Determinations

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TABLE OF CONTENTS

• DETERMINATION OF THE TRIBUNAL
• STATEMENT OF REASONS
• • COMPLAINT
  • PROCUREMENT PROCESS
  • POSITION OF PARTIES
  • • PWGSC's Position
    • C.F. Industrial's Position
  • TRIBUNAL'S DECISION
  • DETERMINATION OF THE TRIBUNAL

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Ottawa, Wednesday, January 9, 2002

File No. PR-2001-031

IN THE MATTER OF a complaint filed by C.F. Industrial Products Inc. under subsection 30.11(1) of the Canadian International Trade Tribunal Act, R.S.C. 1985 (4th Supp.), c. 47;

AND IN THE MATTER OF a decision to conduct an inquiry into the complaint under subsection 30.13(1) of the Canadian International Trade Tribunal Act.

DETERMINATION OF THE TRIBUNAL

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.

Michel P. Granger
Michel P. Granger
Secretary

The statement of reasons will follow at a later date.
 
 

Date of Determination:	January 9, 2002
Date of Reasons:	January 22, 2002
Tribunal Member:	Peter F. Thalheimer, Presiding Member
Investigation Manager:	Paule Couët
Investigation Officer:	Ronald B. Harrigan
Counsel for the Tribunal:	Marie-France Dagenais
Complainant:	C.F. Industrial Products Inc.
Counsel for the Complainant:	John Sawatzky
Government Institution:	Department of Public Works and Government Services
Counsel for the Government Institution:	Susan D. Clarke
	Christianne M. Laizner
	Ian McLeod

 
 
Ottawa, Tuesday, January 22, 2002

File No. PR-2001-031

IN THE MATTER OF a complaint filed by C.F. Industrial Products Inc. under subsection 30.11(1) of the Canadian International Trade Tribunal Act, R.S.C. 1985 (4th Supp.), c. 47;

AND IN THE MATTER OF a decision to conduct an inquiry into the complaint under subsection 30.13(1) of the Canadian International Trade Tribunal Act.

STATEMENT OF REASONS

COMPLAINT

On October 11, 2001, C.F. Industrial Products Inc. (C.F. Industrial) filed a complaint with the Canadian International Trade Tribunal (the Tribunal) under subsection 30.11(1) of Canadian International Trade Tribunal Act ¹ concerning the procurement (Solicitation No. 23232-022002/A) by the Department of Public Works and Government Services (PWGSC) of a diesel generator standby power system for the Department of Agriculture and Agri-Food (AAFC) Research Centre in Harrow, Ontario.

C.F. Industrial alleged that PWGSC had not conducted the evaluation process according to the Request for Proposal (RFP). In particular, C.F. Industrial alleged that PWGSC incorrectly evaluated the proposal submitted by Stratton Electric Limited (Stratton) with respect to its compliance with the mandatory requirements relating to Canadian Standards Association (CSA) certification and incorrectly allowed Stratton to amend its bid price.

C.F. Industrial requested, as a remedy, that the contract be set aside and awarded to the bidder with the lowest-priced compliant proposal.

On October 18, 2001, the Tribunal informed the parties that the complaint had been accepted for inquiry pursuant to subsection 30.11(1) of the CITT Act and subsection 7(1) of the Canadian International Trade Tribunal Procurement Inquiry Regulations.² On November 20, 2001, PWGSC filed a Government Institution Report (GIR) with the Tribunal in accordance with rule 103 of the Canadian International Trade Tribunal Rules.³ On December 5, 2001, C.F. Industrial filed its comments on the GIR with the Tribunal. On December 11, 2001, PWGSC requested permission to file a response to C.F. Industrial's comments on the GIR. On December 13, 2001, PWGSC filed its response to C.F. Industrial's comments on the GIR and, on December 14, 2001, C.F. Industrial submitted comments in reply.

Given that there was sufficient information on the record to determine the validity of the complaint, the Tribunal decided that a hearing was not required and disposed of the complaint on the basis of the information on the record.

PROCUREMENT PROCESS

A Notice of Proposed Procurement (NPP) for this solicitation, along with an RFP, was issued on July 12, 2001, and made available to vendors on MERX⁴ on July 17, 2001. The NPP indicated that the solicitation was being conducted under the North American Free Trade Agreement,⁵ the Agreement on Government Procurement ⁶ and the Agreement on Internal Trade.⁷ The period for the submission of proposals closed on August 28, 2001.

The following portions of the RFP are relevant to this case:

Mandatory Requirements
Proposals will be examined to determine their compliance with the mandatory requirements as detailed herein. Bidders are instructed to comply with each requirement detailed in the following chart. Failure to comply with any item shall render the bid to be considered non-responsive and no further consideration will be given.
Basis of Selection
To be considered responsive, a bid must meet all of the mandatory requirements of this solicitation. Bids not meeting all of the mandatory requirements will be given no further consideration. The lowest priced responsive bid will be recommended for award of a contract or issuance of a standing offer, as the case may be.

Standard Instructions and Conditions in DSS-MAS 9403, incorporated in the RFP by reference, address the provincial sales tax (PST).⁸

The Specifications set out a number of mandatory technical requirements relevant to this case:

Electrical General Requirements ^[9]
6. Materials and Equipment
.2 Equipment and material to be CSA certified. Where there is no alternative to supplying equipment which is not CSA certified, obtain special approval from Electrical Inspection Department.
Diesel Electric Generating Units (Liquid Cooled)^[10]
1.2 Design Criteria
.3 Units must be capable of starting, attaining settled voltage and frequency limits and accepting rated load with voltage and frequency settling to the specified steady state bands, all within 15 seconds for any temperature between 20 deg. C to 35 deg. C. Generator performance shall comply with CAN/CSA - C282 -M89.

Six proposals were received in response to the solicitation, including a proposal from C.F. Industrial. Two proposals were found to be non-compliant based on an initial examination of the submitted documentation.

According to the GIR, the evaluation team convened on September 5, 2001, to examine the four remaining proposals. At that time, the evaluation team determined that three bids, including those of C.F. Industrial and Stratton, were compliant with the mandatory requirements of the solicitation. The evaluation team then determined that the lowest-priced responsive bid was from Stratton. This information was kept confidential pending the verification of references.

On or about September 12, 2001, before the reference verification process was complete, the President of C.F. Industrial approached a member of the evaluation team at a work site. According to the GIR, he stated that he understood that Stratton had submitted a proposal that did not meet the mandatory requirements of the solicitation regarding the CSA certification of the generators and related equipment.

The evaluation team re-examined the supporting material submitted with the Stratton proposal and was satisfied that the requirements of the RFP were met. In addition, on September 13, 2001, the AAFC Facility Manager sent a facsimile to the PWGSC contracting officer that identified items to be clarified. In a subsequent facsimile dated September 17, 2001, the AAFC Facility Manager provided the PWGSC Contracting Officer with copies of CSA certificates of compliance and CSA certification records for the generators and related equipment proposed by Stratton. The evaluation team concluded that, taken together, this material constituted final and conclusive confirmation of its original determination that the Stratton proposal was compliant with the relevant mandatory requirements regarding CSA certification in the solicitation.

PWGSC, in a letter dated September 27, 2001, advised C.F. Industrial that a contract had been awarded to Stratton in the amount of $755,733 plus GST.

According to the GIR, the following exchange occurred between PWGSC and Stratton regarding the issue of PST. Shortly after October 1, 2001, Stratton contacted PWGSC and indicated that, in calculating its bid price, it had erroneously not factored in the PST that it would have to pay with respect to its acquisition of the generator equipment from its supplier and sought relief with respect to the bid price. On October 11, 2001, PWGSC advised Stratton that it had only two options: (1) to ask PWGSC for release from the contract obligation or (2) to fulfil the contract at the price it had bid. On October 15, 2001, Stratton advised PWGSC that it would perform the contract at the bid price.

On October 11, 2001, C.F. Industrial filed this complaint with the Tribunal.

POSITION OF PARTIES

PWGSC's Position

With regard to the allegation that Stratton's proposal was non-compliant with respect to CSA certification, PWGSC submitted that the evaluation team, as a result of thorough and due diligence, confirmed that Stratton's proposal was compliant with all mandatory requirements.

PWGSC further submitted that, by virtue of its letter dated October 19, 2001, filed with the Tribunal, C.F. Industrial conceded that the allegation relating to CSA certification had no foundation.

PWGSC added that the activities performed by the evaluation team, following the discussions between a member of the team and the President of C.F. Industrial on September 12, 2001, in re-examining Stratton's proposal and obtaining written clarification that the generator equipment was CSA-certified were a matter of due diligence.

With respect to the allegation concerning the PST, PWGSC submitted that C.F. Industrial provided no evidence that PWGSC allowed the successful bidder to modify its price after bid closing. PWGSC added that it acted correctly by refusing the request made by Stratton.

In its December 13, 2001, comments, PWGSC submitted that the points raised in the additional correspondence from the consultant to C.F. Industrial were known to C.F. Industrial before it submitted its complaint on October 11, 2001, and that, therefore, the time limit for raising the issues had long since passed. PWGSC further submitted that the evaluation team had taken into consideration the criteria referred to in these items and saw no reason to conclude that Stratton's proposal did not satisfy the requirements. Finally, PWGSC submitted that these comments from C.F. Industrial's consultant did not add anything to the issue of CSA certification.

PWGSC requested that it be awarded costs in this matter.

C.F. Industrial's Position

According to the complaint, on August 27, 2001, the day before bid closing, the generator supplier to Stratton inadvertently sent a document to C.F. Industrial that contained the specifications of each of the items that the supplier would provide to Stratton. As such, C.F. Industrial was aware of elements of Stratton's bid.

In its original complaint, C.F. Industrial submitted that, as Stratton's bid did not meet the mandatory requirements of the RFP, Stratton's proposal should have been rejected in accordance with the terms of the RFP.

C.F. Industrial submitted that, as Stratton had been allowed to clarify its bid subsequent to the closing of tenders, such clarification constituted negotiation and was in contravention of the provisions of the AIT.

In its response to the GIR, C.F. Industrial submitted that Stratton's proposal did not indicate CSA certification for certain products. With respect to the switchgear, C.F. Industrial submitted that it was indicated as being UL91¹¹ -labelled and, with respect to the generator controls, C.F. Industrial submitted that the proposal simply recited that the product met or exceeded certain codes and standards. C.F. Industrial submitted that this was not what the RFP required.

C.F. Industrial submitted that several aspects of Stratton's proposal must have been deemed compliant with the mandatory requirements set out in the solicitation without verification, as additional information was submitted to PWGSC as late as September 14, 2001, long after the solicitation closing date. C.F. Industrial submitted that the fact that this additional information was necessary is, in itself, clear evidence that Stratton's bid was incomplete and, therefore, should have been given no further consideration. C.F. Industrial provided additional correspondence from its consultant as verification.

C.F. Industrial submitted that, when it became apparent to PWGSC that Stratton had omitted to include PST in its bid price, contrary to the mandatory requirements of the RFP and the verbal instructions given at the bidders' conference, either PWGSC should have thrown out Stratton's bid or evaluated all the bids submitted, exclusive of PST.

C.F. Industrial also submitted that the manner in which PWGSC handled the bids and the evaluation was inconsistent with fair practice and PWGSC's own requirements, to such extent that C.F. Industrial should be awarded its costs.

In its response of December 14, 2001, to PWGSC's additional comments, C.F. Industrial reiterated that Stratton's bid did not meet the mandatory requirements set out in the solicitation and that "the consultant's comments of August [September] 18, 2001 are simply additional verification to that already provided in the original complaint that the Stratton bid did not meet mandatory requirements".

TRIBUNAL'S DECISION

Section 30.14 of the CITT Act requires that, in conducting an inquiry, the Tribunal limit is consideration to the subject matter of the complaint. Furthermore, at the conclusion of the inquiry, the Tribunal must determine whether the complaint is valid on the basis of whether the procedures and other requirements prescribed in respect of the designated contract have been observed. Section 11 of the Regulations further provides, in part, that the Tribunal is required to determine whether the procurement was conducted in accordance with NAFTA, the AGP and the AIT.

Article 1015(4)(a) of NAFTA and Article XIII(4)(a) of the AGP provide, in part, that, to be considered for award, a tender must, at the time of opening, conform to the essential requirements of the notices or tender documentation. Article 506(6) of the AIT provides, in part, that the tender documents shall clearly identify the requirements of the procurement and the criteria that will be used in the evaluation of bids.

There is no dispute between the parties as to whether there was a requirement for CSA certification of the generators and associated hardware that make up the standby power system. Neither is there a dispute as to whether a successful bidder is required to pay PST on taxable goods or services used or consumed in the performance of the contract. What is at issue is whether PWGSC properly applied the evaluation methodology and, on that basis, correctly evaluated Stratton's proposal as technically compliant with respect to the mandatory requirements regarding CSA certification and correctly refused Stratton's request to modify its bid price.

The Tribunal is of the view that the information provided as part of Stratton's proposal was sufficient for the evaluation team to have determined on September 5, 2001, that Stratton's proposal was compliant with the mandatory requirements regarding CSA certification. The Tribunal is also of the opinion that PWGSC adequately examined the relevant technical documents and that it was reasonable to conclude, from that examination, that Stratton's proposal met the mandatory requirements. Therefore, the Tribunal finds that PWGSC did not deviate from the evaluation procedures contained in the RFP in conducting its assessment of this requirement of the proposals.

With respect to the second allegation that PWGSC allowed the successful bidder to amend its bid price, the Tribunal finds that this allegation is without merit. The Tribunal notes that the solicitation at issue required a lot price from bidders. The Tribunal also notes that PWGSC did not change either the arrangements of the contract or the contract price as a result of Stratton's request for relief from its error in omitting PST on certain items in its proposal. Therefore, the Tribunal finds that PWGSC properly applied the evaluation procedures contained in the RFP when it determined that Stratton had the lowest-priced responsive bid.

For these reasons, the Tribunal finds that the complaint is not valid.

PWGSC requested to be awarded its costs in the matter. The Tribunal has decided that the circumstances of this case do not warrant costs against C.F. Industrial. Therefore, no costs will be awarded.

DETERMINATION OF THE TRIBUNAL

In light of the foregoing, the Tribunal determines that the procurement was conducted in accordance with the requirements of NAFTA, the AGP and the AIT and, therefore, that the complaint is not valid.

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

2 . S.O.R./93-602 [hereinafter Regulations].

3 . S.O.R./91-499.

4 . Canada's Electronic Tendering Service.

5 . 32 I.L.M. 289 (entered into force 1 January 1994) [hereinafter NAFTA].

6 . 15 April 1994, online: World Trade Organization <http://www.wto.org/english/docs_e/legal_e/final_e.htm> [hereinafter AGP].

7 . 18 July 1994, C. Gaz. 1995.I.1323, online: Internal Trade Secretariat <http://www.intrasec.mb.ca/eng/it.htm> [hereinafter AIT].

8 . Provincial Taxes

9 . GIR, Exhibit 3, section 16010.

10 . Ibid. section 16231.

11 . "UL" refers to Underwriters' Laboratories, Inc., a U.S. testing and certification organization.

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Initial publication: January 22, 2002