---

---

TABLE OF CONTENTS

• DETERMINATION OF THE TRIBUNAL
• STATEMENT OF REASONS
• • COMPLAINT
  • PROCUREMENT PROCESS
  • TRIBUNAL’S ANALYSIS
  • • Costs
  • DETERMINATION OF THE TRIBUNAL

---

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

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
AVALON CONTROLS LTD.	Complainant
AND
THE DEPARTMENT OF PUBLIC WORKS AND GOVERNMENT SERVICES	Government Institution

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.

Pursuant to section 30.16 of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal awards the Department of Public Works and Government Services its reasonable costs incurred in responding to the complaint, which costs are to be paid by Avalon Controls Ltd. The Canadian International Trade Tribunal’s preliminary indication of the level of complexity for this complaint case is Level 2, and its preliminary indication of the amount of the cost award is $2,400. If any party disagrees with the preliminary indication of the level of complexity or the preliminary indication of the amount of the cost award, it may make submissions to the Canadian International Trade Tribunal, as contemplated in the Guideline for Fixing Costs in Procurement Complaint Proceedings. The Canadian International Trade Tribunal retains jurisdiction to establish the final amount of the award.

Dominique Laporte
Dominique Laporte
Secretary

Tribunal Member:	Ellen Fry, Presiding Member
Director:	Randolph W. Heggart
Senior Investigator:	Cathy Turner
Counsel for the Tribunal:	Eric Wildhaber
Complainant:	Avalon Controls Ltd.
Intervener:	Siemens Canada Limited
Government Institution:	Department of Public Works and Government Services
Counsel for the Government Institution:	Susan D. Clarke Ian McLeod Karina Fauteux

Please address all communications to:

COMPLAINT

1. On January 29, 2010, Avalon Controls Ltd. (Avalon) filed a complaint with the Canadian International Trade Tribunal (the Tribunal) under subsection 30.11(1) of the Canadian International Trade Tribunal Act ¹ concerning a procurement (Solicitation No. F5561-092004/B) by the Department of Public Works and Government Services (PWGSC) on behalf of the Canadian Coast Guard (CCG) for the upgrade of the propulsion control and telegraph systems aboard the CCG vessel Hudson.

2. Avalon alleged that PWGSC incorrectly evaluated its proposal and improperly awarded a contract to another bidder. Avalon requested, as a remedy, that the Tribunal recommend that PWGSC terminate the contract awarded to Siemens Canada Limited (Siemens) and award the contract to Avalon. In the alternative, Avalon requested that the Tribunal recommend that PWGSC compensate it for its lost profit and its bid preparation costs. It also requested the reimbursement of its reasonable costs incurred in preparing and proceeding with the complaint.

3. On February 8, 2010, the Tribunal informed the parties that the complaint had been accepted for inquiry, as it met the requirements of 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.² The Tribunal did not issue a postponement of award of contract order under subsection 30.13(3) of the CITT Act, since the evidence on file indicated that a contract had already been issued.

4. On February 10, 2010, PWGSC confirmed to the Tribunal that a contract had been awarded to Siemens. On February 22, 2010, the Tribunal granted a request by Siemens for intervener status. However, Siemens filed no subsequent submissions. On March 8, 2010, PWGSC filed a report with the Tribunal in accordance with rule 103 of the Canadian International Trade Tribunal Rules ³ (the Government Institution Report). On March 18, 2010, Avalon filed its comments on the Government Institution Report.

5. On April 6, 2010, the Tribunal requested additional information from PWGSC in relation to Siemens’s proposal. On April 8, 2010, PWGSC provided the requested information.⁴

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

PROCUREMENT PROCESS

7. On April 3, 2009, PWGSC published an Advance Contract Award Notice (ACAN) which gave notice of its intent to award a contract to Siemens for the proposed upgrade of the propulsion control system aboard the CCG vessel Hudson. On April 23, 2009, Avalon submitted a “Statement of Capabilities” putting forward the position that it was capable of performing the proposed work. On April 24, 2009, PWGSC determined that Avalon had the capability to perform the proposed work. Consequently, PWGSC cancelled the ACAN and proceeded to a competitive tendering process.

8. On October 14, 2009, PWGSC issued a Request for Proposal (RFP) for the upgrade of the propulsion control system aboard the CCG vessel Hudson. On October 21, 2009, a bidders’ conference was held; four companies attended, including Avalon and Siemens. Bids closed on November 12, 2009. Two proposals were received, one from Avalon and one from Siemens. A public opening of the bids was held on November 12, 2009, at which time the bid prices were released to the bidders. Between November 13 and 16, 2009, the CCG Technical Evaluation Team (the CCG Evaluation Team) conducted the technical evaluation of the two proposals. On November 17, 2009, the CCG Evaluation Team sent its initial results (the first CCG evaluation) to PWGSC.

9. The first CCG evaluation awarded Siemens’s proposal 354 points and Avalon’s proposal 261 points for the technical criteria, out of a total of 360 points available.⁵ After taking into account the evaluation of the financial criteria, this scoring would have resulted in Siemens being the successful bidder.

10. On November 18, 2009, PWGSC advised both bidders that it intended to conduct “. . . a second level of verification . . . .” It stated the following:

In the event that there are major discrepancies in the resulting evaluations; PWGSC will reconvene the [CCG Evaluation Team] and provide the team with a listing of concerns and further guidance to re-evaluate the bids. These actions have been undertaken to re-assure both bidders that PWGSC is committed to integrity, accountability and transparency in the procurement process and that we are doing everything that is required to ensure that both bidders will be confident with the fairness of the evaluation procedures.

11. Between November 18 and 24, 2009, a PWGSC team (the PWGSC Evaluation Team) conducted a technical evaluation of the two proposals (the first PWGSC evaluation). The first PWGSC evaluation awarded Siemens’s proposal 324 points and Avalon’s proposal 306 points for the technical criteria, out of a total of 360 points.⁶ After taking into account the evaluation of the financial criteria, this scoring would have resulted in Avalon being the successful bidder. Since there were differences in the scores awarded to the proposals by the CCG Evaluation Team and the PWGSC Evaluation Team, PWGSC convened a meeting between the two teams on November 27, 2009.

12. As a result of the November 27, 2009, meeting, both evaluation teams made changes to some of their initial scores for the technical criteria. The revised evaluations that resulted from these changes will be referred to as “the second CCG evaluation” and “the second PWGSC evaluation”. The CCG Evaluation Team awarded Siemens 337 points (a reduction of 17 points from the first CCG evaluation) and Avalon 276 points (an increase of 15 points from the first CCG evaluation). The PWGSC Evaluation Team awarded Siemens 323 points (a reduction of 1 point from the first PWGSC evaluation) and Avalon 300 points (a reduction of 6 points from the first PWGSC evaluation).⁷ Although the scores awarded by the two evaluation teams differed, both the second CCG evaluation and the second PWGSC evaluation would have resulted in Siemens being the successful bidder after taking into account the evaluation of the financial criteria.

13. In an e-mail to PWGSC dated December 7, 2009, Avalon communicated concerns regarding the evaluation results. On December 8, 2009, PWGSC responded to Avalon’s e-mail. On December 8 and 11, 2009, Avalon responded to PWGSC’s comments. On December 14, 2009, a contract was awarded to Siemens.

14. On December 30, 2009, Avalon filed a complaint with the Tribunal.⁸ On January 15, 2010, the Tribunal issued its decision on that complaint, advising Avalon that it was premature because PWGSC had not yet responded to its correspondence of December 11, 2009.

15. On January 20, 2010, PWGSC responded to Avalon’s correspondence of December 8 and 11, 2009. On January 29, 2010, Avalon filed this complaint with the Tribunal.

TRIBUNAL’S ANALYSIS

16. Subsection 30.14(1) of the CITT Act requires that, in conducting an inquiry, the Tribunal limit its considerations to the subject matter of the complaint. 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 provides that the Tribunal is required to determine whether the procurement was conducted in accordance with the applicable trade agreements, which, in this instance, is the Agreement on Internal Trade. ⁹

17. 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.”

18. Avalon alleges that its bid was evaluated unfairly (i.e. not in accordance with the tender documents) due to bias by the evaluators in favour of Siemens, which was the incumbent contractor and successful bidder.

19. The evidence indicates that PWGSC did in fact consider that Siemens was the “preferred contractor” for the CCG.¹⁰ However, as a result of this, PWGSC took a number of steps to try to ensure that, nonetheless, the procurement process would be fair. When Avalon demonstrated that it had the capability to perform the proposed work, PWGSC initiated a competitive procurement process rather than proceeding to award the contract to Siemens under the ACAN. When finalizing the solicitation documents, PWGSC requested CCG to revise the technical specifications because it was of the view that, as initially drafted, the technical specifications did not provide enough information for bidders to provide an accurate appreciation for the scope of the work.¹¹ PWGSC held a bidders’ conference, where bidders were given the opportunity to ask questions concerning the work before submitting bids. Such a bidders’ conference would tend to assist non-incumbent suppliers in particular, since they would be likely to have less knowledge of the specifics of the work than Siemens, the incumbent supplier. As indicated above, PWGSC arranged to have the PWGSC Evaluation Team conduct a second evaluation in order to address PWGSC’s concerns about potential questions concerning the integrity of the CCG Evaluation Team’s initial assessment. PWGSC informed both bidders in writing of this decision and of the process that would be followed as a result.¹² Because there were differences in the scores awarded to the proposals in the first CCG evaluation and the first PWGSC evaluation, PWGSC convened a meeting between the two teams, which resulted in the revised scores in the second CCG evaluation and the second PWGSC evaluation.¹³

20. Avalon submitted that, despite the actions taken by PWGSC to attempt to ensure that the procurement process was fair, its bid was evaluated unfairly. It noted that, if the results of the first PWGSC evaluation had been accepted, Avalon would have been the successful bidder.¹⁴

21. However, the Tribunal notes that, if Avalon had wished to complain about bias or an apprehension of bias in structuring the procurement process, it would have needed to file a complaint with the Tribunal, or make an objection to PWGSC, within 10 working days after the day on which it became aware, or reasonably should have become aware, of its basis of complaint.¹⁵ The most recent event regarding the structuring of the procurement process that Avalon indicates is a cause of concern is that the PWGSC Evaluation Team was composed of “. . . ex-Coast Guard people. . . .”¹⁶ However, PWGSC informed Avalon in writing about the second evaluation process and general composition of the PWGSC Evaluation Team on November 18, 2009.¹⁷ Therefore, Avalon knew, or reasonably should have known of the basis of any complaint on this ground by November 18, 2009. Consequently, if it wished to file a complaint on this ground with the Tribunal within the time frame required by the Regulations, it should have made an objection to PWGSC or filed its complaint with the Tribunal on this ground by December 2, 2009. The evidence does not indicate that this occurred. Accordingly, to the extent that the complaint is made on this ground, it was not filed within the time frame required by the Regulations; hence, the Tribunal does not have jurisdiction to consider it.

22. Concerning its allegation of bias in the evaluation process, Avalon argues that the evaluations by both evaluation teams were biased.

23. The evidence does not lead the Tribunal to conclude that the evaluation by the PWGSC Evaluation Team was biased. The PWGSC Evaluation Team gave a higher total score to Avalon and a lower total score to Siemens than the CCG Evaluation Team and, if the initial scoring by the PWGSC Evaluation Team had been used, Avalon would have been the successful bidder. Therefore, it is unlikely that the PWGSC Evaluation Team was biased in its scoring.

24. Concerning the CCG Evaluation Team, the evidence indicates that there may well have been bias in the first CCG evaluation. However, in considering whether the complaint is valid, the question is not whether the first CCG evaluation was biased, rather whether the final outcome of the scoring (i.e. the second CCG evaluation) was biased.

25. In considering this issue, the Tribunal examined carefully the detailed scoring sheets (including evaluators’ notes) for the first and second CCG evaluations and the first and second PWGSC evaluations. Given that the evaluation process established by the tender documents required the evaluators to use their personal judgment to a certain extent in assessing the responses to the RFP criteria, the Tribunal would not expect two different evaluation teams to necessarily give the same scores. The scoring sheets indicate that, on two criteria, 1.4 (d) and (j), there was a significant disagreement between the two teams on scoring that was not resolved, whereby the PWGSC Evaluation Team would have given Avalon a significantly higher score than the CCG Evaluation Team. However, the Tribunal’s examination of the relevant portions of Avalon’s and Siemens’s bids and the related evaluators’ notes does not indicate that there was necessarily bias in these parts of the second CCG evaluation.¹⁸ In addition, the Tribunal notes that, for criterion 1.4(k), there also appears to be a significant unresolved disagreement between the two teams with regard to their respective scoring. However, for this criterion, the CCG Evaluation Team would have given Siemens a significantly higher score than the PWGSC Evaluation Team. It is unlikely that this would have occurred if the CCG Evaluation Team had been biased in performing the second CCG evaluation.

26. Accordingly, the evidence does not indicate bias in the evaluation of Avalon’s bid. The Tribunal therefore finds that the complaint is not valid.

Costs

27. The Tribunal awards PWGSC its reasonable costs incurred in responding to the complaint. In determining the amount of the cost award for this complaint case, the Tribunal considered its Guideline for Fixing Costs in Procurement Complaint Proceedings (the Guideline), which contemplates classification of the level of complexity of cases based on three criteria: the complexity of the procurement, the complexity of the complaint and the complexity of the complaint proceedings.

28. The procurement was complex. It had some technical complexity because it dealt with the upgrade of a control system aboard a CCG vessel, which required the removal of the original equipment and the engineering, supply and installation of new programmable logic controllers. The evaluation of proposals was complex, as four separate technical evaluations were conducted. The complaint was moderately complex, as it involved issues relating to bias in a complex evaluation process. The complaint proceedings were not complex, as there were no motions and, although there was an intervener, there were no submissions by that intervener. Considering these three factors, the Tribunal’s preliminary view is that this complaint case has an overall complexity level corresponding to the second level of complexity referred to in Appendix A of the Guideline. The Tribunal’s preliminary indication of the amount of the cost award is $2,400.

DETERMINATION OF THE TRIBUNAL

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

30. Pursuant to section 30.16 of the CITT Act, the Tribunal awards PWGSC its reasonable costs incurred in responding to the complaint, which costs are to be paid by Avalon. The Tribunal’s preliminary indication of the level of complexity for this complaint case is Level 2, and its preliminary indication of the amount of the cost award is $2,400. If any party disagrees with the preliminary indication of the level of complexity or the preliminary indication of the amount of the cost award, it may make submissions to the Tribunal, as contemplated in the Guideline. The Tribunal retains jurisdiction to establish the final amount of the award.

---

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

² . S.O.R./93-602 [Regulations].

³ . S.O.R./91-499.

⁴ . Confidential information provided under letter dated April 8, 2010.

⁵ . Government Institution Report, para. 33; confidential exhibit 21.

⁶ . Ibid., para. 36; confidential exhibit 23.

⁷ . Ibid., paras. 39, 40; confidential exhibits 23, 24.

⁸ . Re Complaint Filed by Avalon Controls Ltd. (6 January 2010), PR-2009-071 (CITT).

⁹ . 18 July 1994, C. Gaz. 1995.I.1323, online: Internal Trade Secretariat <http://www.ait-aci.ca/index_en/ait.htm> [AIT]. The particular services requested are excluded from the North American Free Trade Agreement by Annex 1001.1b-2, Section B, because they fall under category J, Maintenance, Repair, Modification, Rebuilding and Installation of Equipment related to Ships. The Agreement on Government Procurement does not apply because upgrade services are not in the list of included services detailed in Annex 4. Upgrade services are excluded from the Canada-Chile Free Trade Agreement per Annex Kbis-01.1-4, Section B because they fall under category J, Maintenance, Repair, Modification, Rebuilding and Installation of Equipment related to Ships. Upgrade services are excluded from the Canada-Peru Free Trade Agreement .by Annex 1401.1-4, Section B, because they fall under category J, Maintenance, Repair, Modification, Rebuilding and Installation of Equipment related to Ships.

¹⁰ . Government Institution Report, exhibit 29.

¹¹ . Ibid., exhibit 8.

¹² . Ibid., exhibit 22.

¹³ . Ibid., exhibits 27, 28.

¹⁴ . Avalon’s comments on the Government Institution Report at 5.

¹⁵ . Subsection 6(1) of the Regulations provides that a complaint shall be filed with the Tribunal “. . . 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.” Subsection 6(2) states that “[a] potential supplier who has made an objection . . . to the relevant government institution, and is denied relief by that government institution, may file a complaint with the Tribunal within 10 working days after the day on which the potential supplier has actual or constructive knowledge of the denial of relief, if the objection was made within 10 working days after the day on which its basis became known or reasonably should have become known to the potential supplier.”

¹⁶ . Complaint, tab 14.

¹⁷ . Government Institution Report, exhibit 22.

¹⁸ . Ibid., confidential exhibits 21, 23, 24.