STORAGETEK CANADA, INC.
Determinations
File No.: PR-99-050
Ottawa, Monday, May 29, 2000
File No.: PR-99-050
IN THE MATTER OF a complaint filed by StorageTek Canada, 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 section 30.14 of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal determines that the complaint is valid.
Pursuant to subsections 30.15(2) and (3) of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal recommends, as a remedy, that the Department of Public Works and Government Services and the Royal Canadian Mounted Police clarify the statement of general requirements in article 1.1.1 of Annex "C", "Specification and Statement of Work for RCMP Virtual Tape System - Remote Site", of the Request for Proposal and, in this context, reformulate article 1.2.8, as amended, including consequential changes to be made elsewhere in Annex "C", as required, in terms of performance criteria rather than design criteria. It is further recommended that the Department of Public Works and Government Services invite StorageTek Canada, Inc. and IBM Canada Limited to revise, as appropriate, their proposals, including price, on that basis and to that extent only, and that it proceed with this procurement as provided for in the reformulated Request for Proposal and the applicable trade agreements.
In the alternative, the Canadian International Trade Tribunal recommends that the Request for Proposal be cancelled and re-issued with redefined specifications consistent with the provisions of the trade agreements.
Pursuant to subsection 30.15(4) of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal awards StorageTek Canada, Inc. its reasonable costs incurred in filing and proceeding with this complaint.
Patricia M. Close
Patricia M. Close
Presiding Member
Michel P. Granger
Michel P. Granger
Secretary
| Date of Determination: |
May 29, 2000 |
| Tribunal Member: |
Patricia M. Close |
| Investigation Manager: |
Randolph W. Heggart |
| Investigation Officer: |
Paule Couët |
| Counsel for the Tribunal: |
Gerry Stobo |
| Complainant: |
StorageTek Canada, Inc. |
| Counsel for the Complainant: |
Nathan Cheifetz |
| Government Institution: |
Department of Public Works and Government Services |
| Counsel for the Government Institution: |
Susan D. Clarke |
STATEMENT OF REASONS
On February 28, 2000, StorageTek Canada, Inc. (StorageTek) 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 the procurement (Solicitation No. M9087-0-1668/A) by the Department of Public Works and Government Services (the Department) for the supply, delivery, installation, integration and configuration of a virtual tape system, including on-site maintenance services for one year for the upgrade of the remote electronic backup system of the Royal Canadian Mounted Police (RCMP) in Ottawa, Ontario. The requirement also includes a number of options.
StorageTek alleged that the Request for Proposal (RFP), as amended, specifically articles 1.2.8 and 1.2.9 of Annex "C" of the RFP, is unnecessarily restrictive and, therefore, is in breach of Article 1007 of the North American Free Trade Agreement.2
StorageTek requested, as a remedy, that the Tribunal order that the award of any contract be postponed in relation to this solicitation until the Tribunal determined the validity of the complaint. StorageTek also requested that the Department cancel the RFP and issue a new solicitation in a manner which would permit more than one potential supplier to bid, in accordance with the provisions of the applicable trade agreements. Furthermore, StorageTek requested its reasonable costs incurred in filing and proceeding with the complaint.
On March 2, 2000, 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.3 That same day, the Tribunal ordered the Department to postpone the award of any contract in connection with this solicitation until the Tribunal determined the validity of the complaint. On March 31, 2000, the Department filed a Government Institution Report (GIR) with the Tribunal in accordance with rule 103 of the Canadian International Trade Tribunal Rules.4 On April 10, 2000, StorageTek filed comments on the GIR with the Tribunal. On April 26, 2000, the Department filed an additional submission with the Tribunal and, on May 2, 2000, StorageTek filed comments in response.
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
The computer system of the Canadian Police Information Centre provides an online storage and information retrieval system to the municipal, regional and provincial police forces in Canada, as well as to numerous federal government agencies. The Canadian law enforcement community is dependent on the integrity and continuous availability of this computer system in order to serve and protect the citizens of Canada.
Some seven years ago, the RCMP installed a StorageTek automated tape backup facility to meet this objective. At the time, this equipment met the requirements of the RCMP and, according to the GIR, was the best technical solution available. According to the GIR, throughout the summer and fall of 1999, the RCMP realized that dramatically increased requirements for remote storage were creating a bottleneck in its remote tape backup facility. In September 1999, at the request of the RCMP, StorageTek provided four additional tape drives to alleviate the situation. The RCMP decided to look for a more permanent solution and sought a technology referred to as a "virtual" system, which was offered by only two known potential vendors, i.e. StorageTek, with its Virtual Storage Manager,5 and IBM Canada Limited (IBM), with its Virtual Tape Server.
The RCMP had discussions with the two vendors on or about December 1, 2000, and, concluding that they could both accommodate its needs, decided to open the requirement to competition.
On January 18, 2000, an RFP for the subject requirement was issued as a Notice of Proposed Procurement (NPP) on Canada's Electronic Tendering Service (MERX) and in Government Business Opportunities. NAFTA was indicated in the NPP as one of the applicable trade agreements.
The RFP, as amended,6 reads in part:
Section B: Proposal Preparation Instructions
B.5 Technical Proposal (M)
i) It is mandatory that the Technical Proposal include: (M)d) A statement of compliance for each article to any technical requirements (or Statement of Work).
The following definition is included in Annex "C" of the RFP, "Specification and Statement of Work for RCMP Virtual Tape System - Remote Site":
VIRTUAL TAPE STORAGE SYSTEM or Virtual Tape system, refers to the components that comprise the entire automated tape library and virtual storage system. This includes (but is not limited to) components such as the virtual tape RAID 5 disk array, cartridge drives, control units, library storage units, robotics, hardware required to complete the ESCON connection to the remote site and the fibre channel link that connects the two sites.
The following are excerpts from the "Technical Requirements" section of Annex "C" of the RFP:
1.2 Tape Storage System Requirements.
1.2.8 The proposed solution must include the capability of performing Stand Alone Restore (SAR) functionality without the use of an active operating system (OS/390).
1.2.9 The proposed solution must include the necessary work station hardware and software components required to interact and control the storage system with or without an active OS/390 operating system.
On February 3, 2000, StorageTek raised a number of questions with respect to some of the RFP requirements. According to the GIR, at that time, the RCMP had no idea that StorageTek could not comply with all the mandatory technical requirements of the RFP. StorageTek submitted a second set of questions on February 15, 2000.
Question 8 reads as follows:
Item 1.2.8 states that: The proposed solution must include the capability of performing Stand Alone Restore (SAR) functionality without the use of an active operating system (OS/390). We will provide a dedicated automated tape drive for SAR backup and restore processing. The automated tape library will contain sufficient slots to manage the SAR requirement. The process for this requirement will be exactly as it is implemented now. Is this acceptable to the Crown?
On February 18, 2000, the Department responded to question 8 through amendment No. 002 as follows:
Item 1.2.8. The RCMP will use data within this Virtual System to re-create its production system in the event of a disaster. The Virtual System will also be used to test our disaster recovery process on regular basis. The entire OS/390 Operating System and the applications have to be re-created from tape backups. The RCMP will accept to have the SAR utility started on an external or dedicated device, however all data must be backed-up and restored using virtual drives. [Emphasis added]
StorageTek was not satisfied with the Department's answer and, at the request of the Department, it documented its position on the matter in a facsimile dated February 23, 2000. No changes to the RFP were made as a result of this correspondence, and the RFP closed on February 29, 2000.
Two proposals were received, one from IBM and one from StorageTek. StorageTek's proposal was found to be non-compliant. The reasons for the decision were documented in a memorandum dated March 3, 2000, from the RCMP to the Department. The RCMP indicated that StorageTek's proposed solution to utilize a single dedicated non-virtual tape drive which is not part of the Virtual Storage Manager did not meet a number of mandatory requirements because it: (1) failed to provide the functional capability to utilize the SAR program to restore system disk volumes from data that have been backed-up onto virtual volumes; (2) did not meet the requirement for redundancy; and (3) did not comply with the mandatory data transfer rate of 20 megabytes per second.
According to the GIR, neither bidder has been advised of the status of its proposal, as of the date of the GIR, due to the Tribunal's inquiry in the matter.
POSITION OF PARTIES
Department's Position
The Department submitted that StorageTek's proposed technical solution for data backup and restoration involved dedicated drives and was dependent upon an active operating system. In the event of a disaster involving an operating system failure, the Department submitted that manual management of data would be required to achieve recovery of the system. This, the Department submitted, was not acceptable to the RCMP in the context of upgrading its current system and did not satisfy the requirements found in the RFP.
The Department submitted that the SAR requirement is not the simple process described by StorageTek in its complaint. The SAR backup and restoration procedure is a time-consuming and complicated procedure involving a very high volume of data.
The Department also submitted that every effort was made to ensure that both potential vendors were aware of the RCMP's intention to seek a completely virtual solution to replace the existing environment. At no time during the conversations held between the RCMP and StorageTek did StorageTek indicate that its Virtual Storage Manager was incapable of supporting such a requirement.
The Department argued that the RCMP's mandatory requirement for virtual devices was imperative in the context of the upgrade that it contemplated and that there was absolutely no basis for StorageTek's contention that such a requirement is not bona fide and exists only to favour IBM. The RCMP maintains that it was its understanding, at the time that the RFP was issued, that both StorageTek and IBM were capable of meeting the mandatory requirements. Furthermore, the Department submitted that the RCMP has had an excellent working relationship with StorageTek for the past 10 years using their silo technologies. It was also submitted that any further amendment to the RFP would invalidate the requirements found in the RFP. Furthermore, having regard to the period of consultations prior to the issuance of the RFP and the timing of StorageTek's objection to the specifications, the Department submitted that any further amendment at this time would appear to favour StorageTek over IBM.
In the additional submission filed with the Tribunal on April 26, 2000, the Department submitted that StorageTek continues to denigrate the RCMP's basic business requirement for simultaneous backup facilities for its multiple mission-critical police systems. According to the RCMP, it is physically and logically impossible for a single external tape drive to be shared and used simultaneously by multiple systems. The RCMP sought virtual technology to avoid this very issue. The RCMP admitted that the approach proposed by StorageTek "is a functional solution for the restore process, however, it is the backup process that is severely constrained by this method".
StorageTek's Position
StorageTek submitted that the system that it proposed could meet, and indeed exceed, the technical needs of the RCMP for fast and accurate data storage, retrieval and restoration. According to StorageTek, the SAR function can be performed in accordance with the needs of the RCMP with either the IBM or the StorageTek systems, thereby indicating that the technical specification in the RFP is unfairly and unnecessarily restrictive, contrary to the relevant trade agreements.
Specifically, StorageTek submitted that the whole issue is whether the mandatory requirement set out in amendment No. 002 to the RFP, requiring restoration from virtual drives, was a fair technical specification. The SAR requirement per se is not the issue. Furthermore, StorageTek submitted that the solution that it proposed was not dependent upon an active operating system. The manual backup and retrieval of data to which it referred in its proposal consists of an individual placing four tapes into a drive (a 30-to-40 second operation), as opposed to an individual sitting at a keyboard entering a command for a robot to perform such function.
StorageTek submitted that it did not raise the question of its ability to achieve restoration of data from a virtual drive during its December 1, 1999, meeting with the RCMP simply because the solution discussed at the time did not include such features. StorageTek submitted that it only learned of the requirement to restore the system using virtual drives on or about February 18, 2000, with the release of amendment No. 002 to the RFP.
StorageTek admitted that its Virtual Storage Manager system does not restore system disk volumes directly from virtual drives, but that the very existence of this mandatory feature is the key issue in its complaint. In this context, StorageTek submitted that the real requirement of the RCMP is for a restoration function with a given performance and not for a particular specification or method of obtaining that performance.
Concerning the Department's assertion that to amend the RFP now would amount to favouring StorageTek to the detriment of IBM, StorageTek submitted that it raised its concerns with respect to the requirement to restore data from virtual drives as soon as this requirement was made known through amendment No. 002 and that, therefore, it did not see how it could be accused of attempting to delay the procurement process to its advantage.
In its final comments of May 2, 2000, StorageTek reiterated that its complaint was not an attempt to discredit the professional conduct or credibility of any individual. StorageTek also submitted that it was possible to back up and restore data, other than the minimum SAR files (which need to be backed up only in the rare circumstances when the operating system changes), using the StorageTek Virtual Storage Manager. This made a maximum of 64 virtual tape devices available to the RCMP for their critical backups. Any number of these devices could be made available to any of the RCMP's systems and the Virtual Storage Manager would ensure that no simultaneous use of a virtual tape device would occur.
TRIBUNAL'S DECISION
Section 30.14 of the CITT Act requires that, in conducting an inquiry, the Tribunal limit its 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 provides, in part, that the Tribunal is required to determine whether the procurement was conducted in accordance with NAFTA.
Article 1007 of NAFTA reads, in part:
1. Each Party shall ensure that its entities do not prepare, adopt or apply any technical specification with the purpose or the effect of creating unnecessary obstacles to trade.
2. Each Party shall ensure that any technical specification prescribed by its entities is, where appropriate:
(a) specified in terms of performance criteria rather than design or descriptive characteristics; and
(b) based on international standards, national technical regulations, recognized national standards, or building codes.
Having carefully examined the evidence, the Tribunal is of the view that article 1.2.8 of the technical specifications, as amended (the mandatory criterion in respect of which StorageTek's proposal was found to be non-compliant), is written in design terms and sets out a specific manner in which the SAR function is to be achieved, i.e. exclusively using virtual drives. Before the Department's response to question 8, made on February 18, 2000, there was no discernible mention of a virtual drive being required as a constituent ingredient of the virtual tape storage system which was the subject of the RFP. At no time has the RCMP or anyone else suggested that a virtual tape storage system, by necessary implication, must include a virtual drive. Certainly this was not understood to be the case by StorageTek.
The Tribunal is not satisfied that the RCMP is unable to express its need in terms of performance rather than design. There must be some specific performance that the RCMP is aiming to achieve through the particular design specified (i.e. virtual drives), and it is that performance that should be set out in the RFP. It may well be the case that, for performance reasons, a virtual drive is the only design currently capable of satisfying the RCMP's needs. This will, however, have to be clearly formulated and expressed appropriately in an RFP. The Tribunal finds that, contrary to Article 1007 of NAFTA, the current wording of article 1.2.8 of the specifications, as amended, is based on a particular design and, as such, creates or has the effect of creating an unnecessary obstacle to trade.
The Department's submission that prolonging the procurement process at this point in time would amount to favouring StorageTek to the detriment of IBM is without merit. The Tribunal is persuaded that StorageTek discovered its ground of complaint only when the Department responded to question 8. At the request of the Department, on February 23, 2000, StorageTek documented its difficulties with respect to response 8 in a facsimile addressed to the Department. StorageTek filed its complaint with the Tribunal on February 25, 2000. There is nothing before the Tribunal to suggest that StorageTek's complaint or the manner in which it was put to the Tribunal was inappropriate or done for ulterior reasons. Furthermore, the Tribunal wishes to reassure the RCMP that nothing in StorageTek's submissions could be construed as reflecting poorly on the conduct of RCMP personnel.
According to the GIR, neither bidder had been advised of the status of its respective proposal. Considering that it may be possible to remedy the situation by conducting a partial re-bid of the solicitation, the Tribunal will recommend such an approach to the Department. However, should the Department decide not to utilize this approach, in the alternative, the Tribunal will recommend that the solicitation be cancelled and re-issued according to the provisions of the applicable trade agreements.
DETERMINATION OF THE TRIBUNAL
In light of the foregoing, the Tribunal determines that the procurement was not conducted in accordance with the requirements of NAFTA and that, therefore, the complaint is valid.
Pursuant to subsections 30.15(2) and (3) of the CITT Act, the Tribunal recommends, as a remedy, that the Department and the RCMP clarify the statement of general requirements in article 1.1.1 of Annex "C", "Specification and Statement of Work for RCMP Virtual Tape System - Remote Site", of the RFP and, in this context, reformulate article 1.2.8, as amended, including consequential changes to be made elsewhere in Annex "C", as required, in terms of performance criteria rather than design criteria. It is further recommended that the Department invite StorageTek and IBM to revise, as appropriate, their proposals, including price, on that basis and to that extent only, and that it proceed with this procurement as provided for in the reformulated RFP and the applicable trade agreements.
In the alternative, the Tribunal recommends that the RFP be cancelled and re-issued with redefined specifications consistent with the provisions of the trade agreements.
Pursuant to subsection 30.15(4) of the CITT Act, the Tribunal awards StorageTek its reasonable costs incurred in filing and proceeding with this complaint.
1 . R.S.C. 1985 (4th Supp.), c. 47 [hereinafter CITT Act].
2 . 32 I.L.M. 289 (entered into force 1 January 1994) [hereinafter NAFTA].
3 . S.O.R./93-602 [hereinafter Regulations].
4 . S.O.R./91-499.
5 . StorageTek's comments on the GIR dated April 10, 2000.
6 . The RFP was modified by amendment No. 001 on February 7, 2000, amendment No. 002 on February 18, 2000, and amendment No. 003 on February 23, 2000. Only amendment No. 002 is relevant to this case.
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Initial publication: May 29, 2000