MISTRAL SECURITY INC.
MISTRAL SECURITY INC.
v.
DEPARTMENT OF PUBLIC WORKS AND GOVERNMENT SERVICES
File No. PR-2012-035
Order issued
Friday, May 3, 2013
Reasons issued
Thursday, May 9, 2013
IN THE MATTER OF a complaint filed by Mistral Security Inc. 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;
AND FURTHER TO a notice of motion filed by the Department of Public Works and Government Services on March 22, 2013, pursuant to rule 24 of the Canadian International Trade Tribunal Rules, for an order dismissing the complaint on the basis that the Canadian International Trade Tribunal does not have jurisdiction to continue its inquiry.
BETWEEN
MISTRAL SECURITY INC. Complainant
AND
THE DEPARTMENT OF PUBLICS WORKS AND GOVERNMENT SERVICES Government Institution
Pursuant to paragraph 10(a) of the Canadian International Trade Tribunal Procurement Inquiry Regulations, the Canadian International Trade Tribunal hereby dismisses the complaint.
Pursuant to section 30.16 of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal awards Mistral Security Inc. 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. The Canadian International Trade Tribunal's preliminary indication of the amount of the cost award is $10,000. If any party disagrees with the preliminary indication of the amount of the cost award, it may make submissions to the Canadian International Trade Tribunal within 10 working days from the date on which the reasons for the current order are issued. The Canadian International Trade Tribunal reserves jurisdiction to establish the final amount of the award.
Serge Fréchette
Serge Fréchette
Presiding Member
Dominique Laporte
Dominique Laporte
Secretary
The statement of reasons will be issued at a later date.
COMPLAINT
1. On December 24, 2012, Mistral Security Inc. (Mistral) filed a complaint with the Canadian International Trade Tribunal (the Tribunal), pursuant to subsection 30.11(1) of the Canadian International Trade Tribunal Act,1 concerning a procurement (solicitation No. W8486-136120/A) by the Department of Public Works and Government Services (PWGSC), on behalf of the Department of National Defense (DND), for the provision of explosives storage containers.
2. Mistral alleged that PWGSC violated its obligations under the Agreement on Internal Trade2 and the North American Free Trade Agreement3 because it failed to provide adequate time for suppliers to prepare and submit proposals, failed to provide clear criteria for evaluating the proposals and awarding the contract, failed to provide equal access to the procurement to all potential suppliers, and because the technical specifications in the Request for Proposal (RFP) were biased in favour of another supplier. As a remedy, Mistral requested that the Tribunal recommend the cancellation, amendment and re-tendering of the solicitation. Mistral also requested that the Tribunal order PWGSC to postpone the award of the contract until the completion of any inquiry into Mistral's complaint. In addition, Mistral requested its complaint costs.
3. On January 3, 2013, 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.4 That same day, pursuant to subsection 30.13(3) of the CITT Act, the Tribunal ordered PWGSC to postpone the award of any contract until the Tribunal determined the validity of the complaint.
4. On January 7, 2013, PWGSC acknowledged receipt of the complaint and informed the Tribunal that a contract had not yet been awarded.
5. On January 14, 2013, PWGSC certified that the procurement of the goods in question was urgent and that a delay in the award of the contract would be contrary to the public interest. On January 15, 2013, in accordance with subsection 30.13(4) of the CITT Act, the Tribunal rescinded its postponement of award of contract order of January 3, 2013.
6. On January 29, 2013, PWGSC filed a Government Institution Report (GIR) with the Tribunal in accordance with rule 103 of the Canadian International Trade Tribunal Rules.5
7. On February 6, 2013, Mistral filed a notice of motion, pursuant to rule 24 of the Rules, for an order directing PWGSC and DND to file with the Tribunal all documents relevant to the complaint and any additional evidence or information that may be necessary to resolve the complaint. Mistral submitted that the GIR did not include any materials concerning the development of the RFP, the development of the technical specifications for the RFP, the development of the evaluation criteria, and virtually no materials responding to the specific issues raised in the complaint. Mistral also requested an extension of time to file its comments on the GIR.
8. On February 8, 2013, PWGSC provided its comments on the notice of motion. It submitted that a number of the technical documents requested by Mistral contained sensitive and classified information, the disclosure of which could affect Canada's national security.6 PWGSC also submitted that, in any event, the documents at issue were not relevant to the central issue in the complaint, namely, whether the technical specifications and criteria in the solicitation reflect the Crown's legitimate operational requirements.
9. On February 11, 2013, Mistral replied to PWGSC's comments. Mistral submitted that PWGSC and DND were in possession of documents, information and evidence pertaining to the issues raised in the complaint or that may be necessary to resolve the complaint, and that PWGSC's claims of national security were overly broad and should be discounted. In addition, Mistral submitted that relevance is a matter to be determined by the Tribunal through its inquiry process and that PWGSC should produce the requested documentation so that it can be reviewed by the parties and the Tribunal.
10. On February 14, 2013, the Tribunal directed PWGSC to provide it with a list of all documents in its possession that potentially respond to Mistral's request and, with respect to each document, to include a brief explanation of the reason why the Tribunal should not order the disclosure of that document.
11. PWGSC responded to the Tribunal's request on February 19, 2013. Its response identified five potential categories of documents. Of note, PWGSC submitted that the Government of Canada and DND had no documents relating to the first category of documents. It also submitted that five of the documents identified as part of the third category were subject to a claim of national security secret.
12. On February 22, 2013, Mistral submitted its comments on the list of documents provided by PWGSC. With respect to the first category of documents, Mistral submitted that, contrary to PWGSC's assertion, there was information on the record which suggested that relevant documents were in PWGSC's or DND's possession. With respect to those five documents for which a claim of national security secret was made, it submitted that the documents appeared to contain information that was relevant to the issues raised in Mistral's complaint and that PWGSC did not sufficiently explain its claim of national security secret. Mistral requested that these documents be produced or, in the alternative, that the documents be disclosed only to the Tribunal so that the Tribunal may determine whether any portion of these documents should be disclosed.
13. On February 27, 2013, the Tribunal requested that PWGSC provide it with a list of any documents or communications in the possession of PWGSC or DND relating to the first category of documents. With respect to the documents for which a claim of national security secret was made, the Tribunal asked PWGSC to provide it with an explanation of the legal basis for the claim, its views on whether the documents could be disclosed to the Tribunal for review and assessment, and whether a redacted version of these documents could be produced and disclosed to the complainant.
14. On March 4, 2013, PWGSC responded to the Tribunal's request. With respect to the first category of documents, PWGSC submitted that it was not able to locate any correspondence or internal communications. With respect to the documents for which it made a claim of national security secret, PWGSC submitted that the disclosure of these documents could directly or indirectly result in the disclosure of the nature and particulars of DND operations, which would affect Canada's national security interests. It submitted that the process to address the disclosure of this information is provided for in section 38 of the Canada Evidence Act.7
15. On March 7, 2013, Mistral provided its comments on PWGSC's response to the Tribunal's request. With respect to the documents for which a claim of national security secret was made, Mistral suggested that the Tribunal adopt an adverse inference that PWGSC refused to produce those documents because they support Mistral's position.
16. On March 18, 2013, the Tribunal issued an order for the production of a number of documents, including those for which a claim of national security secret was made by PWGSC. In its order, the Tribunal recognized that the disclosure of the documents for which a claim of national security secret was made was subject to any action that PWGSC or DND may take under section 38 of the Canada Evidence Act.
17. On March 22, 2013, the date by which PWGSC should have complied with the Tribunal's order for the production of documents, PWGSC filed a notice of motion with the Tribunal. The motion was for an order dismissing the complaint on the basis that the Tribunal does not have jurisdiction to inquire into the complaint because the Government of Canada had invoked the national security exception provided for in Article 1804 of the AIT, Article 1018(1) of NAFTA, Article XXIII(1) of the Agreement on Government Procurement8 and Article Kbis 16(1) of the Canada-Chile Free Trade Agreement9 in relation to the subject procurement. According to PWGSC, once these provisions of the trade agreements are invoked by the Government of Canada, they have the effect of exempting the subject procurement from the scope of the trade agreements. In the present case, since Mistral is a supplier located in the United States, NAFTA and the AGP are the only trade agreements that apply to this inquiry.10
18. In support of its motion, PWGSC filed a letter dated March 20, 2013, from an Assistant Deputy Minister at DND, Mr. John Turner, addressed to Mr. Tom Ring, the Assistant Deputy Minister of the Acquisitions Branch of PWGSC, as well as a letter dated March 21, 2013, from Mr. Ring to Mr. Turner. The letter from Mr. Turner requested that the national security exception be invoked with respect to the procurement of explosives storage containers at two DND sites. Mr. Ring's letter of March 21, 2013, was a response to Mr. Turner's request. In that letter, Mr. Ring agreed to invoke the national security exception and to exempt from the scope of the trade agreements, including NAFTA and the AGP, the procurement of “Explosives Storage Containers”.
19. In its notice of motion, PWGSC remarked that the Crown reached its conclusion to invoke the national security exception contained in Canada's trade agreements in response to the Tribunal's order for the production of certain classified documents.
20. Mistral submitted its comments on PWGSC's motion on March 27, 2013. Mistral submitted that PWGSC's recourse to the national security exception was not valid and went beyond the actions required to protect the essential security interest identified by PWGSC. Mistral requested that the Tribunal dismiss the motion and continue its inquiry into the complaint. In the alternative, Mistral requested that, if the Tribunal were to grant PWGSC's motion, Mistral be awarded costs in an amount sufficient to cover all of the legal fees, disbursements and applicable taxes that it incurred in pursuing the complaint.
21. On April 3, 2013, PWGSC informed the Tribunal that it had no comment on the comments provided by Mistral.
TRIBUNAL'S ANALYSIS
22. Article 1018 of NAFTA and Article XXIII of the AGP provide for exceptions to the provisions of the trade agreements where national security is involved. Specifically, Article 1018(1) of NAFTA provides as follows:
Nothing in this Chapter shall be construed to prevent a Party from taking any action or not disclosing any information which it considers necessary for the protection of its essential security interests relating to the procurement of arms, ammunition or war materials, or to procurement indispensable for national security or for national defense purposes.11
23. The Tribunal has previously stated that, when the Government of Canada finds that a procurement relates to national security and invokes the national security exception before soliciting bids, the Tribunal does not have jurisdiction to inquire into a complaint relating to that procurement.12 In other words, the Tribunal does not have jurisdiction with respect to the federal government's determination that a particular matter relates to national security:
In the Tribunal's view, the above discussion pertaining to . . . Article 1804 of the AIT suggests that the Tribunal does not have any jurisdiction with respect to the government's determination that a particular matter relates to national security.13
24. However, as the bid challenge authority under the trade agreements, the Tribunal can satisfy itself that a national security exception has actually and properly been invoked. The Tribunal's role, that is, its jurisdiction with regard to national security exceptions, is therefore restricted. It is limited to determining whether the national security exception was actually and validly invoked in the context of a particular complaint. As determined in Lotus Development and Opsis, the Tribunal must be satisfied that the national security exception was duly invoked by the federal government. If these conditions have not been met, then the Tribunal would not be fulfilling its responsibility of ensuring that government procurements that are subject to the trade agreements are carried out in a manner consistent with the provisions of those agreements.14
25. Therefore, the issue before the Tribunal with regard to PWGSC's motion is whether the national security exception was invoked properly and in a timely fashion by the Government of Canada. In this regard, the Tribunal notes that neither NAFTA nor the AGP prescribes the manner in which the national security exception must be invoked by the federal government. In other words, there are no rules that prescribe that the exception must be invoked in the solicitation documents or that the Government must do so at a precise moment in time or before a particular deadline.
26. The Tribunal is of the opinion that the Government need not invoke the exception or announce it publicly in the solicitation documents.15 The Tribunal's jurisprudence indicates rather that the national security exception can be invoked by the Government at any time before the end of the procurement process and that parties can be informed only after the filing of a complaint with the Tribunal.16
27. In light of the foregoing, the Tribunal must ensure that the national security exception was actually invoked with respect to the procurement at issue and in a timely manner. The Tribunal must also be satisfied that the exception was invoked by a duly authorized person.
28. With regard to the first issue, the Tribunal notes that the national security exception invoked in Mr. Ring's letter of March 21, 2013, concerns “. . . the procurement of Explosives Storage Containers.” The Tribunal is of the opinion that this statement clearly refers to the procurement that is the subject of Mistral's complaint and the Tribunal's inquiry. The Tribunal also notes that, at the time of Mr. Ring's letter, no contract had yet been awarded and therefore this exception was invoked before the end of the procurement process.
29. Turning next to the issue of whether the exception was invoked by a duly authorized person, the Tribunal notes that Mr. Ring invoked the national security exception on March 21, 2013, as Assistant Deputy Minister of the Acquisitions Branch of PWGSC. In the Tribunal's opinion, Mr. Ring holds a position that confers upon him the ability to invoke the national security exception of the trade agreements, as a result of the authority delegated by the Government of Canada on the Minister of PWGSC under section 6 of the Department of Public Works and Government Services Act,17 in conjunction with paragraph 24(2)(d) of the Interpretation Act.18 In any event, the Tribunal notes that Mistral did not challenge Mr. Ring's authority to invoke the national security exception on behalf of the Government of Canada.
30. As such, the Tribunal is satisfied that the national security exception was invoked properly and in a timely fashion by the Government of Canada in this case.
31. Regardless of the Tribunal's determination with respect to the invocation of the national security exception, the Tribunal feels compelled to express its view that, if an exception from the trade agreements was truly required for the protection of Canada's essential security interests in the procurement of explosives storage containers, that exception should have been invoked much earlier in the procurement process. Invoking the national security exception with respect to the entire procurement at this late stage of the process appears to go beyond the actions required to protect the essential security interests identified by PWGSC. Other, less severe remedies were surely available to PWGSC.
32. For example, in its notice of motion, PWGSC indicated that it is only the disclosure of a few specific documents that would be contrary to Canada's national security interests. However, instead of availing itself of the process provided for in section 38 of the Canada Evidence Act, or invoking a more narrow application of the national security exception with respect only to those documents whose release would be contrary to Canada's national security interests, PWGSC chose to proceed in a method that severely impacted Mistral's rights.
33. Given the timing of the invocation of the national security exception, as well as the availability of less extreme remedies which would have achieved PWGSC's stated purpose (e.g. the non-disclosure of a few documents), the circumstances surrounding the invocation of the national security exception in this case suggest to the Tribunal a possible misuse of the exception.
34. The Tribunal is cognizant of the fact that it has no authority to make a determination with respect to the federal government's determination that a particular matter relates to national security. The Tribunal is also aware that it has no authority to make a determination with respect to the purpose of the invocation as long as the exception has been invoked properly and in a timely fashion. Nonetheless, the Tribunal finds the invocation of the national security exception in this case to be questionable.
35. The Federal Court of Appeal remarked on the potential for abuse of the national security exception as well as possible remedies of that abuse in Opsis, Gestion d'infrastructure inc. v. Canada (Public Works and Government Services). It stated as follows:
. . . in its effect, the invocation of the national security exception carries the potential for serious abuse. When invoked, the exception results in protecting the procurement from any challenges before the Tribunal specialized in this matter. It may be concealing oblique or improper motives that distract from the real purpose of the invocation and justify a judicial review. I hasten to add that there is no evidence of this in the matter before us.19
36. In the present case, the Tribunal finds that, notwithstanding the unusual circumstances surrounding the invocation of the national security exception, the subject procurement is exempt from the provisions of NAFTA and the AGP for national security reasons. Given that none of the trade agreements apply, the Tribunal finds that the complaint does not concern a “designated contract”, as prescribed by subsection 30.11(1) of the CITT Act. Therefore, the Tribunal does not have jurisdiction to continue its inquiry into the complaint.
37. Since the Tribunal, having considered the provisions of NAFTA, the AGP and the CITT Act, has determined that it does not have jurisdiction to inquire into the complaint, it must find that the complaint has no valid basis and cease its inquiry. Therefore, the Tribunal allows PWGSC's motion and dismisses the complaint pursuant to paragraph 10(a) of the Regulations.
COSTS
38. Section 30.16 of the CITT Act allows the Tribunal to award costs to complainants or government institutions. In determining whether costs should be awarded in this case, the Tribunal considers that, although the complaint has been dismissed, the exceptional circumstances of this case justify an award of costs to Mistral. The Tribunal finds that Mistral pursued its complaint at the Tribunal in good faith, at a point in time when the national security exception had not yet been invoked by PWGSC. In addition, as detailed in the foregoing reasons, the inquiry into this complaint involved numerous submissions, including a motion for production brought by Mistral, which was ultimately granted by the Tribunal.
39. Moreover, the Tribunal is of the view that the invocation of the national security exception by PWGSC at such a late stage of the inquiry process, especially when less severe measures were available to it, significantly impacted Mistral's rights and caused Mistral to expend considerable resources in pursuing a remedy that is no longer available to it.
40. In these circumstances, the Tribunal considers it just to exercise its discretion and deviate from its Guideline for Fixing Costs in Procurement Complaint Proceedings. Therefore, the Tribunal's preliminary indication of the amount of the cost award is $10,000.
ORDER OF THE TRIBUNAL
41. Pursuant to paragraph 10(a) of the Regulations, the Tribunal hereby dismisses the complaint.
42. Pursuant to section 30.16 of the CITT Act, the Tribunal awards Mistral its reasonable costs incurred in preparing and proceeding with the complaint, which costs are to be paid by PWGSC. The Tribunal's preliminary indication of the amount of the cost award is $10,000. If any party disagrees with the preliminary indication of the amount of the cost award, it may make submissions to the Tribunal within 10 working days from the date on which the reasons for the current order are issued. The Tribunal reserves jurisdiction to establish the final amount of the award.
1 . R.S.C. 1985 (4th Supp.), c. 47 [CITT Act].
2 . 18 July 1994, C. Gaz. 1995.I.1323, online: Internal Trade Secretariat <http://www.ait-aci.ca/index_en/ait.htm> [AIT].
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 . S.O.R./93-602 [Regulations].
5 . S.O.R./91-499 [Rules].
6 . PWGSC noted that the nature of these documents is such that section 38 of the Canada Evidence Act could be applicable.
7 . R.S.C. 1985, c C-5.
8 . April 15, 1994, on line: World Trade Organization< http://www.wto.org/english/docs_e/legal_e/final_e.htm> [AGP].
9 . 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). Chapter Kbis, entitled “Government Procurement”, came into effect on September 5, 2008.
10 . Although information concerning the estimated value of the contract to be awarded is not contained on the record of this inquiry, PWGSC has not suggested that the applicable monetary thresholds under NAFTA and the AGP were not met.
11 . Article XXIII(1) of the AGP contains a nearly identical provision.
12 . International Safety Research Inc. (14 June 2006), PR-2006-007 (CITT) [International Safety Research] at 1.
13 . Lotus Development Canada Limited, Novell Canada, Ltd. and Netscape Communications Canada Inc. (14 August 1998), PR-98-005, PR-98-006 and PR-98-009 (CITT) [Lotus Development] at 11; Opsis, Gestion d'infrastructures Inc. v. Department of Public Works and Government Services (10 June 2011) PR-2010-090 (CITT) [Opsis] at para. 13.
14 . Lotus Development at 11; Opsis at para. 14.
15 . See, for example, International Safety Research at 1; Foundry Networks Inc. (19 March 2003), PR-2002-064 (CITT) [Foundry Networks] at 2.
16 . International Safety Research at 1; Foundry Networks at 2; Opsis at para. 17.
17 . S.C. 1996, c. 16.
18 . R.S.C. 1985, c. I-21.
19 . 2012 FCA 42 (CanLII) at para. 16.