File No. PR-2018-001 Harris Corporation v. Department of Public Works and Government Services

Determination issued Thursday, August 23, 2018 Reasons issued Friday, September 7, 2018

 

TABLE OF CONTENTS

DETERMINATION.. i

STATEMENT OF REASONS. 1

TRADE AGREEMENTS. 2

PWGSC’S NSE MOTION.. 3

Background. 3

PWGSC’s Position. 6

Harris’s Position. 7

PWGSC’s Reply. 8

Tribunal’s Analysis. 8

TIMELINESS OF GROUNDS OF COMPLAINT. 13

Laboratory Testing. 13

Arbitrary and Biased User Trial Scoring. 15

CONCLUSION.. 17

COMPLAINT COSTS. 17

DETERMINATION.. 18

 

IN THE MATTER OF a complaint filed by Harris Corporation pursuant to subsection 30.11(1) of the Canadian International Trade Tribunal Act, R.S.C., 1985, c. 47 (4th Supp.);

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
HARRIS CORPORATION	Complainant
AND
THE DEPARTMENT OF PUBLIC WORKS AND GOVERNMENT SERVICES	Government Institution

DETERMINATION

Pursuant to subsection 30.14(2) of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal determines that the complaint is not valid.

Pursuant to section 30.16 of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal awards the Department of Public Works and Government Services its reasonable costs incurred in preparing and proceeding with this complaint, which costs are to be paid by Harris Corporation. In accordance with the Procurement Costs Guideline, the Canadian International Trade Tribunal’s preliminary indication of the cost award is $1,150. 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, as contemplated in Article 4.2 of the Procurement Costs Guideline. The Canadian International Trade Tribunal reserves jurisdiction to establish the final amount of the cost award.

Jean Bédard                             
Jean Bédard
Presiding Member

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

Tribunal Panel:                                                 Jean Bédard, Presiding Member

Support Staff:                                                   Eric Wildhaber, Dustin Kenall and Peter Jarosz, Counsel

Complainant:                                                    Harris Corporation

Government Institution:                                     Department of Public Works and Government Services

Counsel for the Complainant:                             Benjamin Mills
Drew Tyler
Carly Haynes

Counsel for the Government Institution:              Susan D. Clarke
Ian McLeod
Roy Chamoun
Kathryn Hamill
Peter Osborne
Scott Rollwagen
Brendan Morrison
Zachary Rosen

Please address all communications to:

The Registrar
Secretariat to the Canadian International Trade Tribunal
333 Laurier Avenue West
15th Floor
Ottawa, Ontario  K1A 0G7

Telephone: 613-993-3595
Fax: 613-990-2439
E-mail: citt-tcce@tribunal.gc.ca

 

STATEMENT OF REASONS

1.                   On April 10, 2018, Harris Corporation (Harris) filed a complaint with the Canadian International Trade Tribunal (the Tribunal) concerning a request for standing offer (RFSO) with respect to a procurement (Solicitation No. M7594-5-4254/B) conducted by the Department of Public Works and Government Services (PWGSC) for the provision of white phosphor night vision binocular systems and recommended spare parts (binoculars) for the Royal Canadian Mounted Police (RCMP).

2.                   Harris alleges that PWGSC damaged Harris’s sample binoculars during laboratory testing and then evaluated them in an arbitrary and biased manner during user trials.

3.                   PWGSC submits that the Tribunal lacks jurisdiction to hear the complaint on the basis of the RCMP’s invocation of the national security exception (NSE) to the trade agreements in relation to this procurement. Regardless, it submits that there is no evidence that Harris’s binoculars were damaged by PWGSC or were evaluated otherwise than as provided for in the tender documents.

4.                   For the reasons provided below, the Tribunal finds that the NSE does not bar the Tribunal from adjudicating the complaint, which the Tribunal finds to be not valid.   

BACKGROUND

5.                   On February 9, 2017, PWGSC issued the RFSO for the binoculars on an as-and-when-required basis for delivery across Canada. The RFSO was issued to certain suppliers invited to bid after signing a non-disclosure agreement. The resulting contract from the RFSO is a Standing Offer with an initial term of three years with an option to extend for seven additional one-year periods.

6.                   The RFSO is a retender of a solicitation (Solicitation No. M7594-5-4254/A) issued a year earlier on February 4, 2016. That solicitation was the subject of a complaint by M.D. Charlton and an inquiry by the Tribunal in File No. PR-2015-070. At the conclusion of that inquiry, the Tribunal found in favour of the complainant in that case and recommended that the RFSO be “cancelled and a new solicitation be issued . . . [that does] not include technical requirements that favour a particular supplier.”[1]

7.                   Bids in connection with the RFSO were ultimately received from Harris and xxx xxxx bidders (one of which submitted bids for two separate products), for a total of xxxxxxx.

8.                   The evaluation process had six phases, each of which (except for the pricing phase) bidders had to pass to progress to the next.[2] The details of the evaluation procedure set out in the RFSO are confidential and the details are in the confidential annex to this statement of reasons.

9.                   On November 1, 2017, PWGSC notified Harris that it had not won the bid. In addition to identifying the winning bidder and its evaluated price, the regret letter identified the points assessed for each of the laboratory and user trial evaluations for Harris and the winning bidder. It also provided Harris’s scores for each of the constituent rated criteria for the laboratory and user trial evaluations.[3]

10.               On November 3, 2017, Harris requested a debriefing with PWGSC, which was eventually held on December 5, 2017.[4]

11.               On November 27, 2017, Harris inspected the six returned units. It discovered that Unit 1205 had damage consistent with an impact and that Unit 1204, which had been subjected to laboratory testing, was not properly xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx.[5]

12.               On November 30, 2017, PWGSC provided Harris a document in response to some of Harris’s preliminary questions, which included, inter alia, the average values Harris scored on the laboratory results and the aggregate points Harris was awarded by each participant in the user trials.[6] PWGSC also forwarded testing notes prepared by the user trial participants documenting the conditions of testing (weather, lighting, start and end time, etc.), though not the actual evaluations or scores for Harris.[7]

13.               Harris also makes a number of confidential allegations in connection with the debriefing.[8]

14.               On December 7, 2017, Harris e-mailed PWGSC to confirm the list of documents and information that it had asked for and understood PWGSC had agreed to provide during the debriefing.[9] PWGSC also provided Harris the individual score sheets from the user trials for Harris’s binoculars.[10]

15.               On December 19, 2017, Harris sent an objection letter to PWGSC.[11] Harris objected that the participants were not reasonably instructed, resulting in an arbitrary and unfair evaluation inconsistent with the evaluation criteria in the RFSO. Harris argued that the evaluators’ lack of experience with Harris’s equipment combined with their preference and familiarity with the winning bidder’s goods prejudiced the evaluation. Harris further objected that one of its binocular units had been damaged while in the possession of PWGSC, compromising the integrity of PWGSC’s evaluation of that unit. Harris also objected that one of its other units submitted for laboratory testing was not properly reassembled prior to user trials, resulting in an unfair evaluation.

16.               On March 26, 2018, PWGSC sent Harris a letter denying its objections.[12]

17.               On April 2, 2018, PWGSC sent Harris, inter alia, the individual and consensus scoresheets pertaining to all phases of its bid evaluation.[13]

18.               On April 10, 2018, Harris filed this complaint with the Tribunal, raising the same grounds of complaint identified in its objection letter to PWGSC.

TRADE AGREEMENTS

19.               Subsection 30.14(1) of the Canadian International Trade Tribunal Act[14] 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 Canadian International Trade Tribunal Procurement Inquiry Regulations[15] provides that the Tribunal is required to determine whether the procurement was conducted in accordance with the applicable trade agreements and their provisions.

20.               Harris submits (and PWGSC has not contested) that the applicable trade agreements are the Canadian Free Trade Agreement,[16] the North American Free Trade Agreement[17] and the Revised Agreement on Government Procurement.[18]

21.               The trade agreements stipulate that, to be considered for contract award, a tender must conform to the essential requirements set out in the tender documentation and require that procuring entities award contracts in accordance with the criteria and essential requirements specified in the tender documentation.

22.               When considering the manner in which bids are evaluated, the Tribunal applies the standard of reasonableness. As the Supreme Court of Canada has repeatedly underlined, “reasonableness is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process.”[19] As a result, the Tribunal does not generally substitute its judgments for that of the evaluators, unless the evaluators have not applied themselves in evaluating a bidder’s proposal, have ignored vital information provided in a proposal, have based their information on undisclosed criteria or have otherwise not conducted the evaluation in a procedurally fair way.[20] In addition, the Tribunal is of the view that the responsibility for ensuring that a proposal is compliant with all essential criteria of a solicitation ultimately resides with the bidder.[21]

PWGSC’S NSE MOTION

Background

23.               As it did in M.D. Charlton,  the RCMP is invoking the NSE in connection with this procurement. For context and clarity, the background of both instances is reviewed in depth below.

24.               On February 4, 2016, PWGSC issued the original RFSO for this procurement. In the case of M.D. Charlton referenced above, the complainant challenged the technical requirements of the RFSO.

25.               In an earlier letter dated August 26, 2015, the Deputy Commissioner of the RCMP requested that the Assistant Deputy Minister of PWGSC invoke the NSE of all of Canada’s trade agreements, current and future, with respect to the procurement by the RCMP of commercial off-the-shelf and military off-the-shelf night vision binoculars.[22] By letter dated September 15, 2015, the Assistant Deputy Minister of PWGSC agreed to invoke the NSE. The letter noted that it:[23]

does not constitute either an approval or rejection of a sole source procurement strategy. Any procurement strategy must be in accordance with Government Contracts Regulations and applicable policies.

26.               In the M.D. Charlton inquiry, PWGSC argued that the Tribunal lacked jurisdiction to consider the complaint based on the NSE invoked in the above letters. The Tribunal denied PWGSC’s motion, finding that:[24]

[T]he trade agreements leave the identification of the national security interest to the sole discretion of the responsible government institution . . . [but] the [latter] should curtail the application of the disciplines of the trade agreements only to the extent necessary . . . .

In this case, the RCMP conducted an assessment and clearly identified that the only action necessary to protect the national security interest was the non-disclosure of the technical specifications of the night vision binoculars to be procured.

However, when it invoked the NSE, PWGSC went beyond that need, as assessed by the RCMP, and instead applied a blanket exemption to the solicitation, subtracting it altogether from any and all of the disciplines of the trade agreements (i.e. for “all purposes”). In so doing, the Tribunal finds that PWGSC breached the trade agreements by failing to properly tailor the scope of the exception. Rather, the trade agreements require PWGSC to exclude only those provisions of the agreements necessary to protect the national security interest at play. . . .

27.                Ultimately, the Tribunal found M.D. Charlton’s complaint to be valid and recommended that the solicitation be cancelled and retendered. PWGSC decided not to challenge that recommendation.

28.                In anticipation of the retender, the RCMP renewed its request, via a letter dated November 3, 2016, that PWGSC “invoke the National Security Exception to exempt this procurement of Night Vision Binoculars from all of Canada’s trade agreements, current and future . . . for all purposes.” The RCMP wrote that “[t]his letter replaces and supersedes the National Security Exception requesting letter dated August 26, 2015, which occasioned the issuance of your invocation letter of September 15, 2015.”[25]

29.               On November 25, 2016, the Deputy Commissioner of PWGSC responded via letter as follows:[26]

Based on the reasons set out in your letter of November 3, 2016, I agree to invoke the National Security Exception to exempt the procurement of Night Vision Binoculars from the provisions of all of Canada's trade agreements, current and future . . . for all purposes.

30.               The letter confirmed that it:[27]

replaces and supersedes the previous invocation letter of September 15, 2015, . . . [and] does not constitute either an approval or rejection of a sole source procurement strategy. Any procurement strategy must be in accordance with Government Contracts Regulations and applicable policies.

31.               On February 9, 2017, PWGSC retendered the solicitation in the form of the current RFSO, which included a requirement that bidders sign a non-disclosure agreement. It also described the invocation of the NSE as follows:[28]

1.4 National Security Exception

The national security exceptions provided for in the trade agreements have been invoked; therefore, this procurement is excluded from all of the obligations of all the trade agreements.

32.               On April 13, 2017, in PR-2017-002, M.D. Charlton filed a complaint alleging that the technical specifications of the retendered RFSO still favoured a particular supplier. M.D. Charlton also challenged PWGSC’s invocation of the NSE.

33.               On April 24, 2017, the Tribunal dismissed this complaint as unsubstantiated and untimely.[29] With regard to the NSE, the Tribunal found that M.D. Charlton had failed to articulate how the mere invocation of the NSE prejudiced it but otherwise did not address the merits of the NSE invocation.

34.               On May 4, 2017, the Deputy Commissioner of PWGSC sent the RCMP another letter in order to correct the signature block in the letter dated November 25, 2016, to reflect PWGSC’s legal name and to change the point of contact information at PWGSC responsible for managing the RCMP’s procurement.[30]

35.               On April 10, 2018, Harris filed this complaint with the Tribunal. The Tribunal accepted the complaint for inquiry on April 11, 2018, and served it on PWGSC on April 13, 2018. The Tribunal originally ordered PWGSC to file its response to the complainant’s motion for production and any preliminary motions by April 19, 2018. On April 19, 2018, PWGSC requested the Tribunal extend the deadline for filing its response to the motion for production and any preliminary motions to May 3, 2018. On April 20, 2018, the Tribunal granted the request, but confirmed that the deadline for the filing of the Government Institution Report (GIR) remained May 8, 2018.

36.               On April 26, 2018, PWGSC requested an extension of the time to file its preliminary motions to May 18, 2018, and for the Tribunal to hold in abeyance all other steps in this proceeding including the deadlines for PWGSC to file its response to the complainant’s motion for production and to file its GIR.

37.               On April 27, 2018, the Tribunal maintained the May 3, 2018, deadline for PWGSC to file its response to the motion for production but extended the deadline for any preliminary motions and the GIR to May 18, 2018.

38.               On May 9, 2018, PWGSC reiterated its position that its invocation of the NSE ousted the jurisdiction of the Tribunal including its ability to set deadlines for PWGSC to respond to Harris’s motion for production and its complaint.

39.               On May 10, 2018, the Tribunal repeated that it expected PWGSC to abide by the deadlines set in the Tribunal’s letter dated April 27, 2018.

40.               On May 16, 2018, PWGSC filed an interlocutory judicial review of the Tribunal’s scheduling orders, arguing that the Tribunal lacked jurisdiction to order the production of documents or the GIR pending an anticipated (but then not yet filed) motion from PWGSC to dismiss on NSE grounds.

41.               On June 28, 2018, PWGSC’s application was heard by the Federal Court of Appeal.

42.               On June 29, 2018, PWGSC’s application was denied by the Federal Court of Appeal, which ruled that PWGSC:[31]

should first have brought [its] motion before the CITT or otherwise made [its] submissions on this question to the CITT and received a ruling from the CITT on this question. Without a decision of the CITT on whether the inquiry can continue, we do not have any reasons to review. The refusal of the CITT to bifurcate this issue from the merits of the complaint is not an exceptional circumstance that warrants the intervention of this Court.

[Emphasis added]

43.               On July 3, 2018, PWGSC wrote to the Tribunal proposing to submit the GIR and its response to the motion for production and its NSE motion by July 10, 2018.[32]

44.               On July 5, 2018, the Tribunal accepted the above deadline and ordered Harris file its responses by July 19, 2018, and PWGSC file its replies by July 24, 2018.

45.               On July 10, 2018, PWGSC filed its GIR, response to the motion for production, and NSE motion.

46.               On July 18, 2018, the Tribunal extended the deadline for Harris’s responses to July 24, 2018, and the deadline for PWGSC’s replies to July 27, 2018.

47.               On July 23, 2018, Harris filed its responses to the GIR[33] and the NSE motion.

48.               On July 27, 2018, PWGSC filed its reply to Harris’s response to the NSE motion.

PWGSC’s Position

49.               PWGSC submits that the Tribunal has no jurisdiction to hear any complaints about this procurement because the NSE was invoked “for all purposes” by the authorized official at PWGSC. PWGSC argues that for the Tribunal to do otherwise:

•         is contrary to prior Tribunal and federal courts’ decisions;

•         ignores that the NSE provisions of the trade agreements are more broadly worded than other exceptions, conferring sole discretion to the government institution as to their scope; and

•         encroaches on the role of the federal courts.

50.               PWGSC reiterated the same arguments that it made in Hewlett-Packard[34] and M.D. Charlton, with the following two exceptions: (1) PWGSC argues that the Tribunal is not equipped to handle NSE procurements because the procedures under the Canada Evidence Act[35] for handling sensitive or potentially injurious information relating to national security contemplate review of such evidence by the Federal Courts; (2) PWGSC also argues that as the invocation of the NSE was a term of the RFSO, Harris is contractually obliged to abide by it.

Harris’s Position

51.               Harris submits that PWGSC has not met its burden under the Tribunal’s case law to identify a rationale for excluding access to the Tribunal.  

52.               Harris submits that the Tribunal’s position has been consistently articulated in each of the three NSE cases it has considered since 2016. PWGSC has had several opportunities to challenge these decisions or, failing that, bring its practices up to date to be compliant with the Tribunal’s findings in those matters.

53.               Harris argues that PWGSC’s interpretation of the NSE inappropriately places it on the same footing as the so-called “public interest override” set out in subsection 30.13(4) of the CITT Act. Subsection 30.13(4) of the CITT Act expressly provides that the Tribunal must rescind an order postponing contract award whenever “the government institution certifies in writing that the procurement of the goods or services to which the designated contract relates is urgent or that a delay in awarding the contract would be contrary to the public interest.” The trade agreements require parties to adopt interim measures to preserve suppliers’ opportunity to participate in challenged procurements.[36] These provisions provide that public interest considerations may be taken into account to override such measures, but they do not prescribe a specific test or legal standard for how to weigh such considerations. By enacting subsection 30.13(4) of the CITT Act Parliament has, however, articulated its preferred standard. Harris argues that if Parliament wanted to confer similarly broad authority on government institutions to invoke the NSE, it could have done so. Harris further argues that PWGSC’s position, that its invocation should be treated as equivalent to an unreviewable certification of public interest under subsection 30.13(4), is thus contrary to the text and structure of the CITT Act.

54.               Harris also submits that by taking the position that a national security invocation is entirely unreviewable, PWGSC is taking a stance that is directly opposite to the one that the Government of Canada is taking at the WTO to seek an end to punitive tariffs imposed by the Government of the United States against certain steel and aluminum products: there the Government of Canada is arguing that trade agreements require the United States to show that its purported national security motive is rationally grounded so that such an exceptional measure is as restrained as possible and truly based on bona fide threats.[37]

PWGSC’s Reply

55.               PWGSC does not contest that the Tribunal has jurisdiction to consider whether a duly authorized person actually invoked the NSE. It also does not contest that tribunals may examine discretionary decisions for arbitrariness – it argues, however, that the Crown’s discretion under the NSE is extraordinarily broad because it involves national security and should, therefore, only be reviewed by a court. 

56.               Finally, PWGSC argues that its decision not to challenge the Tribunal’s NSE decision in M.D. Charlton is irrelevant. It argues that a choice not to seek judicial review of a prior decision does not bind the Crown in a later proceeding in a new procurement.

Tribunal’s Analysis

57.               The majority of PWGSC’s arguments have already been addressed by the Tribunal in prior cases: first, in Eclipsys[38] at paras. 34-45 (exercise of discretion); second, in M.D. Charlton at paras. 20-28 (jurisdiction) and 29-38 (scope); and third, in Hewlett-Packard at paras. 41-48 (jurisdiction versus legal question), 49-56 (statutory role of the Tribunal in reviewing invocations of NSE), 57-68 (Tribunal and Federal Court precedent) and 69-75 (text of NSE versus exceptions in the trade agreements).

58.               The Tribunal’s holdings in Eclipsys and M.D. Charlton were not on the subject matter of a judicial review, and the government’s request for judicial review in Hewlett-Packard was dismissed by the Federal Court of Appeal as moot.[39]

59.               Most importantly, the Tribunal observes that PWGSC has chosen to ignore these latest decisions and not attempt to address the concerns raised by the Tribunal in these three decisions by resorting to the NSE as an unfettered and all-purpose release from the requirements of the trade agreements.

60.               In these three decisions, the Tribunal has required of government institutions to articulate a “rationale” for excluding (i) access to the Tribunal and (ii) the requirement (found in both common law breach of contract doctrine and the trade agreements) that purchasers abide by the terms of tenders which they themselves wrote. In every instance before the Tribunal since those decisions were released, the government institution has refused to do so, falling back on the argument that its exercise of discretion is simply unreviewable.

61.               That stance is untenable both from a general rule of law and administrative law framework and more particularly given the fact that the trade agreements are intended to be binding between Canada and foreign countries or Canada and the provinces and territories. They are not aspirational statements of principle, but legal agreements incorporated by Acts of Parliament into the laws of Canada. To interpret one of their provisions as conferring unreviewable discretion on Canada (at the expense not only of foreign suppliers but also Canadian ones) is contrary to their purpose, and the mandate of the Tribunal as fully articulated by the Federal Court of Appeal in Almon.[40] It is also inconsistent with the a number of legislative provisions and case law including:

•         the structure and text of the CITT Act, which show that Parliament has expressly conferred on government institutions the exclusive authority to override the Tribunal’s postponements of contract awards in the public interest but not conferred similar authority on government institutions regarding the NSE;

•         administrative law cases recognizing that tribunals with supervisory powers may properly review government exercises of even exclusive discretion; and

•         international public law principles and cases requiring parties to exercise their treaty rights in good faith.

62.               The second set of letters seeking and granting invocation of the NSE for purposes of the retendered RFSO contain even less justification for jettisoning the disciplines of the trade agreements than the first set of letters. The first request for invocation identified the need for confidentiality regarding the specifications of the night vision binoculars as grounds for ousting the trade agreements:[41]

The specifications of the NVB procurement contain details that, if released into the public domain, could compromise the integrity of the tool’s capability and jeopardize criminal and national security investigations. It is considered necessary for the protection of essential security interests that the procurement of this solution not be disclosed as it remains indispensable for criminal investigations, counter-terrorism and other national security purposes. Any disclosure would identify RCMP capabilities and provide avenues for adversaries to attempt to defeat this capability. These measures are considered necessary to protect public order and safety and considered necessary to protect human life and health as well as our obligations to international partnerships. The nature of any operation using this particular equipment will be covert.

63.               In M.D. Charlton, the Tribunal found that this was precisely the type of rational explanation that would justify invocation of the NSE for a specific discipline (here, the requirement that tender documents and their terms otherwise be public), but that it could not justify a wholesale repudiation of the trade agreements for other disciplines for which no need had been articulated (such as, specifically, recourse to the bid-challenge mechanism that Parliament vested in the Tribunal).

64.               However, the RCMP justified (and the PWGSC based) the renewed invocation on the following rationale:[42]

This procurement is for the acquisition of specialized high quality imaging binoculars to be used in high risk police operations by Royal Canadian Mounted Police Emergency Response Teams, throughout the force, including police operations relating to Canada’s national security interests and counter terrorism actions. Such operations include but are not limited to the apprehension of terrorists, national security investigations requiring the observation of location, behaviour and armed status of targets posing a threat, and the neutralization of active lethal threats having links to organizations posing a risk to national security.

This procurement is necessary to protect public order and safety, preserve human life and health, and honour Canada’s obligations to international partnerships. The goods procured will play a vital role in the Royal Canadian Mounted Police’s contribution to international peace and security and are necessary for the protection of Canada’s national security interests.

65.               The second set of letters identifies a national security interest in the RCMP procuring night vision binoculars. This national security interest is legitimate and authentic on its face. However, contrary to what is found in the first set of letters, this request for invocation makes no justification whatsoever for excluding any particular discipline of the trade agreements and does not even provide the partial justification that was set out in the first series of letters. As such, it was clearly made without reference to the Tribunal’s decisions in Eclipsys or M.D. Charlton. Further, in the invocation letter dated May 4, 2017, making certain technical corrections, PWGSC and the RCMP had another opportunity to bring their practices in line with these cases in Hewlett-Packard (issued in the interim), yet they chose to ignore them.

66.               Aside from the letters, the only other evidence PWGSC has produced is an affidavit from an RCMP sergeant involved with the procurement. He was not involved with the NSE invocation, but agrees with the statements in the RCMP’s letter dated November 3, 2016. In particular, he states that the disclosure of “[i]nformation related to the RCMP’s technical capability in type and numbers in the NVB procurement . . . could compromise the integrity of the NVB’s capability . . . . [Thus] [i]t is necessary . . . that certain procurement and technical information, including the specifications and information related to the RCMP’s overall capability in the type and number of these devices, not be disclosed . . . .”[43]

67.               Even accepting all of this testimony as credible and that it may cure some of the deficiencies in the second set of letters, none of it provides an explanation as to why a complainant should not have access to the Tribunal to bring a complaint on the basis that PWGSC has not abided by the terms it chose itself for its RFSO.

68.               PWGSC spends a portion of its motion raising two new arguments.

69.               First, PWGSC suggests that the federal courts are better suited to handle procurement files for which the NSE provisions have been invoked. As the Tribunal understands this argument, this would be because the Canada Evidence Act lodges the review power regarding “sensitive information” and “potentially injurious information” in the federal courts.

70.               Secondly, PWGSC argues that the references to the NSE in the RFSO constitute a binding contractual term of the RFSO.

71.               In connection with the first argument, the Tribunal disagrees with the notion that this review power pursuant to the Canada Evidence Act could oust the jurisdiction of courts or tribunals who may be called upon to consider “sensitive information” and “potentially injurious information” as part of their proceedings. If Parliament had intended to move cases involving this type of information to the federal courts, it would have expressly said so. Instead of this, Parliament chose to enact a procedure by which the Attorney General of Canada, and the federal courts if needed, can subject to any conditions that they consider appropriate, authorize the disclosure of all or part of “sensitive information” and “potentially injurious information” in the context of a proceeding before a court, person or body with jurisdiction to compel the production of information, which would include the Tribunal.[44]

72.               Furthermore, these provisions of the Canada Evidence Act are of general application. They are not conditioned to the prior invocation of the NSE. If section 38.01 of the Canada Evidence Act is triggered during a proceeding before the Tribunal, the procedure set out in sections 38 to 38.15 of the Canada Evidence Act will be engaged regardless of the invocation of the NSE. It is wrong to conflate the role that the federal courts may play in the application of sections 38 to 38.15 of the Canada Evidence Act with the issue of the jurisdiction of the Tribunal to hear certain cases. There is no logical reason why the jurisdiction of the Tribunal should be ousted in certain situations but not in others when there is always a possibility that sections 38 to 38.15 of the Canada Evidence Act will apply in any proceeding before the Tribunal.

73.               Furthermore, the argument raised by PWGSC is not relevant in the context of this case. Neither PWGSC, nor the RCMP, nor the Attorney General of Canada has claimed, in the motion or otherwise, that this procurement contains any sensitive information or potentially injurious information as defined in the Canada Evidence Act. These procedures have not been invoked. Indeed, the RFSO itself contains no security screening clearance requirements:

1.3 Security Requirements

No Government of Canada security screening clearance from Public Services and Procurement Canada’s Industrial Security Program is required for an organization or personnel to perform work under a resulting Contract. However, this solicitation and all of its contents are subject to the confidentiality requirements specified with in the non-disclosure agreement that was a requirement for the receipt of the solicitation, and the invocation of the National Security Exception.

74.               Even assuming the RFSO did contain security screening requirements and secret information and the provisions of the Canada Evidence Act were invoked, it does not then follow that the Canada Evidence Act ousts the Tribunal of its jurisdiction to hear this case. In the absence of an authorization from the Attorney General of Canada, there would simply be an interlocutory procedural application where the federal courts would be called upon to rule on whether certain information should be disclosed or not.

75.               PWGSC has cited no cases in which any court has held that the Canada Evidence Act ousts the substantive jurisdiction of a tribunal (or of a superior court) to hear an underlying procurement review matter of which it has jurisdiction simply because of a claim regarding whether certain evidence may be disclosed.[45] The legislative provisions governing the Tribunal’s robust system of protecting confidential information and the accessible and timely disposition of procurement review cases also belie this proposition.

76.               PWGSC’s second new argument is likewise unconvincing. The Tribunal disagrees with PWGSC’s characterization of the references to the NSE in the RFSO as constituting a binding contractual term of the RFSO. The NSE is referenced in three places: article 1.3, article 1.4, and article 1.5. Articles 1.3 and 1.4 merely state that the NSE has been invoked to exclude the trade agreement obligations. Article 1.5 does state that the “Offeror acknowledges and understands the application of the national security exception to this solicitation, and that the information it contains is sensitive and must be held in confidence without disclosure.” It then requires the bidder to certify that it will take certain steps to accept the confidentiality of the RFSO. Nowhere does it expressly require the bidder to waive its rights under the trade agreements or its right to challenge the NSE invocation at the Tribunal. Furthermore, in view of the Tribunal’s recent decisions regarding the NSE, it is unreasonable for PWGSC to assume that the mere invocation of the NSE ousted the Tribunal’s jurisdiction and that this assumption was clearly and freely agreed upon by the bidders. In other words, there could be no contractual “meeting of the minds” on this issue, in the current context.

77.               Even assuming that the language in the RFSO should be read in such a manner, such a provision would be in breach of the trade agreements. The framework of federal procurement law under the trade agreements is informed but not limited or bound by the Contract A/Contract B framework under breach of contract doctrine in common law, wherein an express term may rebut any implied duty of fairness. The trade agreements identify a minimum set of substantive and procedural rights to bidders. Outside that minimum, parties may negotiate further terms, on for example whether the government institution will be liable for bid preparation costs. What the government may not do, however, is to condition participation in a public procurement on bidders waiving their rights under the trade agreements.

78.               In summary, looking at the terms of the RFSO itself, the Tribunal finds no evidence that PWGSC and the RCMP treated this procurement process with the level of confidentiality associated with a genuine NSE concern. Bidders were allowed to work on the resulting contract without any security clearance. The RFSO process was conducted without a Treasury Board security designation. Further, the letter prepared by the RCMP requesting NSE invocation contains no background information or supporting documentation. This is in contrast to the letter prepared by Shared Services Canada (SSC) regarding its request for NSE invocation, discussed in PR-2016-043. There, SSC included a lengthy annex to the letter describing the security threat in depth and with particulars. Invoking the NSE is a serious decision. It should be supported by serious evidence in the administrative record.

79.               Finally, one of the most compelling reasons for the Tribunal exercising its jurisdiction to review PWGSC’s invocation of the NSE is also the simplest and most straightforward. All government procurements are important in that they are (or should be) in the public interest. A procurement that is in the national security interest should not be held to a lower standard. It is necessary that the procurement be not only conducted as confidentially as national security requires, but also that the evaluation, process, and result be reasonable. They are not mutually exclusive. Put simply, it is not in the national security interest for PWGSC’s errors to go unchallenged and unreviewed. No legitimate objective, of security or otherwise, is furthered if PWGSC is allowed to indiscriminately exclude all trade agreement disciplines, including access to the Tribunal (which is the specialized body designated by Parliament as the bid challenge authority for procurements by the Government of Canada) – and by justifying such actions based exclusively on self‑justifying and purportedly inscrutable sovereign or unassailable reasons.

80.               Fundamentally, the Tribunal continues to ask that a government entity invoking a NSE satisfies it on two points: (1) What national security rationale exists to deny bidders equality and fairness in regard to holding government entities accountable for respecting the rules that they have set out in their procurements? (2) What national security rationale exists to deny bidders access to the Tribunal’s procurement review mechanism? – or alternatively: How is forcing a bidder to go to the courts instead of the Tribunal justifiable on national security grounds? The Tribunal has already said that it will review the answers to those questions on a reasonableness standard. In order to be able to do this, the Tribunal first needs answers to review. To date, in all of the recent matters involving invocation of the NSE, neither PWGSC nor SSC has provided any answer whatsoever to those questions, despite repeated opportunity and invitation to do so.

81.               Based on all of the above, the Tribunal finds the attempted broad-based NSE invocation for the current RFSO does not represent a good faith attempt to try to limit the application of the NSE provisions to circumstances where they are rationally connected to national security interests. Accordingly, the motion is denied.

TIMELINESS OF GROUNDS OF COMPLAINT

82.               In the submissions accompanying its complaint, Harris submitted that its complaint is timely. It argued that the earliest it could have become aware of the basis of its complaint is December 5, 2017, the date of the debriefing.

83.               PWGSC submits that if Harris had any concerns with the criteria of the user trial, it should have raised them during the bidding period.

84.               When a complaint is first filed, the Tribunal makes an initial preliminary determination regarding certain threshold matters regarding completeness, standing, jurisdiction, etc. One of those threshold matters is timeliness: a complaint must be filed with the Tribunal or the relevant government institution within 10 working days of when the complainant first learned of the grounds of their complaint. The Tribunal’s initial decision to accept a complaint for inquiry does not represent a final ruling on any of these threshold matters, because, in addition to being made only for gatekeeping purposes, they are based only on the evidence and arguments of one party (the complainant) rather than the full record. Nor is the Tribunal required to confine itself to challenges to threshold matters raised by a party. Indeed, section 10 of the Regulations specifically provides that “[t]he Tribunal may, at any time, order the dismissal of a complaint where . . . (c) the complaint is not filed within the time limits set out in these Regulations . . . .”

85.               Harris has raised essentially two grounds of complaint. First, it submits that two of its units were improperly handled at the laboratory testing phase, resulting in their damage and/or improper calibration. It was therefore unfair for PWGSC to submit those units to performance testing at the user trials where they would have expectedly scored poorly. Second, Harris submits, based on variations in scoring, that the user trial scores were based on arbitrary, unbridled opinion not reasonable assessments – to the advantage of the RCMP’s allegedly preferred supplier.

86.               Having the benefit now of all of the relevant evidence, the Tribunal finds that all of the grounds of Harris’s complaint are untimely.

Laboratory Testing

87.               Harris stated, both in its complaint submission[46] and in its objection letter to PWGSC,[47] that “[o]n November 27, 2017, the six returned units were inspected by Harris.”[48] Michael Browning, the Harris engineer who inspected the returned units, testified in his affidavit sworn April 9, 2018, that:[49]

Upon inspection I immediately noticed that NVB unit 1204 was severely xxxxxxxxxxxx. The xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. This would have significantly affected the user experience. In my opinion, the xxxx    xxx     xxxx made it impossible to use the NVB xxxxxxxx. There was also a black pot on the left tube.

. . .

I also noted the following damage to the exterior of unit 1204: There is evidence of damage on the objective cover front face on [the] side of the tube with damage. This damage is consistent with an impact.

Upon inspection of unit 1205, I also noted damage to its right-side I2 Tube. There are several darkened smudges on the tube. James Wolfe [another engineer at Harris] advised me that this was due to an impact to the unit, such as a drop. When a tube suffers a severe physical shock it will cause dark smudges like the ones seen in the image. James Wolfe also advised me that there is no other known possible cause of this damage. Darken smudges did not render the unit unusable, but it is distracting, and would have affected the user experience.

88.               In Exhibit B to his affidavit, Mr. Browning attached photos showing the quality issues described above for both Units 1204 and 1205. The pictures are preceded by a cover page reading “Pictures and Testing Post Return, Nov 29, 2017”.[50]

89.               Based on the above evidence, the Tribunal finds that Harris discovered the grounds of its complaint regarding Units 1204 and 1205 as early as November 27, 2018, but in any event no later than November 29, 2017.

90.               Mr. Browning stated that he “immediately” noticed that Unit 1204 was so xxxxxx xxxxxx xxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxx. He also noted damage to Units 1204 and 1205, resulting in black spots and dark smudges in the field of vision when used. He confirmed that Harris’s “standard internal testing procedures” led him to believe that the units were xxxxxxxxxxxxx and damage-free when submitted.[51] Indeed, the affidavit of Nimesh Shah (another Harris engineer), sworn April 5, 2018, confirms that prior to shipment, Harris inspected each of the six samples that it submitted as part of its bid to confirm they were in working order when delivered to PWGSC.[52]

91.               Therefore, Harris believed or had grounds to believe that the damage and xxxxxxxxxxxxxx observed upon their return to Harris was potentially attributable to PWGSC. However, it did not identify this as an objection or request retesting until its letter dated December 19, 2017, several days after the 10‑working-day deadline expired on December 11, 2017, or (using November 29, 2017, as the baseline) December 13, 2017. 

92.               Harris’s ground of complaint regarding its two laboratory tested units is based on the argument that subjecting damaged and xxxxxxxxxxxxxxxxxxxxx to user trials is inherently unfair. It had knowledge of the state of its units on their return from PWGSC more than 10 working days before it first raised it on December 19, 2017. This by itself was sufficient notice for Harris to object to the scoring if it considered the situation as being inherently unfair. Harris did not have to wait for the results of the evaluation to file its objection in that regard. The Tribunal and the Federal Court of Appeal have clearly and repeatedly held that suppliers must not take a “wait and see” approach by holding onto their objections until they have confirmed the results of the solicitation and their final scores.[53] That is what Harris did by deciding to wait to file an objection until it knew the user trial scores for the allegedly damaged and xxxxxxxxxxxx.

93.               Accordingly, this ground of complaint is barred as untimely.

Arbitrary and Biased User Trial Scoring

Positions of the Parties

94.               Harris submits that the RFSO evaluation scoring guide was arbitrary and biased. The specific allegations are set out in the confidential appendix to these reasons. This made it more likely that the evaluation could be, whether consciously or not, conducted unfairly to the advantage of the winning bidder.

95.               PWGSC submits that Harris’s arguments are unfounded for the following reasons:

•         As to the scoring procedure, all of the details about which Harris now complains – including the scoring criteria – were disclosed to bidders in the RFSO itself.[54] Harris knew that there would be multiple users testing its equipment across multiple trials, assessing the same criteria throughout. The technical ranking was also designed to be determined based on the highest average score. The very design of the bid contemplates variability. If Harris had an objection to this type of evaluation, it should have raised it at the start.

•         Harris has not provided the Tribunal a workable standard for determining what level of scoring variation is unacceptable. Harris admits that some variation is acceptable, but does not identify an intelligible principle for determining when a variation in user score moves from reasonable to unreasonable.

•         As to the allegation of a preferred supplier, PWGSC submits that this is unsubstantiated. Harris has presented no evidence of bias or preference in the current solicitation. Rather, it relies exclusively on the Tribunal’s determination in a prior case. PWGSC has filed the affidavit of the lead RCMP technical evaluator and project manager responsible for this procurement, who has provided sworn evidence that none of the six RCMP evaluators had any familiarity with or preference for the winning bidder’s good. The prior purchase involving the winning bidder was for a monocular device, not night vision binoculars.

Tribunal’s Analysis

96.               The user trial scoring procedures are described in the RFSO – the provisions of the RFSO have been designated as confidential and the relevant provisions are presented in the confidential annex.[55]

97.               Regarding these RFSO procedures, the Tribunal notes that suppliers may always submit questions and propose amendments to solicitation documents to government institutions. For this RFSO in particular, enquiries were expressly permitted.[56]

98.               There is no evidence that Harris submitted any enquiries for this RFSO regarding the number of participants in the user trials, the criteria of assessment, how participants would be instructed, and what type of variation would be contemplated across users and across the same criteria. These are the fundamental grounds of Harris’s complaint today.

99.               Harris believes that it did not have sufficient knowledge of the arbitrariness of the individual user scoring until December 7, 2017, when PWGSC disclosed the user scores sheets showing the scores for each unit and each criteria.

100.            The Tribunal does not believe that to be correct. At the time the RFSO was released, Harris knew that there would be multiple participants scoring multiple units in multiple trials on the same criteria. By definition, there would be possible variation, not only across users but for the same criteria (otherwise, why have users scored each criterion separately for each trial). Harris also knew that the RFSO eschewed reliance on “unbridled opinion”.

101.            If Harris found these two principles irreconcilable or if there was an inherent problem in the test procedure of the RFSO, it was incumbent on Harris to raise an objection when the RFSO was issued. It ought not to have waited until after the trials were completed and the results were in, as it ended up doing, to alert PWGSC to this issue or propose an amendment to the scoring procedure.

102.            In this case, Harris attempts to explain away its results in the evaluation by an after-the-fact analysis and now finds fault in the events or criteria of which it was clearly earlier aware of and to which it should have objected as it became aware of them.

103.            Again, the fact that there would be variations was inherent in the evaluation procedure disclosed in the RFSO. The RFSO expressly informed bidders that the evaluation would be based on user “perceptions”. When there are multiple individual evaluators and no consensus scoring, it is inevitable that there will be variation based on subjectivity. PWGSC tried to avoid these subjective perceptions amounting to “unbridled opinion” by structuring how they would be assessed. There would be multiple participants to avoid any individual bias. The individuals would be confined to the scoring form which asked set questions tied to task-oriented, quantifiable criteria. The scores would be added up to average out individual variations. The participants would then repeat the process under different trial environments.

104.            In essence, PWGSC set up an evaluation procedure similar to a consensus scoring evaluation but without all the participants conferring on a final score. Instead, their individual scores were summed. Just as consensus scores are permitted to vary from individual scores, individual scores may vary amongst evaluators.

105.            Harris has not explained why it did not challenge this evaluation procedure at the time it was proposed. It has not alleged that PWGSC did not follow the steps outlined in the user trial procedure. It is dissatisfied with the results, because it finds them too subjective and varied. That was inherent in the evaluation process. If Harris had wanted a different scoring process that would have left less room for variation or, for example, reconciled variation through a final consensus scoring, it should have demanded it at a much earlier date. Harris raised no objection to the method of reconciliation of the RFSO (summing up individual scores). It cannot now object simply because the results of such a process were unfavourable to it.

106.            To be clear, in addition to Harris not raising an objection to this evaluation procedure in a timely manner, its reliance on the scoring variations has failed to convince the Tribunal that any breach of the trade agreements took place. The two issues (of timeliness and of breach of the trade agreements) are related in this proceeding.

107.            Harris is asking for the Tribunal to hold that the RFSO evaluation process was improperly subjective (both in design and in result), and argues that the evaluation scores amount to being arbitrary. However, given the design of the RFSO, it has not identified what degree of consistency and variability would be acceptable. In response to this point, Harris “submits that the Tribunal is able to assess whether or not, based on all the facts, the evaluation was arbitrary or sufficiently unfair that it contravened the Trade Agreements.”[57] But that is the crux of the issue – the Tribunal must have an objective reference or standard (found either in the trade agreements or the RFSO) against which to assess the facts against. Harris has provided none.

108.            Thus, for a remedy, Harris simply asks for a re-evaluation of all proposals or the cancellation and re-issuance of the solicitation. This amounts, in effect, to asking the Tribunal to design a new evaluation procedure. It is fundamentally a different type of relief from that granted by the Tribunal in the predecessor solicitation in M.D. Charlton where the Tribunal issued a prohibition against including unnecessary requirements favouring one bidder. It amounts to the Tribunal issuing a mandatory order that the evaluation procedures of the RFSO include some other standard, which Harris fails to even identify. Doing so would improperly intrude on the discretion of PWGSC to set its own evaluation procedures. As such, having failed to be convinced that the scoring resulting from the current evaluation procedures proves a breach of the trade agreements, the Tribunal finds this ground of complaint to be not valid.

CONCLUSION

109.            For the reasons above, the Tribunal concludes that the complaint is not valid.

COMPLAINT COSTS

110.            Pursuant to section 30.16 of the CITT Act, the Tribunal may award costs of, and incidental to, any procurement complaint proceedings.

111.            As the successful party, PWGSC is entitled to its reasonable costs.

112.            In determining the amount of cost award for this complaint, the Tribunal considered its Procurement Costs Guideline (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.

113.            The procurement here was not complex. The RFSO was not hundreds of pages, and the goods procured were simple night vision binoculars.

114.            The complaint was complex. It numbered 50 pages and included three separate grounds and hundreds of pages of exhibits, including two sworn affidavits. Harris’s reply to the GIR itself number 187 pages including attachments.

115.            The proceedings were also complex. They included a motion for production of documents, a motion to dismiss the complaint based on the NSE, submissions regarding confidentiality, a request by PWGSC for a stay of proceedings pending its interlocutory judicial review, and a request by Harris to rule on the evidence as filed. It was also necessary to adopt the 135-day extended schedule for issuing a decision. 

116.            Given the above, the appropriate level of complexity would, under normal circumstances, be Level 3. However, the Tribunal finds that much of the complexity of the case is attributable to the conduct of PWGSC. PWGSC was unsuccessful in its NSE motion, which raised very few new arguments but extensively delayed matters. PWGSC repeatedly insisted that the Tribunal should not proceed hearing the merits until it had addressed the NSE motion, while at the same time requesting numerous extensions to file said motion.

117.            As such, in accordance with Appendix A of the Guideline, the Tribunal’s preliminary indication of the amount of the cost award is $1,150, i.e. an amount equivalent to Level 1 costs.

DETERMINATION

118.            Pursuant to subsection 30.14(2) of the CITT Act, the Tribunal determines that the complaint is not valid.

119.            Pursuant to section 30.16 of the CITT Act, the Tribunal awards PWGSC its reasonable costs incurred in preparing and proceeding with this complaint, which costs are to be paid by Harris. In accordance with the Guideline, the Tribunal’s preliminary indication of the amount of the cost award is $1,150. If any party disagrees with the preliminary level of complexity or 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 cost award.

Jean Bédard                             
Jean Bédard
Presiding Member