BUNTIN REID PAPER
Determinations
Board File No: D91PRF66W-021-0010
IN THE MATTER OF:
A Complaint By Buntin Reid Paper of 2730 Lancaster Road Ottawa, Ontario
Board File No: D91PRF66W-021-0010
Complaint dismissed
AND IN THE MATTER OF:
The Free Trade Agreement Implementation Act, Part II, Sec. 15 S.C. 1988, Ch. 65.
30 May 1991
DETERMINATION BY THE BOARD
This complaint concerns a solicitation for a Standing Offer to supply the Department of National Defence with an estimated $119,880 worth of printing paper of the brand name "Windsor Offset", or equal, over a period of one year. The complainant, in submitting their bid, failed to include a completed Form DSS/MAS 4079 "Statement of Eligible Goods" -- in which they could have stated that their goods were "eligible goods" under the Free Trade Agreement. The Request for Standing Offer (RFSO) contained a clear warning that if they did not complete and return the form, their goods would be considered "non-eligible".
The consequence of having their goods considered "non-eligible" was that a 10 percent penalty was added to their quotation for evaluation purposes, and they feared this would alter their chances of winning the contract.
Their complaint is that the Department of Supply and Services (DSS) should have known the goods were "eligible goods", from other information supplied in their bid, and that they had offered to complete and file the necessary form (albeit after the bidding closed), but had been refused the opportunity to do so. They ask that the 10 percent evaluation penalty be rescinded.
Since this complaint was received before the Standing Offer was awarded, the Board issued a Stop Award Order on 27 March 1991 and directed that the complaint be investigated.
The Investigation
The details relating to the filing of the complaint, its timeliness and completeness are all met, as related in the Board's Investigation Report (I.R.).
Several individuals were interviewed in person or by telephone in order to confirm various statements made or contained in the documentation. These individuals were Mr. James Barr, Branch Manager, Buntin Reid Paper, Ottawa; and Ms. Julia Brunette, (Contracting Officer) and Mr. Brian Carroll, (Supervisor) both of DSS-Capital Region Supply Centre, Ottawa.
Following a new procedure, of which notice was given by the Board in the Government Business Opportunities (GBO) during the week of 18 February 1991, a copy of the Preliminary Investigation Report was sent to both the governmental institution and the complainant for their comments, prior to submission to the Board. Both these parties submitted brief written comments, and these have been added to the Investigation Report, and taken into account by the Board in reaching this determination.
As well, the report of this investigation contains a number of appendices relating to material and documents deemed relevant by the investigative staff. Particular reference is not made to all of these supporting documents in this determination, but they have been made available to the parties, and, subject to the provisions of the Access to Information Act, they are available to any other person.
Because the investigation produced sufficient information to enable the Board, in its opinion, to resolve the issues raised in this complaint, it was determined that no formal hearing was required in the present case. The Board, in reaching its conclusions, has considered the report of its investigative staff and the comments thereon by the parties, and has made its findings and determinations on the basis of the facts disclosed therein, the relevant portions of which are mentioned in this determination.
In considering the Investigation Report, the Board determined that this complaint should be dismissed. In order to allow the procurement to proceed, it immediately issued an Order on 15 May 1991 rescinding the Stop Award Order of 27 March 1991 and indicated that reasons would follow. These, therefore, are the Board's reasons.
The facts of this case are simple and not in dispute. The complainant acknowledges that they did not include the Statement of Eligible Goods form with their bid. They were, or should have been, aware of the warning (in the bid package sent to them) that the consequence would be that their goods would be treated as "non-eligible".
The RFSO contained the following notice, typed in caps, at the top of the first page after the standard form face page:
"WOULD YOU PLEASE COMPLETE AND RETURN WITH YOUR BID SUBMISSION THE STATEMENT OF ELIGIBLE GOODS FORM, 4079 ATTACHED. IF IT IS NOT RETURNED WITH YOUR BID SUBMISSION, ITEMS WILL BE CONSIDERED NON-ELIGIBLE."
The only allusion in the RFSO to any repercussion for being "non-eligible" is a reference later on to a discretion which MAY be exercised by the department to give preference to "eligible goods" and products of Canadian origin. More about this later.
The DSS Supply Policy Manual (SPM) (which is available to suppliers for a price), Directive 3005.13 a) reads:
"13. a) Products of domestic origin, designated products from rationalized firms (see SPM Directive 3051), and eligible goods will be accorded national treatment. The bid price for all other products will be increased by a factor of 10 percent for evaluation purposes." (emphasis added)
The contracting officer treated the complainant's goods as "non-eligible" -- as the bid package information warned that she would -- and she followed the policy direction set out in the SPM and increased the complainant's bid by a factor of 10 percent for evaluation purposes.
It is also a fact that, on the front page of the RFSO (which the complainant signed and returned to DSS as constituting their bid), there appeared a box:
"
Country of Foreign Content Value of Foreign Content
Pays d'origine des éléments Valeur des éléments étrangers
étrangers
$ CDN
"
which the complainant filled in, respectively, with a "0" and "N/A". It is this information which the complainant contends shows DSS that their product was wholly Canadian (which, if true, would mean that it was "eligible" within the meaning of the Free Trade Agreement (FTA) definition for such goods).
(As the Board has noted in an earlier case (McDermid, Board File No. E90PRF6635-021-0013, 1 November 1990), the purpose of these standard form boxes is to elicit information for the application of another policy having to do with premiums for Canadian content. And, as in McDermid, this clause is inappropriate, and thus confusing, for use with any solicitation coming under the FTA because another regime applies.)
The complainant also contends that the product they were offering was "Windsor Offset", the exact product specified, (i.e. -- not an "or equal" product), and that this product is a trade name for a paper product manufactured by DOMTAR, Buntin Reid's parent company. The complainant also contends DSS knew the product was wholly Canadian-made.
(They also note that "Windsor Offset" is "...clearly identified in SSC's own publication `Generic Identification of Paper and Paperboard Brand Names'..." which, if true, is presumably offered as another reason why DSS ought to have known that "Windsor Offset" was a wholly Canadian product. Subsequently, during the investigation, the complainant acknowledged that this reference was in error and withdrew the point.
DSS acknowledges, in its Governmental Institution Report (GIR) that the contracting officer "...could safely assume [that] it was a product of Canadian origin..." but they point out that she had no alternative but to consider the products "non-eligible" for failing to comply with the terms and conditions of the bid documents. In this, the Board considers that she was correct.
The complainant offered to complete and supply the missing form, but that was after the bidding was closed, and the contracting officer refused to permit it. Incidentally, another bidder also failed to file a form 4079 on time -- and was treated the same way by the contracting officer, who attached the 10 percent factor to their bid too, when doing her evaluation. To have done otherwise would have been unfair to the bidders who complied with the bidding requirements. In this too, the Board considers that she was correct.
The reason why the Board feels the contracting officer was right to insist on the submission of the completed form 4079 -- even if it creates the appearance of a slavish adherence to rules in a case where she might have been able to safely assume that the product was of Canadian origin -- is because the Department is not obliged to assume...and made it clear by the terms of the bidding documents that it was not going to assume...anything at all about the eligibility or otherwise of the goods for the purposes of the solicitation.
It is for the bidder to declare what the status of the goods was...and in this particular instance, the government made it reasonably clear that nothing would be assumed because they required the bidder to warrant that the goods were eligible -- or, if they weren't, to declare what their status truly was and warrant that. The RFSO contained the following clause that would have been valid if the form 4079 had been enclosed:
"STATEMENT OF ELIGIBLE GOODS:
The Bidder represents and warrants that the Statement of Eligible Goods attached to this bid is accurate and complete and satisfies the definition of eligible goods set out in that statement.
The Bidder acknowledges that the Minister relies upon such representation and warranty to enter into any contract resulting from this bid.
Bids for eligible goods and bids for products of Canadian origin may be given preference over other bids in accordance with the procedures for implementing the Canada-U.S. Free Trade Agreement respecting government procurement, published annually in the Canada Gazette.
Such representation and warranty may be verified in such manner as the Minister may reasonably require."
Nor is this an unreasonable requirement. The trade status of goods is so variable that contracting officers cannot be expected to know this for all the many products with which they constantly deal. They may become familiar with some of them, but the truth of these matters is peculiarly within the knowledge of the bidders. The information must be certified because it is a criterion within the FTA, it must be demonstrable to Canada's partner that it is being consistently applied, and it may be necessary if enforcement action is ever required.
Not having been offered the required warranty, the contracting officer was not required to assume what it might have represented if it had been offered. Those were the rules of this game and the contracting officer adhered to them.
However, there are several additional points that should be made about this "eligible goods" issue. For example:
1. As already noted, the RFSO warned that failure to include the form would result in the offered goods being considered "non-eligible".
Nowhere did it say that the consequence would be the addition of a 10 percent penalty factor for evaluation purposes. (The department has made this point clear in some other procurements the Board has had occasion to examine (see I.R. Appendix 15) but it did not do so in this case.)
Moreover, the policy direction given in the SPM shows that, even if goods are found to be "non-eligible", it does not necessarily mean that the 10 percent penalty will be added to the bid for evaluation purposes. That statement (as well as the statement in the GBO) discloses that there are two other categories of goods that are to receive "national treatment": designated products from rationalized multinational companies, and products of domestic origin. But, it is only in the policy statement in SPM 3005 Directive 13 d) that it is made clear that failure to file results in the goods being treated as not only "non-eligible" but also as goods of foreign origin, thus excluding them from these other two categories as well.
In addition to that, the bid documents leave the impression that the department may (i.e. in its discretion) give the preference, whereas, the departmental policy (just noted) stipulates that the application of the penalty, by which that preference is accorded, is mandatory.
2. The clause in the RFSO headed "STATEMENT OF ELIGIBLE GOODS" quoted above, directs the enquiring reader to the "procedures" for implementing the FTA that are "published annually in the Canada Gazette", for information about the preferences accorded "eligible goods" and "products of Canadian origin."
No citation for the correct issue of the Canada Gazette is offered. In fact, the procedures were published in the Canada Gazette, Part I, of 21 January 1989, shortly after the FTA was implemented -- but, as the Board has had occasion to note before (see McDermid, Board File E90PRF6635-021-0013, 1 November 1990) that notice did not contain any reference to the 10 percent penalty factor.
The notice is now contained in the GBO. It is published once a year, and most recently in the 25 January 1991 issue of the GBO -- coincidentally, just four days before the issue that contained the Notice of Proposed Procurement (NPP) for this procurement. And also in that issue, the omission of the reference to the 10 percent penalty has been corrected and it now makes a clear and understandable reference to the penalty. Alas, it was not to that publication that the RFSO directed the supplier's attention.
3. The "Statement of Eligible Goods" clause quoted above, is a standard clause, taken from the Department's Supply Policy Manual, where it is known as clause "t543".
Clause t543 was amended, effective 29 December 1989, more than a year before the NPP that initiated this procurement was published, and the amendment corrected the references to the Canada Gazette so that it now supplies the correct reference to the GBO. However, the "old" clause t543 is the one that appears in this RFSO, over a year after its update in the SPM. Thus, suppliers continue to be misdirected in bid documents about matters that have long been changed.
Conclusion
Despite these demonstrable shortcomings in the bid documentation, the Board concludes that the complaint in this case ought to be dismissed. In reaching this decision, the Board is most affected by the fact that the documentation was clear, at least, in delivering a warning "up front" that the appropriate Statement of Eligible Goods form was a matter of signal importance to the government; that they demanded a direct representation and warranty in respect of it, and it was clear that failure to submit the form had a consequence that might be important to the bidder because their goods were going to be treated as "non-eligible" (whatever consequence the complainant might have thought that would bring).
How, exactly, that consequence would be brought to bear, was not as clear as it should have been. The sources of information to which the supplier was directed didn't contain the right information. The source that did contain the right information was not brought to their attention. And there were other minor anomalies of a somewhat confusing nature as noted above.
Nevertheless, there was sufficient information to put a reasonably prudent business person on guard about what was required, why it was required and that there was an important consequence attached to failing to supply it. Business persons have responsibilities in these matters too, and are expected to react prudently and in their own best interests. They had before them sufficient information to know that the consequences might affect them and they ignored it at their peril.
What happened to the complainant in this case was unfortunate...but it was, in fact, what they were warned would happen...and it was brought about as a direct consequence of their own failure to provide the requested documentation with their bid.
Moreover, the contracting officer applied the policy of the government exactly as she was required, and did it fairly and evenhandedly to all the bidders. (This is in contrast to the McDermid case, cited above, where some similar misdirections about published procedures were also found among the facts of the case. But in that case, the policy was not followed in all the cases to which it applied, thus tainting that case with an unfairness the Board could not overlook.)
In the present case, what happened does not go the length of amounting to an unfairness to the bidder. Confusion, perhaps; unfairness, no. There was adequate transparency, on the facts of this case, for a reasonably prudent bidder to know what was required and that serious consequences would attend failure to comply. The requirement was reasonable and compliance would have been easy.
Accordingly,
DETERMINATION
The Board, pursuant to Section 33 of the Procurement Review Board Regulations, hereby dismisses this complaint because it finds that, upon investigation, it is without a valid basis.
The Board has, by Order dated 15 May 1991, rescinded its Stop Award Order issued 27 March 1991.
G.A. Berger
_________________________
G.A. Berger
Chairman
Procurement Review Board of Canada
Initial publication: August 28, 1997