File PR-2022-017 Derek Penney Electrical Ltd.

Decision made Tuesday, June 21, 2022 Decision and reasons issued Monday, July 4, 2022

 

IN THE MATTER OF a complaint filed pursuant to subsection 30.11(1) of the Canadian International Trade Tribunal Act.

BY

DEREK PENNEY ELECTRICAL LTD.

AGAINST

DEFENCE CONSTRUCTION (1951) LIMITED

DECISION

Pursuant to subsection 30.13(1) of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal has decided not to conduct an inquiry into the complaint.

 

STATEMENT OF REASONS

[1] Subsection 30.11(1) of the Canadian International Trade Tribunal Act [1] (CITT Act) provides that, subject to the Canadian International Trade Tribunal Procurement Inquiry Regulations [2] (Regulations), a potential supplier may file a complaint with the Canadian International Trade Tribunal concerning any aspect of the procurement process that relates to a designated contract and request the Tribunal to conduct an inquiry into the complaint. Subsection 30.13(1) of the CITT Act provides that, subject to the Regulations, after the Tribunal determines that a complaint complies with subsection 30.11(2) of the CITT Act, it shall decide whether to conduct an inquiry into the complaint.

[2] Derek Penney Electrical Ltd.’s (DPEL) complaint concerns a procurement by Defence Construction (1951) Limited (DCC), on behalf of the Department of National Defence (DND), for the provision of facility maintenance and support services for six DND facilities located within the vicinity of St. John’s, Newfoundland and Labrador (solicitation SJ322871).

[3] DPEL disputes DCC’s finding that it had tied with the winning bidder, Cahill Instrumentation & Technical Services (2011) Limited (the Cahill Group), and questions whether the Cahill Group had obtained the required facility security clearances, as set out in the solicitation documents.

BACKGROUND

[4] The request for proposals (RFP) was published on January 18, 2022. The bid closing date was February 28, 2022, at 2:00 p.m. EST.

[5] On or before February 28, 2022, DPEL submitted its bid.

[6] On April 4, 2022, and followed up in a letter dated April 5, 2022, DCC communicated to DPEL that its bid and that of its competitor, the Cahill Group, resulted in a tie. ^[3] DCC indicated that the method it generally adopted in the event of a tie was to hold a coin toss; however, this option was only available if both parties agreed to be bound by the result. If not, DCC would cancel the procurement.

[7] On April 6, 2022, DPEL requested additional information to better understand how the matter resulted in a tie and questioned whether the Cahill Group, and any of its potential subcontractors, held the requisite security clearances. DPEL also noted that the Cahill Group was not registered in the provincial registry to carry on business in the province of Newfoundland and Labrador.

[8] On April 8, 2022, DCC provided a partial answer, detailing that it had evaluated the bids in accordance with the evaluation criteria, which expanded the meaning of what constituted a tie score. DCC further clarified that the Cahill Group’s legal name for the purposes of the bid was Cahill Instrumentation & Technical Services (2011) Limited. ^[4]

[9] On April 11, 2022, DPEL requested further confirmation of the exact business entity that had submitted a bid in the solicitation and whether all named business entities held valid security clearances, as specified in the solicitation documents and their amendments.

[10] On April 14, 2022, DCC confirmed that the matter was being reviewed by DCC’s National Director, Contract Services, and that DPEL would receive a response at the Director’s earliest convenience.

[11] By emails dated April 21, 22 and 25, 2022, DPEL requested updates on the status of its inquiry, with several employees from DCC included as recipients of this correspondence.

[12] On April 25, 2022, DCC provided further clarification. DCC confirmed that it could only provide debriefings with respect to a bidder’s own submission and would not comment on the contents of other bidders’ submissions. It also indicated that, whereas all bidders are required to have a facility security clearance, due to changes to the way clearances were issued by the Department of Public Works and Government Services, DCC would not verify security clearances prior to a company being awarded a contract. DCC also provided examples of when a coin toss had been used to break a tie but reiterated that it was DPEL’s choice whether to take part in the coin toss.

[13] On April 26, 2022, DPEL objected to this assessment of the solicitation, addressing its email to the various DCC executives. In particular, DPEL objected to DCC’s assessment that the facility security clearance did not need to be verified, as this requirement was set out in the solicitation as a mandatory criterion and was later clarified in an amendment. DPEL also communicated its concern with respect to who had actually bid on the contract and with respect to other bidders’ experience performing the work requested. Lastly, DPEL took issue with the use of a coin toss to determine the outcome of the contract, as it has been completing work in the buildings covered by the solicitation for the last 15 years. As a recourse, DPEL requested that a re-evaluation of the bids take place.

[14] On April 27, 2022, DCC’s Vice-President, Operations-Procurement, confirmed that DCC would provide the full legal name of the bidder that tied with DPEL, that it would verify its security status against its legal name, and that the evaluation completed complied with the terms of the RFP.

[15] On May 4, 2022, DCC confirmed that the legal name of the bidder was Cahill Instrumentation & Technical Services (2011) Limited, that it held a valid facility security clearance, and that the evaluation was carried out in accordance with the terms of the RFP. DCC also confirmed that, if a method to break the tie was not agreed upon, the solicitation would be cancelled.

[16] On May 5, 2022, DPEL reiterated many of the same questions to DCC.

[17] On May 9, 2022, DCC declined to elaborate further on its response and requested that DPEL decide whether it accepted the proposed coin toss or whether it wished to provide an alternative tie‑breaking methodology.

[18] On May 9 and 10, 2022, DPEL forwarded its concerns to the President and Chief Executive Officer (CEO) of DCC, the Minister of Public Services and Procurement, as well as a senator for Newfoundland and Labrador.

[19] On May 16, 2022, the President and CEO of DCC provided a response to DPEL. The letter outlined the same information as contained in DCC’s previous responses. It also reminded DPEL that, for the purposes of the solicitation, the proper point of contact was the contracting officer and that failure to direct questions through the contracting officer could lead to its bid being rejected for consideration.

[20] On May 17, 18, 25 and 27, 2022, DPEL continued to make the same objections it had made at other various times described above.

[21] On May 17, 2022, DCC confirmed that it would not be responding to any more questions and would cancel the procurement if DPEL did not provide a method by which it could break the tie.

[22] On May 30, 2022, DCC cancelled the solicitation.

[23] On May 31, 2022, DPEL objected to the cancellation, as it did not view the assertion that the solicitation had ended in a valid tie.

[24] On June 13, 2022, DPEL submitted its complaint.

[25] On June 14, 2022, the Tribunal requested that additional information be provided. DPEL provided the missing information on the same day.

[26] On June 15, 2022, the Tribunal acknowledged receipt of DPEL’s complaint.

ANALYSIS

[27] Pursuant to sections 6 and 7 of the Regulations, the Tribunal may conduct an inquiry into a complaint if all of the following conditions are met:

• (i) the complaint has been filed within the time limits prescribed by section 6;

• (ii) the complainant is a potential supplier;

• (iii) the complaint is in respect of a designated contract; and

• (iv) the information provided discloses a reasonable indication that the government institution did not conduct the procurement in accordance with the applicable trade agreements.

[28] For the reasons that follow, the Tribunal finds that the complaint was not made in a timely manner and that, in any event, it does not disclose a reasonable indication of a breach of the applicable trade agreements.

Timeliness

[29] Pursuant to section 6 of the Regulations, a potential supplier must either raise an objection with the procuring government institution or file a complaint with the Tribunal no later than 10 working days after the day on which the basis of the complaint became known or reasonably should have become known to the supplier. Where the potential supplier first makes an objection, it must file a complaint within 10 working days after the day on which the potential supplier has actual or constructive knowledge of the denial of relief.

[30] DPEL had been made aware that the solicitation would be cancelled if it chose not to take part in the coin toss, or another similar tie-breaking method, as of April 4, 2022, when it was made aware that its bid had tied with the Cahill Group’s bid.

[31] DCC maintained consistent albeit repetitive communication with DPEL throughout the process of addressing DPEL’s objections. Following the letter of May 16, 2022, from DCC’s President and CEO, it should have been clear to DPEL that it had exhausted its available opportunities to seek redress from the government institution. This was further confirmed on May 17, 2022, when DCC confirmed that it would not discuss the matter further and would be proceeding with the cancellation of the solicitation.

[32] DPEL’s complaint was filed with the Tribunal on June 14, 2022, 19 business days after May 17, 2022, when DCC had denied the relief that DPEL requested. As the Tribunal has communicated to potential suppliers, bidders cannot adopt a “wait‐and-see attitude” in procurement complaints in which time is of the essence, and the procurement review process does not provide for grievances to be accumulated and then presented only when a proposal is rejected. [5] As soon as DPEL had received DCC’s denial of relief on May 17, 2022, it had 10 working days to file its complaint.

Reasonable indication of a breach of the trade agreements

[33] Even if DPEL’s complaint had been timely, the complaint does not demonstrate that DCC’s actions contravened the applicable trade agreements. Whereas DPEL suggests that the Cahill Group could not have received a score within one point of DPEL’s score, it does not provide evidence as to why it believed this to be the case. DPEL similarly did not provide evidence to sustain its allegation that DCC erred in evaluating its bid or the Cahill Group’s bid.

[34] With respect to how the solicitation ended in a tie, the solicitation defined a tie as including any score separated by one point or less. Concerning the evaluation of price, DCC included similar language, allowing any price within 5 percent of the lowest price to be awarded full marks. With an estimated contract value of $7.3 million, a 5 percent variance to this estimated value would represent up to $365,000—a not insignificant sum for a bid to be above or below a competitor and still receive full points.

[35] The RFP included the following evaluation methods that ultimately resulted in a tie:

4.4 Results of Evaluation and Selection of Proponent

 

. . .

4.4.3 If the top two total scores are tied or separated by one point or less, the Proponent who received the highest score for the Cost Proposal will be selected to negotiate an Agreement with DCC.

4.3 Evaluation of the Cost Proposals and Indigenous Benefits Plan

 

. . .

4.3.2 Scoring of the Cost Proposal:

.1 To determine the Total Amount of a Proponent’s Cost Proposal, items 2.4.1.1 and 2.4.1.2 quoted in the Cost Proposal will be added together along with the: (i) budget for the implementation of Additional Work Requests during the initial Period of Service, in accordance with Section 1.7 and as identified on the Electronic Bidding System, and (ii) amount for mobilization (i.e., the period between Contract award and Service Commencement, refer to GC5.5.3) as identified on the Electronic Bidding System.

.2 The score for the Total Amount will be allocated as follows:

Criteria	Score
Proponent’s Price is ≥ (Lowest Price) and ≤ (Lowest Price + 5%)	10
Proponent’s Price is > (Lowest Price + 5%) and ≤ (Lowest Price + 10%)	9
Proponent’s Price is > (Lowest Price + 10%) and ≤ (Lowest Price + 15%)	8
Proponent’s Price is > (Lowest Price + 15%) and ≤ (Lowest Price + 20%)	7
Proponent’s Price is > (Lowest Price + 20%) and ≤ (Lowest Price + 25%)	6
Proponent’s Price is > (Lowest Price + 25%) and ≤ (Lowest Price + 30%)	5
Proponent’s Price is > (Lowest Price + 30%) and ≤ (Lowest Price + 35%)	4
Proponent’s Price is > (Lowest Price + 35%) and ≤ (Lowest Price + 40%)	3
Proponent’s Price is > (Lowest Price + 40%) and ≤ (Lowest Price + 45%)	2
Proponent’s Price is > (Lowest Price + 45%) and ≤ (Lowest Price + 50%)	1
Proponent’s Price is > (Lowest Price + 50%)	0

 

.3 The score for the cost criterion will then be multiplied by its percentage weight factor as indicated in Table 1 to produce a weighted score.

[36] The evidence on record indicates that the proposals by DPEL and the Cahill Group were evaluated as tied, according to the terms of the solicitation.

[37] As discussed above, DPEL has not detailed why it believes that the Cahill Group’s bid was non-compliant or could not have been awarded a similar score in the point-rated criteria. For the Tribunal to inquire into a procurement complaint, there must be a reasonable indication that a procuring entity has violated one of Canada’s trade agreements: ^[6]

In procurement complaints, the party alleging that a procurement has not been conducted in accordance with the applicable trade agreements must provide some proof to support that claim. This is not to say that the complainant in a procurement dispute under one of the agreements has the burden of proving all necessary facts as a plaintiff generally does in a civil case. . . . However, the complainant must provide sufficient facts or arguments to demonstrate a reasonable indication that a breach of one of the trade agreements has taken place. ^[7]

[38] With respect to DCC’s decision to cancel the solicitation, DCC sought in almost all its communications with DPEL to come to a mutually agreeable method to break the tie between DPEL and the Cahill Group. DCC explained its decision-making process to DPEL repeatedly over the course of almost two months and provided it with examples of situations where it had proceeded to a coin toss to decide between two bids that had been evaluated as tied. DCC also indicated its openness to considering other methods for breaking the tie; however, none were proposed by DPEL.

[39] In the case at issue, the solicitation process was designed to allow bidders with similar scores to be judged based upon their financial bid. As financial bids were evaluated within a range of 0 to 10, the two provisions together increased the chances that parties would end with a tied score.

[40] While the Tribunal has generally found that the cancellation of a solicitation must comply with the applicable trade agreements ^[8] and that a procuring entity should generally award a contract when it receives a compliant bid, ^[9] the circumstances have resulted in two compliant bids and no manner in which to break the tie.

[41] In the circumstances, the Tribunal finds DCC’s actions to be fair and reasonable.

DECISION

[42] Pursuant to subsection 30.13(1) of the CITT Act, the Tribunal has decided not to conduct an inquiry into the complaint.