing its pricing information before contract award. Under section 5.10(c) of the Supply Manual, PWGSC is prohibited from releasing confidential information until after contract award; it reads as follows:

    5.10. Confidentiality of Bids

    a. The contracting officer must treat all information in a secure and confidential manner to ensure the integrity of the contracting process.

    b. When referring bids to the client (or technical evaluators) during the evaluation process, the following cautionary note must be provided to the client:

    “Bid information must be divulged only to individuals authorized to participate in this contracting process. Information must not be divulged to, or discussed with, the private industry.”

    c. During the period from bid closing to contract award, (including the contract approval process), contracting officers receiving requests from suppliers for the names of bidders must not release this information. For more information, suppliers should contact the Access to Information and Privacy Office.

    d. After contract award, the names of bidders and other information may be released in accordance with departmental policy. (See 7.30 Procurement Reporting and Posting of Award Notices.)

    [Emphasis added]

31. Thus, Hawboldt concludes it is irrelevant whether PWGSC intended to prejudice Hawboldt or whether Hawboldt knew that its bid price would be published after contract award.

Tribunal’s Analysis

32. Article 510 of the AIT merely states that the government institution is not required to disclose confidential information – it does not impose an affirmative burden. However, Article XV(1) of the AGP and Article 1014(3) of NAFTA specifically require the government to keep bidders’ information in confidence. The Supply Manual is not binding on PWGSC or the Tribunal for purposes of determining compliance with the trade agreements, but it is instructive that PWGSC itself interprets the confidentiality provision of the trade agreements as prohibiting disclosure of bid price information prior to contract award.
33. The Tribunal’s case law recognizes the trade agreements impose a duty on the government to protect confidential information. In 1091847 Ontario Ltd., the Tribunal explained that “the obligation of procuring entities to provide pertinent information to a losing bidder must be balanced with its obligation to protect the confidentiality of commercially sensitive information, including the financial details of the successful bid.”^[6] In Lanthier Bakery Ltd., the Tribunal opined as follows on PWGSC’s disclosure of a complainant’s pricing before a standing offer was signed (without ruling on the matter as the ground was time-barred):^[7]

    . . . The Tribunal is concerned that the improper communication of a bidder’s confidential information to a competitor may have considerable consequences on the conditions of competition in the context of any upcoming RFSO designed to meet the same needs and could call into question the integrity of the procurement process.

    Had the Tribunal found Lanthier’s complaint valid, the Tribunal would have considered the disclosure of Lanthier’s pricing when determining the appropriate remedy. . . . In any event, it is incumbent upon PWGSC to ensure that any future procurement processes are conducted fairly, or it may be the subject of another complaint.

34. PWGSC’s defence (that it had to cancel the RFP and that it did not intend to prejudice Hawboldt) is relevant only when addressing the issues of prejudice and remedy, not when ascertaining whether breaches of the AGP and NAFTA occurred when Hawboldt’s prices were disclosed. PWGSC argues that the breach is immaterial because the only thing preventing contract award was a requisition amendment that was ultimately granted. However, there is no language in the trade agreements excusing inadvertent or immaterial breaches of confidentiality. Rather, Article XV(1) of the AGP expressly states that government institutions “shall receive, open and treat all tenders under procedures that guarantee the fairness and impartiality of the procurement process, and the confidentiality of tenders” [emphasis added]. Article XVII(2), as described below, uses similarly mandatory language unqualified by intention or consequence.
35. Not only did PWGSC fail to guarantee the confidentiality of tenders, it violated its own procedures by preliminarily awarding the contract to Hawboldt and then advising unsuccessful bidders of Hawboldt’s pricing before it had authorization to do either.
36. Therefore, the Tribunal finds this ground of complaint is valid.

PWGSC’s Improper Disclosure Precluded Fair Competition and Prejudiced Hawboldt

37. Article XVII of the AGP reads as follows:

    Article XVII — Disclosure of Information

    Non-Disclosure of Information

    2. Notwithstanding any other provision of this Agreement, a Party, including its procuring entities, shall not provide to any particular supplier information that might prejudice fair competition between suppliers.

    3. Nothing in this Agreement shall be construed to require a Party, including its procuring entities, authorities and review bodies, to disclose confidential information where disclosure:

    . . .

    b. might prejudice fair competition between suppliers;

    c. would prejudice the legitimate commercial interests of particular persons, including the protection of intellectual property; . . . .

38. Articles 1008(2)(a), 1015(8), and 1019(5) of NAFTA read as follows:

    Article 1008: Tendering Procedures

    1. Each Party shall ensure that the tendering procedures of its entities are:

    (a) applied in a non-discriminatory manner; and

    (b) consistent with this Article and Articles 1009 through 1016.

    2. In this regard, each Party shall ensure that its entities:

    (a) do not provide to any supplier information with regard to a specific procurement in a manner that would have the effect of precluding competition; . . . .

    Article 1015: Submission, Receipt and Opening of Tenders and Awarding of Contracts

    8. Notwithstanding paragraphs 1 through 7, an entity may withhold certain information on the award of a contract where disclosure of the information:

    (a) would impede law enforcement or otherwise be contrary to the public interest;

    (b) would prejudice the legitimate commercial interest of a particular person; or

    (c) might prejudice fair competition between suppliers.

    Article 1019: Provision of Information

    5. No Party may disclose confidential information the disclosure of which would prejudice the legitimate commercial interests of a particular person or might prejudice fair competition between suppliers, without the formal authorization of the person that provided the information to that Party.

Positions of the Parties

39. Hawboldt submits that the Tribunal has frequently held that improper disclosure of a bidder’s pricing information can disadvantage it in future competitions. In Med-Emerg, it held that “[d]isclosure of the particulars of the other bidders’ evaluations should be such as to preserve their competitive advantage for similar or related solicitations in the future.”^[8] In Conair, the Tribunal considered a complaint that PWGSC improperly cancelled and retendered a solicitation after verbally advising the complainant it had been awarded the contract. As a result of PWGSC disclosing each of the two bidders’ prices to the other before cancelling the solicitation, the other bidder lowered its price dramatically on the retender and won it.^[9] The Tribunal found as follows:

    The evidence before the Tribunal indicates, in the Tribunal’s view, that no contract had been awarded by the Department to the complainant in respect of the procurement at issue. However, the Tribunal observes that the Department acted as if the contract had been awarded when it disclosed the pricing information of each bidder. Article 1008(2)(a) of NAFTA provides that entities shall not provide to any supplier information with regard to a specific procurement in a manner that would have the effect of precluding competition. In the Tribunal’s view, the effect of the disclosure by the Department was to make it practically impossible in the circumstances for there to be a fair re-bid of the solicitation. As a result, the Tribunal finds that such disclosure by the Department had the effect of precluding competition and constitutes a violation of Article 1008(2)(a) of NAFTA.

40. The Tribunal ultimately found that PWGSC should not have cancelled the original solicitation and, therefore, recommended it compensate the complainant for the lost profits it would have earned on the original tender.
41. Hawboldt also relies on the Tribunal’s decision in Lengkeek, in which the complainant alleged that PWGSC disclosed its pricing information to a competitor in a solicitation being retendered.^[10] The Tribunal concluded that this inadvertent disclosure violated Article 501 of the AIT, the purpose of which is to “ensure equal access to procurement for all Canadian suppliers”, and Article 504(3), which prohibits “the unjustifiable exclusion of a supplier from bidding”. The Tribunal held as follows:^[11]

    In an absolute sense, the disclosure of LVE’s confidential commercial information could not prevent it from tendering on the second solicitation. However, it is clear that, as a result of this disclosure, at least one significant competitor knows the amount of LVE’s previous bid. This means that LVE is likely to be seriously handicapped in setting its price when bidding on the second RFP and, as a result, fundamentally prejudiced in relation to at least one significant competitor when tendering on that solicitation. Thus, LVE has been denied the opportunity to tender properly. Given the objective of equal access to procurement, as outlined in Article 501 of the AIT, the Tribunal considers that this situation amounts to being unjustifiably excluded from the procurement process for the second RFP.

42. PWGSC maintains that Hawboldt has not been unduly prejudiced because the retender will be on different terms than the RFP, including a higher initial quantity of cranes to be purchased (with pricing changed to reflect economies of scale); new per-unit storage costs, field service support, and spares to influence pricing upwards; and a lower role given to pricing (with technical merit comprising 20% of the bidder’s score). The price of steel may also fluctuate as a raw material. PWGSC speculates that Hawboldt’s August 25, 2017, bid price will be outdated by the time of any retender.
43. Finally, PWGSC also relies on the Tribunal’s recent decision involving a retender in AFG, particularly footnote 15, reading: “The Tribunal notes with considerable sympathy that AFG may be at a strategic disadvantage in the renewed bidding as its pricing was publicly disclosed upon award as required by the trade agreements. However, publication of award pricing is required by the trade agreements result and is a feature of the long-established public tendering and award system . . . .”^[12]

Tribunal’s Analysis

44. The language of the relevant trade agreement provisions is mandatory, providing that the government institution “shall” not disclose confidential information: it is irrelevant whether the disclosure is inadvertent. The language also establishes a low threshold – any disclosure that “might prejudice fair competition between suppliers” – requiring proof of only some probability of harm.
45. Competition is harmed by prematurely releasing bid pricing information before a contract award is authorized. Indeed, the time between bid submission and contract award is the period during which confidentiality procedures are perhaps most needed. Before bid closing, government institutions will not have much, if any, confidential pricing information in their possession, so the risk of improper disclosure is low. After bid closing, such information will not be relevant as regards the recently closed competition because bidders’ prices will already be filed. However, bid pricing information filed in a proposal will be relevant as regards any possible retender. The trade agreements regulate the extent to which government institutions may disclose such information for precisely that reason. They, and the Tribunal’s own legislation and regulations, contemplate a process in which bidders will object to procurements at any stage, including post-bid but pre-award. These objections may, if valid, result in retenders, as indeed occurred here. When government institutions do not implement and follow measures to safeguard bid pricing information during this period, they risk prejudicing competition in retenders.
46. This understanding is reflected in the Tribunal’s case law. Med-Emerg, Conair, and Lengkeek all support the proposition that a bidder may suffer undue prejudice in a retender due to the untimely release of its bid pricing from the original solicitation to competitors. Moreover, PWGSC’s own internal emails admit as much, where one director writes on October 23, 2017:^[13]

    It should be noted that no contract has been awarded but regret letters were sent out which disclosed the price of the lowest compliant bidder. This create [sic] issues for a retender since the scope now needs to be modified to avoid bidders taking advantage of this information. As per our discussion, it would be recommended to review the practice of providing pricing information until an actual contract has been awarded.

47. All of PWGSC’s arguments go to the scope and duration of the prejudice to fair competition – again, these are points that are relevant to remedy, but not to the issue of the existence of a breach of the trade agreements. None of these arguments rebut the fact that competition for the retendered solicitation has in fact been harmed. Hawboldt’s competitors now know the exact price it bid. They also know that it had the lowest compliant bid price. Hawboldt, however, has no notion of its competitors’ prices. The only way for PWGSC to successfully rebut a presumption of prejudice in such a scenario would be to show that the retender will have no pricing component. Simply reducing the pricing component from 100% to 80% may diminish to some degree the magnitude, or potential of prejudice, but it does not eliminate the prejudice that was caused.
48. PWGSC argues that the provisions of NAFTA require it to publish the value of a contract, but this too is beside the point. Article 1015(7) of NAFTA requires only that a procuring entity shall publish, inter alia, the value of the contract “[n]o later than 72 days after the award of a contract”. This provision did not require PWGSC to publish the contract award value in the regret letters and before it had received authorization to award the contract. Furthermore, Article 1015(8), which immediately follows, expressly provides that a procuring entity “may withhold certain information on the award of a contract where disclosure of the information: . . . (c) might prejudice fair competition between suppliers.”
49. Finally, the Tribunal also finds that AFG is distinguishable. In that case, the Tribunal determined it lacked jurisdiction to hear the complaint because the challenge to cancellation of the contract award involved a matter of contract administration, not conduct violating the trade agreements involving the procurement process. In AFG, PWGSC did not engage in a re-evaluation of proposals, retriggering the procurement process; rather, it found its requirements inadequate. There was also no allegation PWGSC lacked the contract requisition authorization to issue an award. Further, in AFG, the complaint specifically challenged the legality of the contract cancellation, which Hawboldt has not done here.
50. Therefore, the Tribunal finds this ground of complaint is valid.

REMEDY

51. Hawboldt requests its bid preparation costs, its complaint costs, and that it be compensated for damages caused by PWGSC’s disclosure of its pricing information.
52. Pursuant to subsection 30.15(2) of the Canadian International Trade Tribunal Act,^[14] the Tribunal has wide discretion to craft flexible remedies:

    Subject to the regulations, where the Tribunal determines that a complaint is valid, it may recommend such remedy as it considers appropriate, including any one or more of the following remedies:

    (a) that a new solicitation for the designated contract be issued;

    (b) that the bids be re-evaluated;

    (c) that the designated contract be terminated;

    (d) that the designated contract be awarded to the complainant; or

    (e) that the complainant be compensated by an amount specified by the Tribunal.

53. Pursuant to subsection 30.15(3) of the Act, in determining an appropriate remedy the Tribunal must consider each of the following:

    (a) the seriousness of any deficiency in the procurement process found by the Tribunal;

    (b) the degree to which the complainant and all other interested parties were prejudiced;

    (c) the degree to which the integrity and efficiency of the competitive procurement system was prejudiced;

    (d) whether the parties acted in good faith; and

    (e) the extent to which the contract was performed.

54. The Tribunal has previously issued warnings in regard to behaviours similar if not identical to the one scrutinized here, and believes that the disclosure of confidential pricing information before definitive contract award constitutes an indisputable and serious deficiency in the procurement process.
55. The degree of prejudice to Hawboldt is significant for the reasons already provided – namely, that the disclosure seriously reduces Hawboldt’s chances of winning a retender or, at the least, makes it more likely that even if it does win it will do so at a reduced profit level. At worst, the situation may be viewed by the bidder as so untenable that it would refrain from submitting a bid for the retendered opportunity.
56. The evidence shows that there is a systemic practice of releasing pricing information by rote without proper considerations of the appropriate time for its communication. In cases such as this one, the prejudice that it causes to the integrity and efficiency of the procurement system is serious and long-standing. It undermines the competitiveness of retenders and severely curtails the scope of practical remedies available to the Tribunal.
57. As Lengkeek and Conair demonstrate, this has happened before. On both occasions, the Tribunal made it clear that this practice was problematic and could result in a compensation recommendation. The evidence discloses that PWGSC violated its own procedures. Furthermore, PWGSC’s internal emails recognize that this is a recurring problem, where a director writes (in response to the other director’s comment excerpted above):^[15]

    In addition, on the final point, I will be working with my team to review and likely stop the practice of sharing contract values in regret letters. It has now in a few cases resulted in issues when forced to retender as one parties price has been disclosed. As best I can tell there is no requirement as to why we do so before any resulting contract is awarded.

58. In the context of this case, a compensation recommendation is warranted.
59. Despite the unfortunate circumstances that arose in this matter, there is, however, no evidence that PWGSC acted in bad faith.
60. In regard to the statutory criterion of contract performance (paragraph 30.15(3)(e)), of course, no work on the contract has been performed as none has been awarded.
61. Finally, both parties oppose deferring the calculation of any compensation recommendation. The Tribunal initially contemplated deferring any compensation recommendation on the basis that the full extent of the prejudice to Hawboldt would not be known until the results of the retender are known – indeed, Hawboldt may suffer no further prejudice in certain circumstances: for example, if it submits no bid, if a new bid is deemed non-compliant, or if it were to lose the retendered opportunity for reasons other than price. However, Hawboldt makes the compelling point that deferring a calculation of compensation until after the results of the retender are known would be unfair, as it will be forced, if it wants to compete effectively in the retender against competitors who now know its pricing, to suffer an uncompensated loss by having to immediately undercut its own original bid when the next solicitation is tendered. The Tribunal also finds that deferring compensation until the retender is concluded could be equally unfair to other bidders if the Tribunal’s remedy remains outstanding and dependent on the outcome of the retender, i.e., Hawboldt may treat the outstanding remedy as an indemnification for purposes of competitively pricing its bid.
62. On the basis of the above, the Tribunal finds that the most appropriate remedy is an award of some quantum of compensation calculated today.
63. Any relief of an injunctive nature is not appropriate because Hawboldt concedes that the cancellation and retender is proper. Further, Hawboldt has not requested that the Tribunal otherwise intervene in the retendering, by, for example, recommending how pricing or other criteria should be scored – although the Tribunal does take PWGSC at its word that it intends to take the measures it has identified to reformulate the terms of the retender in a manner that is intended to minimize the prejudice from the disclosure of pricing.
64. An award of full lost profits is not appropriate either, because the contract has not yet been awarded; Hawboldt is free to participate in the retender and may still win. An award of lost profits would be unfair because it could also constitute double compensation and, therefore, provide Hawboldt an unfair pricing advantage in the retender.
65. It is clear, however, that Hawboldt has suffered some degree of pricing disadvantage in the retender: its competitors know the price they need to beat, but Hawboldt does not know their pricing.
66. The Tribunal has authority under subsection 30.15(2) of the Act to recommend “such remedy as it considers appropriate”, including “that the complainant be compensated by an amount specified”. Accordingly, a compensation recommendation by the Tribunal is not limited to only lost profits but rather can be calculated based on an amount tailored to remedy the prejudice particular to the facts of each case.^[16] This case warrants the remedy that follows.
67. The Tribunal finds an appropriate remedy in this case would be an award of compensation equal to ████████████████████████████████████████.^[17] Awarding Hawboldt compensation in this amount is intended to remedy the prejudice suffered by providing Hawboldt a monetary sum it can apply in any retender in relation to its bid price to offset the fact that its competitors are now free to match or, most likely, undercut its prior bid price. Basing the quantum on █████████████ ties the compensation to the procurement at issue while ensuring that the total quantum is not so high that it will over-tip the scales unfairly in Hawboldt’s advantage. It is also consistent with the practice in prior cases for determining compensation where the prejudice suffered is difficult to quantify.^[18]
68. Additionally, the Tribunal finds the total quantum of compensation should remain confidential until after the results of the retender are finalized. Keeping the recommendation confidential obviously prevents competitors from being able to simply factor-in the compensation award into a future bid and thereby undercut Hawboldt, as if no remedy had been awarded (and effectively allowing PWGSC’s prejudice-causing actions to manifest themselves again). A confidential recommendation of ████████████ thus fulfills the objectives of minimizing the prejudice to Hawboldt, avoiding unwarranted double compensation, while attempting to bring some equilibrium back to the playing field for the retender.
69. The Tribunal recognizes that no remedy in the circumstances created by PWGSC can be perfect, but believes that this compensation puts all bidders back into a similar situation of “informational uncertainty” regarding each other’s likely bid prices, as if the prejudice had not occurred. Further, this monetary compensation remedy also reflects the seriousness of the deficiency in PWGSC’s contract award process and the prejudice that it has caused to the integrity and efficiency of the competitive procurement system. Providing no compensation remedy at all, simply because the prejudice to Hawboldt is difficult to quantify, would be inconsistent with the Tribunal’s mandate to recognize and remedy violations of the trade agreements.

BID PREPARATION COSTS

70. The Tribunal also has authority under subsection 30.15(4) of the Act to “award to the complainant the reasonable costs incurred by the complainant in preparing a response to the solicitation for the designated contract.” This authority is distinct from and additional to that of the Tribunal under subsection 30.15(3) to recommend a remedy of compensation.
71. Hawboldt has participated in a procurement that, through PWGSC’s design and evaluation errors, was cancelled without result. As such, Hawboldt’s costs in preparing a bid were effectively thrown away and it will be forced to incur duplicate costs in a retender. In such situations, the Tribunal has recognized in the past that it is appropriate to award a complainant its bid preparation costs.^[19] Further, PWGSC has not articulated any reason why Hawboldt’s request for bid preparation costs should be denied. Accordingly, the Tribunal finds that, in addition to the quantum of compensation recommended, Hawboldt should be awarded its reasonable bid preparation costs.

COMPLAINT COSTS

72. Pursuant to section 30.16 of the Act, “the Tribunal may award costs of, and incidental to, any proceedings before it in relation to a complaint on a final or interim basis and the costs may be fixed at a sum certain or may be taxed.”
73. In determining the amount of cost award for this complaint, the Tribunal considered its Procurement Costs Guideline (the Guideline), which contemplates classification of the level of complexity of cases on the basis of three criteria: the complexity of the procurement, the complexity of the complaint and the complexity of the complaint proceedings.
74. In this instance, the complexity of the procurement itself was high, but it was not the focus of the complaint. The focus of the complaint was PWGSC’s disclosure of confidential information, which required a relatively simple analysis of the provisions of the trade agreements protecting confidentiality. However, the proceedings did raise more complex issues regarding the appropriate remedy, requiring supplementary submissions by the parties. The matter also required a 135-day time frame. The complexity of the proceedings was therefore moderate.
75. As such, in accordance with Appendix A of the Guideline, the Tribunal’s preliminary indication of the level of complexity for this complaint is Level 2, and the preliminary indication of the amount of the cost award is $2,750.

DETERMINATION

76. Pursuant to subsection 30.14(2) of the Act, the Tribunal determines that the complaint is valid.
77. Pursuant to subsections 30.15(2) and (3) of the Act, the Tribunal recommends that PWGSC compensate Hawboldt in an amount equal to its █████████████████.
78. Pursuant to subsection 30.15(4) of the Act, the Tribunal awards Hawboldt, in addition to the compensation recommended above, its reasonable bid preparation costs.
79. Should the parties be unable to agree on the amount of compensation and bid preparation costs, Hawboldt shall file with the Tribunal, within 40 days of the date of this determination, a submission on the issue of compensation. PWGSC will then have seven working days after receipt of Hawboldt’s submission to file a response. Hawboldt will then have five working days after the receipt of PWGSC’s reply submission to file any additional comments. The parties are required to serve each other and file with the Tribunal.
80. Pursuant to section 30.16 of the Act, the Tribunal awards Hawboldt its reasonable costs incurred in preparing and proceeding with this complaint, which costs are to be paid by PWGSC. In accordance with the Guideline, the Tribunal’s preliminary indication of the level of complexity for this complaint is Level 2, and its preliminary indication of the amount of the cost award is $2,750. If any party disagrees with the preliminary level of complexity or indication of the amount of the cost award, it may make submissions to the Tribunal, as contemplated in Article 4.2 of the Guideline. The Tribunal reserves jurisdiction to establish the final amount of the cost award.