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TABLE OF CONTENTS

• DECISION
• STATEMENT OF REASONS
  • DECISION
• CORRIGENDUM

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

BY

INNOVATIVE RESPONSE MARKETING INC.

AGAINST

THE DEPARTMENT OF CANADIAN HERITAGE

Pursuant to subsection 30.13(1) of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal has decided not to conduct an inquiry into the complaint.

Serge Fréchette
Serge Fréchette
Presiding Member

Dominique Laporte
Dominique Laporte
Secretary

1. Subsection 30.11(1) of the Canadian International Trade Tribunal Act ¹ provides that, subject to the Canadian International Trade Tribunal Procurement Inquiry Regulations,² a potential supplier may file a complaint with the Canadian International Trade Tribunal (the Tribunal) concerning any aspect of the procurement process that relates to a designated contract and request the Tribunal to conduct an inquiry into the complaint. Subsection 30.13(1) of the CITT Act provides that, subject to the Regulations, after the Tribunal determines that a complaint complies with subsection 30.11(2) of the CITT Act, it shall decide whether to conduct an inquiry into the complaint.

2. The complaint relates to a procurement (Solicitation No. 10091783) by the Department of Canadian Heritage (Canadian Heritage) for the provision of warehousing and distribution services for promotional items such as Canadian flags and pins. The principal requirements of the procurement are the storage, inventory management, packing and shipping (by truck) of the promotional items as and when requested by clients within the province of Ontario.

3. Innovative Response Marketing Inc. (Innovative) alleges that Canadian Heritage unfairly and unreasonably disqualified its bid by not taking into account that, as the incumbent, Innovative has provided error-free professional services that meet all the mandatory and preferred requirements; by requesting a billing structure in the Request for Proposal (RFP) that falls outside industry norms; by disqualifying its bid due to the fact that Innovative did not submit pricing in Appendix “A” of the RFP due to the insufficient space provided; by not taking into account the other pricing that Innovative added to its proposal, which Innovative considered missing from Appendix “A” to the RFP; and by not respecting Ontario labour law by requesting that the overtime charged be listed for only one person, thereby causing any bidder complying with this request to break the law.

4. Subsection 30.11(1) of the CITT Act provides that “. . . a potential supplier may file a complaint with the Tribunal concerning any aspect of the procurement process that relates to a designated contract and request the Tribunal to conduct an inquiry into the complaint.”

5. Section 30.1 of the CITT Act defines the term “designated contract” as follows:

“designated contract” means 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.

6. Subsection 3(1) of the Regulations provides the following:

For the purposes of the definition “designated contract” in section 30.1 of the Act, any contract or class of contract concerning a procurement of goods or services or any combination of goods or services, as described in Article 1001 of NAFTA, in Article 502 of the Agreement on Internal Trade, in Article I of the Agreement on Government Procurement, in Article Kbis-01 of Chapter Kbis of the CCFTA, or in Article 1401 of Chapter Fourteen of the CPFTA, that has been or is proposed to be awarded by a government institution, is a designated contract.

7. Subsection 7(1) of the Regulations sets out three conditions that must be satisfied before the Tribunal can conduct an inquiry in respect of a complaint. One of these conditions is that the complaint be in respect of a designated contract, i.e. a contract subject to at least one of the trade agreements, as is made clear by subsection 3(1).

8. Annex 1001.1b-1 of the North American Free Trade Agreement,³ Annex Kbis-01.1-3 of the Canada-Chile Free Trade Agreement⁴ and Annex 1401.1-4 of the Canada-Peru Free Trade Agreement,⁵ which all use the Common Classification System for classifying services, exclude all classes of services (except Class V503, “Travel Agent Services”) under Category V, “Transportation, Travel and Relocation Services”, from their respective scope of coverage. The excluded classes of services include services listed under both Sub-group V0, “Land Transport Services”, e.g. “Motor Freight” (Class V001), and Sub-group V5, “Supporting and Auxiliary Transport Services”, e.g. “Packing/Crating Services” (Class V504), and “Warehousing and Storage Services” (Class V505).⁶ Turning to the Agreement on Government Procurement,⁷ Annex 4 of Canada’s Appendix 1, which provides a listing of services that Canada offers for coverage, does not include transportation, distribution or warehousing services. As such, since this procurement is for the provision of warehousing and land transportation (i.e. shipping) services, it is not subject to NAFTA, the CCFTA, the CPFTA or the AGP. Accordingly, only the Agreement on Internal Trade⁸ potentially applies to this solicitation.

9. However, to be considered a designated contract, a contract must be of a value in excess of the relevant monetary thresholds prescribed by the trade agreements. The monetary threshold for the procurement of services under the AIT is $100,000.

10. Article 502 of the AIT provides as follows: “This Chapter applies to measures adopted or maintained by a Party relating to procurement within Canada . . . where the procurement value is . . . $100,000 or greater, in cases where the largest portion of the procurement is for services . . . .”

11. Article 505 of the AIT indicates that the procurement value to be considered when determining coverage is the one that was estimated at the time of the publication of a notice of a call for tenders.

12. Article 518 of the AIT defines procurement value as “. . . the estimated total financial commitment resulting from a procurement, not taking into account optional renewals when the compulsory part of the contract is of at least one year’s duration”.

13. According to the RFP submitted with the complaint, the compulsory part of the contract is one year and the estimated cost range for the requirement is between $10,000 and $30,000 (plus GST) for the period starting April 1, 2010, and ending March 31, 2011. The RFP also indicates that Canadian Heritage reserves the right to extend the period of the contract by up to four additional one-year periods.

14. In this case, the Tribunal considers that the procurement value of the contract that is the subject of this complaint was estimated at no more than $30,000 at the time of the publication of the RFP and, therefore, is below the monetary threshold of the AIT. In accordance with Article 518 of the AIT the optional renewals of the contract at the discretion of Canadian Heritage shall not be taken into account in determining the procurement value. Therefore, the complaint is not in respect of a designated contract.

15. In light of the above, the Tribunal does not have jurisdiction to conduct an inquiry into the complaint.

DECISION

16. Pursuant to subsection 30.13(1) of the CITT Act, the Tribunal has decided not to conduct an inquiry into the complaint.

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

BY

INNOVATIVE RESPONSE MARKETING INC.

AGAINST

THE DEPARTMENT OF CANADIAN HERITAGE

In the English version of the statement of reasons for the decision in the above matter, the first sentence in paragraph 8 should have read as follows:

Annex 1001.1b-2 of the North American Free Trade Agreement, Annex Kbis-01.1-4 of the Canada-Chile Free Trade Agreement and Annex 1401.1-4 of the Canada-Peru Free Trade Agreement, which all use the Common Classification System for classifying services, exclude all classes of services (except Class V503, “Travel Agent Services”) under Category V, “Transportation, Travel and Relocation Services”, from their respective scope of coverage.

[Footnotes omitted]

By order of the Tribunal,

Dominique Laporte
Secretary

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

² . S.O.R./93-602 [Regulations].

³ . 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 (entered into force 1 January 1994) [NAFTA].

⁴ . Free Trade Agreement between the Government of Canada and the Government of the Republic of Chile, 1997 Can. T.S. No. 50 (entered into force 5 July 1997) [CCFTA]. Chapter Kbis, entitled “Government Procurement”, came into effect on September 5, 2008.

⁵ . Free Trade Agreement between Canada and the Republic of Peru, online: Department of Foreign Affairs and International Trade <http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-... (entered into force 1 August 2009) [CPFTA].

⁶ . In this regard, see Appendix 1001.1b-2-B of NAFTA. The CCFTA and CPFTA include similar provisions.

⁷ . April 1994, online: World Trade Organization <http://www.wto.org/english/docs_e/legal_e/final_e.htm> [AGP].

⁸ . 18 July 1994, C. Gaz. 1995.I.1323, online: Internal Trade Secretariat <http://www.ait-aci.ca/index_en/ait.htm> [AIT].