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TABLE OF CONTENTS

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

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IN THE MATTER OF a complaint filed by E.G. Spence Residential, Commercial and Industrial Maintenance and Construction 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

E.G. SPENCE RESIDENTIAL, COMMERCIAL AND INDUSTRIAL MAINTENANCE AND CONSTRUCTION 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 valid.

Pursuant to subsection 30.15(4) of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal awards E.G. Spence Residential, Commercial and Industrial Maintenance and Construction $350 for its reasonable costs incurred in preparing its proposal submitted in response to Solicitation No. W0113-110473/A, which costs are to be paid by the Department of Public Works and Government Services.

Pursuant to section 30.16 of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal awards E.G. Spence Residential, Commercial and Industrial Maintenance and Construction its reasonable costs incurred in preparing and proceeding with the complaint, which costs are to be paid by the Department of Public Works and Government Services. In accordance with the Guideline for Fixing Costs in Procurement Complaint Proceedings, the Canadian International Trade Tribunal’s preliminary indication of the level of complexity for this complaint case is Level 1, and its preliminary indication of the amount of the cost award is $1,000. 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 article 4.2 of the Guideline for Fixing Costs in Procurement Complaint Proceedings. The Canadian International Trade Tribunal reserves jurisdiction to establish the final amount of the award.

Jason W. Downey
Jason W. Downey
Presiding Member

Dominique Laporte
Dominique Laporte
Secretary

The statement of reasons will be issued at a later date.

Tribunal Member: Jason W. Downey, Presiding Member

Counsel for the Tribunal: Alain Xatruch

Complainant: E.G. Spence Residential, Commercial and Industrial Maintenance and Construction

Government Institution: Department of Public Works and Government Services

Counsel for the Government Institution: Susan D. Clarke
Ian McLeod
Roy Chamoun

Please address all communications to:

The Secretary
Canadian International Trade Tribunal
Standard Life Centre
333 Laurier Avenue West
15th Floor
Ottawa, Ontario
K1A 0G7

Telephone: 613-993-3595
Fax: 613-990-2439
E-mail:

COMPLAINT

1. On January 2, 2012, E.G. Spence Residential, Commercial and Industrial Maintenance and Construction (E.G. Spence) filed a complaint with the Canadian International Trade Tribunal (the Tribunal) pursuant to subsection 30.11(1) of the Canadian International Trade Tribunal Act¹ concerning a procurement (Solicitation No. W0113-110473/A) by the Department of Public Works and Government Services (PWGSC), on behalf of the Department of National Defence, for the provision of inspection, maintenance and repair services for residential-style washers and dryers at Canadian Forces Base (CFB) Borden.

2. E.G. Spence alleged that PWGSC failed to evaluate its proposal in accordance with the terms of the solicitation and that, as a result, the procurement process was unfair and lacked transparency. E.G. Spence further alleged that, had it been aware of the manner in which PWGSC would evaluate its proposal, it would have submitted a considerably different proposal.

3. As a remedy, E.G. Spence requested that the Tribunal recommend that the solicitation be re-opened and that all bidders be given an opportunity to submit new proposals on the basis of clearly stipulated evaluation criteria. In the alternative, it requested that it be compensated for lost wages and profits.

4. On January 9, 2012, 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 On January 12, 2012, PWGSC acknowledged receipt of the complaint and informed the Tribunal that a contract had been awarded to Parkway Home Appliance Service (Parkway).

5. On February 3, 2012, PWGSC filed a Government Institution Report (GIR) with the Tribunal in accordance with rule 103 of the Canadian International Trade Tribunal Rules.³ On February 22, 2012, E.G. Spence filed its comments on the GIR.

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 November 21, 2011, PWGSC issued a Request for Proposal (RFP) for the provision of inspection, maintenance and repair services for residential-style washers and dryers at CFB Borden.

8. The provisions of the RFP that are relevant in the context of the current complaint provide as follows:

PART 2 – BIDDER INSTRUCTIONS

. . . 

1.2 Mandatory Site Visit

It is mandatory that the Bidder or a representative of the Bidder visit the work site. Arrangements have been made for [a] site visit to be held on 30 November 2011 at 10:00 a.m. at Contracts Office, 2nd Floor, Room 234, 16 Ramillies Road (Building P-154), CFB Borden in Borden Ontario Canada. . . .

. . . 

PART 4 – EVALUATION PROCEDURES AND BASIS OF SELECTION

. . . 

1.1.1 Mandatory Financial Criteria

(a) The bidder must submit, in Canadian dollars, firm prices, for all items listed in the Basis of Payment.

(b) The bidder must complete and submit with [its] bid the Basis of Payment.

. . . 

1.1.3 Financial Evaluation Criteria

The total estimated usage for each line item will be multiplied by the Firm Unit Price to determine the extended price for that line item. The extended price for all line items will be totaled to determine the aggregate price for evaluation purposes.

. . . 

PART 6 – RESULTING CONTRACT CLAUSES

. . . 

4.1 Period of the Contract

The period of the Contract is from date of Contract to 31 December 2012 inclusive.

. . . 

ANNEX A

REQUIREMENT

1. Requirement

The Contractor must provide all labour, materials, tools, equipment and transportation required for inspections, maintenance and repairs of approximately 900 residential style washers and dryers, for the Department of National Defence (DND), Tech Services Construction Engineering, at CFB Borden, Borden, Ontario, Canada.

. . . 

Part A: Rations and Quarters Support Services

The Contractor must provide all labour, materials, tools, equipment and transportation for inspections of approximately 700 washers and dryers.

Inspections will be performed on twenty-five (25) washers or dryers per month, commencing the 1st work day of each month.

Located at 675 Dieppe Road (Building P-144) Room 107 are the following makes and models:

. . . 

Part B: Blackdown Park

The Contractor must provide all labour, materials, tools, equipment and transportation for inspections of approximately 200 washers and dryers.

Inspections will be performed on twenty-five (25) washers or dryers per month, from 01 April to 31 October. . . .

. . . 

ANNEX “B”

BASIS OF PAYMENT

For the period from date of Contract to 31 December 2012 inclusive.

PART I

A. Inspections and Preventative Maintenance

Inspections and Preventive Maintenance include all labour, material, tools, equipment and transportation required to complete the inspections and preventative maintenance as specified in Annex A.

Item	Description	Firm Unit Price
1	Washing Machines Building P-144	$ / Each
2	Dryers Building P-144	$ / Each
3	Washing Machines Blackdown Park	$ / Each
4	Dryers Blackdown Park	$ / Each

9. The mandatory site visit, as described in the RFP, was held on November 30, 2011, at CFB Borden. According to E.G. Spence, it was specified, during this visit, that inspections would occur at the rate of 25 washers and dryers per month (i.e. 300 washers and dryers per year) at the Rations and Quarters Support Services (R&QSS) and at a rate of 25 washers and dryers per month between April 1 and October 31 (i.e. 175 washers and dryers per year) at Blackdown Park, thereby amounting to the inspection of 475 washers and dryers per year.

10. In the GIR, PWGSC confirmed that potential suppliers were told, during the site visit, that the required inspections were limited to 475 washers and dryers and would not cover all 900 washers and dryers located at the R&QSS and Blackdown Park within the term of the contract.

11. On December 7, 2011, the solicitation closed. PWGSC received four proposals, including one from E.G. Spence, which were all considered responsive. On December 13, 2011, PWGSC awarded the contract to Parkway on the basis of the lowest evaluated price.

12. On December 14, 2011, E.G. Spence sent two e-mails to PWGSC wherein it challenged the award of the contract and requested a debriefing and information on the steps to take to have the procurement process re-examined. On the same day, PWGSC responded by providing E.G. Spence with a letter which advised that a contract in the amount of $104,500 (HST extra) had been awarded to Parkway. The letter also advised E.G. Spence that its proposal had a total evaluated price of $45,915 compared to Parkway’s total evaluated price of $28,560.⁴

13. Later on December 14, 2011, E.G. Spence sent another e-mail to PWGSC requesting that it disclose how it had calculated the total evaluated price for its proposal. On December 15, 2011, PWGSC provided E.G. Spence with the details of the financial evaluation pertaining to its proposal, which indicated that its firm unit prices had been multiplied by a total of 700 washers and dryers for the R&QSS and 200 washers and dryers for Blackdown Park (for a total of 900 washers and dryers).

14. On December 23, 2011, E.G. Spence filed a complaint with the Office of the Procurement Ombudsman (OPO), objecting to the financial evaluation of its proposal by PWGSC. On December 29, 2011, OPO informed E.G. Spence that the procurement fell outside its jurisdiction and advised it to contact or file a complaint with the Tribunal.

15. On December 30, 2011, E.G. Spence filed documents with the Tribunal and expressed its wish to file a procurement complaint. On the same day, the Tribunal, pursuant to subsection 30.12(2) of the CITT Act, notified E.G. Spence that additional information was required before its complaint could be considered filed.

16. On January 2, 2012, the Tribunal received the additional information requested from E.G. Spence and its complaint was therefore considered filed.

TRIBUNAL’S ANALYSIS

17. 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, are the North American Free Trade Agreement,⁵ the Agreement on Internal Trade,⁶ the Canada-Chile Free Trade Agreement,⁷ the Canada-Peru Free Trade Agreement⁸ and the Canada-Colombia Free Trade Agreement.⁹

18. 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.”

19. Article 1013(1)(h) of NAFTA provides that the tender documentation shall include the following:

the criteria for awarding the contract, including any factors other than price that are to be considered in the evaluation of tenders and the cost elements to be included in evaluating tender prices . . . .

20. Article 1015(4)(d) of NAFTA provides that the government shall award contracts as follows:

awards shall be made in accordance with the criteria and essential requirements specified in the tender documentation.

21. The CCFTA, the CPFTA and the CCOFTA contain provisions similar to those of NAFTA.

22. In its complaint, E.G. Spence submitted that, while the terms of the RFP and the information that it received during the mandatory site visit indicated that proposals would be evaluated on the basis that inspections would be limited to 300 washers and dryers at the R&QSS and 175 washers and dryers at Blackdown Park during the term of the contract, PWGSC evaluated its proposal on the basis that inspections would cover all 700 washers and dryers at the R&QSS and all 200 washers and dryers at Blackdown Park.

23. The issue in this inquiry is therefore whether PWGSC evaluated E.G. Spence’s proposal in accordance with the terms of the RFP.

24. In accordance with article 1.1.3 of Part 4, “EVALUATION PROCEDURES AND BASIS OF SELECTION”, of the RFP, the total evaluated price of a proposal is determined by multiplying the total estimated usage for each line item by the unit price for that line item and then adding the results. With regards to the number of estimated inspections of washers and dryers, the Tribunal notes that the terms of the RFP are not entirely clear.

25. On the one hand, Annex A, “REQUIREMENT”, to the RFP provides as follows: “The Contractor must provide all labour, materials, tools, equipment and transportation for inspections of approximately 700 washers and dryers” at the R&QSS and “. . . approximately 200 washers and dryers” at Blackdown Park. On the other hand, Annex A also provides as follows: “Inspections will be performed on twenty-five (25) washers or dryers per month, commencing on the 1st work day of each month” at the R&QSS and “. . . twenty-five (25) washers or dryers per month, from 01 April to 31 October” at Blackdown Park.

26. In light of the fact that the RFP explicitly provides that the period of the contract is from the date of the contract (the solicitation closed on December 7, 2011) to December 31, 2012,¹⁰ the foregoing rates of inspection result in an estimated 300 inspections at the R&QSS and 175 inspections at Blackdown Park.¹¹

27. However, any perceived ambiguity in the terms of the RFP was dispelled during the mandatory site visit which took place at CFB Borden on November 30, 2011. As noted above, PWGSC confirmed, in its GIR, that potential suppliers were told, during the site visit, that the required inspections were limited to 475 washers and dryers (i.e. 300 at the R&QSS and 175 at Blackdown Park) and would not cover all 900 washers and dryers within the term of the contract.

28. Consequently, the unit prices contained in E.G. Spence’s proposal had to be multiplied by a total of 475 washers and dryers. However, the evidence on the record clearly indicates that those unit prices were incorrectly multiplied by a total of 900 washers and dryers.¹² In addition, the Tribunal notes that, in its GIR, PWGSC acknowledged that unit prices for inspections offered by each of the bidders had been multiplied by an incorrect number of washers and dryers.

29. In light of the foregoing, the Tribunal finds that PWGSC failed to evaluate E.G. Spence’s proposal in accordance with the terms of the RFP, in violation of the applicable trade agreements, and therefore determines that the complaint is valid.

Remedy

30. Having determined that the complaint is valid, the Tribunal must now consider whether the circumstances relevant to the procurement at issue warrant the recommendation of a particular remedy.

31. In this regard, the Tribunal is governed by subsections 30.15(2) and (3) of the CITT Act, which provide as follows:

(2) Subject to the regulations, where the Tribunal determines that a complaint is valid, it may recommend such remedy as it considers appropriate, including any one or more of the following remedies:

(a) that a new solicitation for the designated contract be issued;

(b) that the bids be re-evaluated;

(c) that the designated contract be terminated;

(d) that the designated contract be awarded to the complainant; or

(e) that the complainant be compensated by an amount specified by the Tribunal.

(3) The Tribunal shall, in recommending an appropriate remedy under subsection (2), consider all the circumstances relevant to the procurement of the goods or services to which the designated contract relates, including:

(a) the seriousness of any deficiency in the procurement process found by the Tribunal;

(b) the degree to which the complainant and all other interested parties were prejudiced;

(c) the degree to which the integrity and efficiency of the competitive procurement system was prejudiced;

(d) whether the parties acted in good faith; and

(e) the extent to which the contract was performed.

32. Moreover, subsection 30.15(4) of the CITT Act provides the Tribunal with the authority to award to the complainant the reasonable costs that it incurred in preparing a response to the solicitation that is the subject of the complaint.

33. The Tribunal is of the view that the failure to evaluate a proposal in accordance with the terms of the solicitation represents a serious deficiency in the procurement process which prejudices the integrity and efficiency of the competitive procurement system.

34. The integrity and efficiency of the competitive procurement system can only be maintained if bidders are confident that the process is fully transparent and that their proposals will be evaluated in accordance with the terms of the solicitation. Although it is clear that a mistake was made with respect to the evaluation of proposals, the evidence does not indicate that there was a lack of good faith on the part of PWGSC.

35. PWGSC submitted that, while the unit prices for inspections offered by each of the bidders were inadvertently multiplied by an incorrect number of washer and dryers, the mistake had no impact on the ultimate ranking of the proposals, since it was made with respect to the evaluation of all proposals.

36. PWGSC submitted that, if the unit prices had been multiplied by the correct number of washers and dryers, the ranking of the proposals would have been exactly the same.¹³ It therefore submitted that the mistake had been without consequence for the outcome of the procurement process, that the resulting contract had been correctly awarded to the lowest bidder (i.e. Parkway) and that E.G. Spence’s interests in the procurement had not been unfairly affected.

37. In its comments on the GIR, E.G. Spence recognized that its bid was too high for it to be awarded the contract and that it was no longer looking for the Tribunal to overturn the award of the contract to Parkway.

38. The Tribunal is of the view that the evidence on the record clearly indicates that, regardless of the number of washers and dryers used for determining the total evaluated price of proposals, Parkway would still have obtained the lowest total evaluated price and would have been awarded the contract.

39. Therefore, in these circumstances, the Tribunal finds that there is no basis to recommend that the award of the contract to Parkway be disturbed or to recommend that E.G. Spence be compensated for a loss of profit or opportunity to profit.

40. However, as stated by the Federal Court of Appeal in Canada (Attorney General) v. Envoy Relocation Services,¹⁴ “. . . the [Tribunal] performs a regulatory role in the administrative process . . . and must exercise its powers with a view to, among other things, maintaining potential bidders’ confidence in the integrity of the procurement system”, as “[a]n erosion of confidence would have a detrimental impact on the competitiveness of bidding.”

41. When E.G. Spence learned that the unit prices contained in its proposal had been multiplied by a total of 900 washers and dryers instead of 475, it was reasonable for it to conclude that the procurement process was flawed and lacked transparency. It was also reasonable for it to take the steps that it did with respect to the filing of a complaint with the Tribunal.

42. Although the current inquiry has now revealed that PWGSC made a mistake which did not alter the ultimate ranking of the proposals, this type of error nonetheless serves to undermine potential bidders’ confidence in the integrity of the procurement system and may even deter them from responding to future solicitations. This is particularly so given PWGSC’s vast procurement experience and the relative simplicity of the current procurement process. As E.G. Spence stated in its comments on the GIR, “. . . the [procurement] process should not only speak to transparency it should be transparent.”

43. In these circumstances, the Tribunal deems it appropriate to award E.G. Spence its reasonable costs incurred in preparing its proposal submitted in response to the solicitation.

44. The Tribunal estimates that E.G. Spence spent no more than one full working day to both attend the mandatory site visit at CFB Borden on November 30, 2011, and prepare its proposal submitted in response to the solicitation, which, according to the terms of that solicitation, did not appear to be difficult. Taking into consideration the service call and labour rates contained in E.G. Spence’s proposal,¹⁵ the Tribunal finds that an amount of $350 reasonably represents the costs that E.G. Spence likely incurred in preparing its proposal.

45. Therefore, pursuant to subsection 30.15(4) of the CITT Act, the Tribunal awards E.G. Spence $350 for its reasonable costs incurred in preparing its proposal submitted in response to the solicitation.

Costs

46. The Tribunal awards E.G. Spence its reasonable costs incurred in preparing and proceeding with 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 on the basis of three criteria: the complexity of the procurement, the complexity of the complaint and the complexity of the complaint proceedings.

47. The Tribunal’s preliminary view is that this complaint case has a complexity level corresponding to the lowest level of complexity referred to in Appendix A of the Guideline (i.e. Level 1). The procurement was not complex, as it dealt with the provision of a simple set of services. The complaint was not complex, as it only dealt with the matter of whether or not PWGSC evaluated a single part of E.G. Spence’s proposal in accordance with the terms of the solicitation. Finally, the complaint proceedings were not complex, as PWGSC acknowledged that an error had been made in the evaluation of proposals, there were no motions or interveners, and a public hearing was not required. Accordingly, as contemplated by the Guideline, the Tribunal’s preliminary indication of the amount of the cost award is $1,000.

DETERMINATION OF THE TRIBUNAL

48. Pursuant to subsection 30.14(2) of the CITT Act, the Tribunal determines that the complaint is valid.

49. Pursuant to subsection 30.15(4) of the CITT Act, the Tribunal awards E.G. Spence $350 for its reasonable costs incurred in preparing its proposal submitted in response to Solicitation No. W0113-110473/A, which costs are to be paid by PWGSC.

50. Pursuant to section 30.16 of the CITT Act, the Tribunal awards E.G. Spence its reasonable costs incurred in preparing and proceeding with the complaint, which costs are to be paid by PWGSC. In accordance with the Guideline, the Tribunal’s preliminary indication of the level of complexity for this complaint case is Level 1, and its preliminary indication of the amount of the cost award is $1,000. 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 article 4.2 of the Guideline. The Tribunal reserves jurisdiction to establish the final amount of the award.

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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.

⁴ . In the GIR, PWGSC explained that the total evaluated price calculated with respect to each proposal included a fixed amount for inspections (based on the actual number of inspections to be performed) and a notional amount for service calls (based on a notional number of service calls used for the purpose of the evaluation). It further explained that the amount of the contract awarded to Parkway, which was significantly higher than Parkway’s total evaluated price, represents a cost limit and that the actual cost of the contract will depend on the actual volume of service calls that may be required during the term of the contract.

⁵ . 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].

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

⁷ . 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.

⁸ . 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].

⁹ . Free Trade Agreement between Canada and the Republic of Colombia, online: Department of Foreign Affairs and International Trade <http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-... (entered into force 15 August 2011) [CCOFTA]. The Agreement on Government Procurement (15 April 1994, online: World Trade Organization <http://www.wto.org/english/docs_e/legal_e/final_e.htm>) does not apply, as the value of the procurement is below the applicable monetary threshold for the procurement of services under that agreement.

¹⁰ . See article 4.1 of Part 6, “RESULTING CONTRACT CLAUSES”, of the RFP and Annex “B”, “BASIS OF PAYMENT” to the RFP.

¹¹ . These estimates are obtained by multiplying the number of complete months during the term of the contract (i.e. 12 months) by 25 for the R&QSS and by multiplying 7 months (April through October) by 25 for Blackdown Park.

¹² . See GIR, exhibit 11.

¹³ . In this regard, PWGSC provided, as part of its GIR, an evaluation grid demonstrating that multiplying both E.G. Spence’s and Parkway’s unit prices by 300 washers and dryers for the R&QSS and 175 washers and dryers for Blackdown Park would still have resulted in Parkway obtaining the lowest total evaluated price. See GIR, Confidential Exhibit 13.

¹⁴ . 2007 FCA 176 (CanLII) at paras. 21, 22.

¹⁵ . GIR, Confidential Exhibit 11.