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TABLE OF CONTENTS

• DECISION
• STATEMENT OF REASONS
  • DECISION

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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

KERN INC.

AGAINST

THE CANADA REVENUE AGENCY

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.

André F. Scott
André F. Scott
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. 1000264322) by the Canada Revenue Agency (CRA) for the provision of electric mailing machines and related devices described in the solicitation document as mail production hardware (inserters) and Automated Document Factory (ADF) server hardware and software components.

3. Kern Inc. (Kern) alleged that the CRA improperly awarded a contract to a bidder that has filed for bankruptcy. It submitted that awarding a multi-million dollar contract to an unstable and potentially bankrupt company does not seem like a prudent decision. It contended that the contract should be awarded to the bidder with the next best proposal.

4. On October 6, 2009, the CRA issued the solicitation document. On November 5, 2009, bids closed. According to the complaint, a contract was awarded to Bowe Bell & Howell on July 6, 2010.

5. In its complaint, Kern included a press release issued on May 21, 2010, that indicated that BÖWE SYSTEC AG applied to the District Court of Augsburg, Germany, to open insolvency proceedings. According to Kern, BÖWE SYSTEC AG is the parent company of the successful bidder.

6. On May 27, 2010, Kern sent via e-mail a Web site link to the CRA procurement officer regarding the press release issued by BÖWE SYSTEC AG. Kern stated the following in its e-mail to the CRA procurement officer: “. . . I simply would like to offer you access to this information and get your feedback (if any) on what this news means to you and CRA.”

7. According to the complaint, this e-mail, which was aimed at giving notice to the CRA that BÖWE SYSTEC AG was in jeopardy of ceasing operations globally, constituted an objection to the relevant government institution. Kern indicated that the CRA provided a response to its objection on June 1, 2010, and that it was informed that the insolvency proceedings involving BÖWE SYSTEC AG were “not a concern to them”.

8. Kern filed its complaint with the Tribunal on July 16, 2010. However, the complaint was deemed incomplete, since it did not comply with subsection 30.11(2) of the CITT Act. On July 21, 2010, the Tribunal sent a letter informing Kern of the Tribunal’s determination that the complaint did not comply with the requirements of subsection 31.11(2) and to request additional information, including a copy of the solicitation document, and a clear and detailed statement of the substantive and factual grounds of the complaint. On July 23, 2010, Kern provided additional information. In accordance with subrule 96(1) of the Canadian International Trade Tribunal Rules,³ the complaint was therefore considered to have been filed on July 23, 2010.⁴

9. 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.”

10. Subsection 6(2) of the Regulations 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.”

11. In other words, a complainant has 10 working days from the date on which it first becomes aware, or reasonably should have become aware, of its ground of complaint to either object to the government institution or file a complaint with the Tribunal. If a complainant objects to the government institution within the designated time, the complainant may file a complaint with the Tribunal within 10 working days after it has actual or constructive knowledge of the denial of relief by the government institution.

12. The only ground of complaint is that the contract was improperly awarded to an unstable and potentially bankrupt company. According to the complaint, Kern made an objection to the CRA regarding this ground of complaint on May 27, 2010, and was denied relief on June 1, 2010. Thus, if the Tribunal were to consider that Kern’s e-mail to the CRA of May 27, 2010, amounted to an objection within the meaning of subsection 6(2) of the Regulations, it would have to conclude that the complaint was filed in an untimely manner, as it was not filed within 10 working days after the day on which Kern had actual knowledge of the denial of relief received on June 1, 2010.

13. However, even though Kern found out about, and informed the CRA of, the potential insolvency issues facing BÖWE SYSTEC AG in May 2010, the Tribunal is of the view that its ground of complaint stems from the fact that the contract was actually awarded to Bowe Bell & Howell. Thus, the basis of the complaint would only have become known to Kern when it learned that the contract had indeed been awarded to Bowe Bell & Howell. Thus, The Tribunal does not consider the May 27, 2010, e-mail from Kern to the CRA to be an objection, since, according to the complaint, Kern had no official communication at that time from the CRA that a contract had been awarded. In the absence of a valid objection to the relevant government institution, the Tribunal must therefore determine whether the complaint was filed within the time limit prescribed by subsection 6(1) of the Regulations.

14. Under subsection 6(1) of the Regulations, in order to be timely, the complaint must be filed within 10 working days from the day after the basis of the complaint became known or reasonably should have become known to Kern, i.e. in this case, the day on which it knew or reasonably should have known that a contract had been awarded to Bowe Bell & Howell. The information provided with the complaint indicates that a contract was awarded to Bowe Bell & Howell on July 6, 2010, and there is no information before the Tribunal that would suggest that Kern learned that the contract had been awarded to Bowe Bell & Howell at another date.

15. The Tribunal is of the view that, in the absence of evidence to the contrary, Kern should reasonably have known on July 6, 2010, that a contract had been awarded to Bowe Bell & Howell. In order to have been filed within the prescribed time limit, Kern should have filed its complaint with the Tribunal on July 20, 2010, at the latest. As explained above, the complaint is considered to have been filed on July 23, 2010. The Tribunal therefore finds that the complaint has not been filed within the time limit prescribed by subsection 6(1) of the Regulations.

16. In light of the above, the Tribunal will not conduct an inquiry into the complaint and considers the matter closed.

DECISION

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

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

² . S.O.R./93-602 [Regulations].

³ . S.O.R./91-499 [Rules].

⁴ . Subrule 96(1) of the Rules reads as follows: “A complaint shall be considered to have been filed (a) on the day it was received by the Tribunal; or (b) in the case of a complaint that does not comply with subsection 30.11(2) of the Act, on the day that the Tribunal receives the information that corrects the deficiencies in order that the complaint comply with that subsection” [emphasis added].