M.D. CHARLTON CO. LTD.

M.D. CHARLTON CO. LTD.
File No. PR-2017-002

Decision made
Tuesday, April 18, 2017

Decision and reasons issued
Monday, April 24, 2017

TABLE OF CONTENTS

 

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

BY

M.D. CHARLTON CO. LTD.

AGAINST

THE DEPARTMENT OF PUBLIC WORKS AND GOVERNMENT SERVICES

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.

Peter Burn
Peter Burn
Presiding Member

STATEMENT OF REASONS

  1. Subsection 30.11(1) of the Canadian International Trade Tribunal Act[1] provides that, subject to the Canadian International Trade Tribunal Procurement Inquiry Regulations,[2] a potential supplier may file a complaint with the Canadian International Trade Tribunal (the 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.

SUMMARY OF COMPLAINT

  1. On April 13, 2017, M.D. Charlton Co. Ltd. (M.D. Charlton) filed a complaint with the Tribunal regarding a Request for Standing Offer (RFSO) (Solicitation No. M7594-5-4254/B) issued by the Department of Public Works and Government Services Canada (PWGSC) on February 9, 2017, on behalf of the Royal Canadian Mounted Police (RCMP) for the provision of night vision binoculars.[3]
  2. The RFSO is a re-tender of a solicitation issued a year earlier on February 4, 2016, which 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 which the Tribunal found that the solicitation’s technical requirements favoured a preferred supplier and recommended that the RFSO be “cancelled and a new solicitation be issued . . . [that does] not include technical requirements that favour a particular supplier.”[4]
  3. In this complaint, M.D. Charlton alleges that the new RFSO does not follow the Tribunal’s recommendation in File No. PR-2015-070, because

1)   the solicitation has not been conducted in an open, fair and transparent manner, as recommended by the Tribunal;
2)   the RFSO’s technical specifications still favour a particular supplier;
3)   PWGSC has violated various provisions of its Supply Manual, its Standard Acquisition Clauses and Conditions (SACC) Manual and its Code of Conduct for Procurement by, inter alia, incorporating requirements into the RFSO that are not essential; and
4)   the RCMP and PWGSC improperly invoked the National Security Exception (NSE) with regard to the RFSO.[5]

  1. As a remedy, M.D. Charlton requests that an alleged RCMP-preferred manufacturer be barred from participating in the solicitation, that the solicitation be cancelled, that a new solicitation be issued and that an investigation be conducted by the Tribunal into the “ethical and procurement practice” of the RCMP’s technical authority and PWGSC’s contracting authority for the RFSO.

ANALYSIS

  1. The Tribunal has decided not to conduct an inquiry into M.D. Charlton’s complaint for three reasons, namely, because

(1)  it is untimely;
(2)  even if its complaint is timely, M.D. Charlton seeks enforcement of a prior Tribunal recommendation (a matter outside the Tribunal’s jurisdiction); and
(3)  even if considered to be a timely new complaint in which the complainant is not seeking enforcement of a prior recommendation, it fails to disclose a reasonable indication that the procurement was not conducted in accordance with the applicable trade agreement, in this case the Agreement on Internal Trade.[6]

The Complaint is Untimely

  1. Subsection 6(1) of the Regulations provides that a complaint shall be filed with the Tribunal “not 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 potential supplier.” Subsection 6(2) of the Regulations states that a potential supplier who has made an objection to the relevant government institution, and is denied relief by that government institution, may file a complaint with the Tribunal “within 10 working days after the day on which the potential supplier has actual or constructive knowledge of the denial of relief, if the objection was made within 10 working days after the day on which its basis became known or reasonably should have become known to the potential supplier.”
  2. The RFSO was issued on February 9, 2017. As part of the solicitation, PWGSC conducted a Q&A process in which questions were submitted by bidders and answered by PWGSC on a rolling basis; specifically, questions 1-8 were answered on February 28, 2017; questions 9-19 on March 2, 2017; questions 20-33 on March 16, 2017; and questions 34-53 on March 27, 2017.[7]
  3. M.D. Charlton submitted its first questions on February 17, 2017.[8] PWGSC’s answers to those questions (Q1-8) were released on February 28, 2017.[9] M.D. Charlton failed to raise any objection relating to the subject matter of those answers within the 10-day time frame provided for under subsection 6(1) of the Regulations.
  4. M.D. Charlton submitted twenty further questions to PWGSC on February 23, 2017,[10] then, absent an immediate answer, re-submitted them (with new numbering but otherwise not substantially changed) on March 2, 2017.[11] M.D. Charlton claims that PWGSC never responded to these questions. However, PWGSC did in fact respond to them on March 27, 2017, as part of its ongoing Q&A process, numbering them as consecutive questions 34-53.[12]
  5. Of these twenty questions, thirteen raise a potential breach of the trade agreement (Q34-35, 42-44 and 46-53), specifically, bias of specifications.[13] These represent the gravamen of M.D. Charlton’s complaint about the RFSO. They are also the only potentially valid grounds—relating to the terms and requirements of the RFSO, which became known to M.D. Charlton as of February 9, 2017—raised in the complaint, as discussed below.
  6. M.D. Charlton filed its complaint on April 10, 2017, which is ten business days after March 27, 2017. Thus, its February 23, 2017, questions (answered as questions 34-53 of the Q&As issued on March 27, 2017) would be timely, but for the fact that they were already asked and answered earlier in the Q&A process: specifically, Q34-35, 42 and 44 were already asked in Q9-10 (issued on March 2, 2017);[14] Q43,46-48 and 50-53 in Q17 (issued on March 2, 2017);[15] and Q49 in Q29 (issued on March 16, 2017).[16]
  7. The Tribunal has previously held that a potential supplier must make objections in a timely manner as they become known to it, and that it must guard against accumulating them so as not to have them declared untimely.[17]
  8. All of the questions and answers relating to M.D. Charlton’s grievances were published by March 16, 2017. Thus, M.D. Charlton first became aware, or reasonably should have become aware, of its grievances by March 16, 2017, at the latest. The time frame contemplated by subsection 6(1) of the Regulations therefore lapsed on March 30, 2017. The complaint is therefore untimely.

M.D. Charlton Seeks Enforcement of a Tribunal Recommendation in Another Proceeding

  1. The Federal Court of Appeal has held as follows: “[g]iven that the CITT only possesses a recommendation power in respect of procurement complaints according to subsection 30.15(2), it is apparent that the enforcement of the Tribunal’s recommendations is not within the CITT’s jurisdiction.”[18] As such, the proper forum for enforcing an order of the Tribunal is the federal courts.[19]
  2. The Tribunal finds that M.D. Charlton seeks to enforce the Tribunal’s recommendation in File No. PR-2015-070 and that this request is, thus, outside the Tribunal’s jurisdiction.
  3. The pith of the complaint is that PWGSC has not sufficiently implemented the terms of the Tribunal’s recommendation in File No. PR-2015-070, according to which the RFSO “should not include technical requirements that favour a particular supplier.”[20]
  4. Under the heading “Content or nature of objection” in its complaint form, M.D. Charlton writes as follows: “The [RFSO] requirements is [sic] still written with a specific manufacturer in mind. The requirements has [sic] changed very little since the CITT ruled on PR-2015-070”.[21] Under the heading “Basic nature of the complaint” in its complaint form, it further writes as follows:[22]

    1. Solicita[t]ion was not conducted in an Open, Fair and Transparent manner as recommended within the Determination and Reasons for PR-2015-070.

    2. Within the Determination and Reasons for PR-2016-070 it was recommended “that the solicitation be cancelled and a new solicitation be issued. The new solicitation should not include technical requirements that favour a particular supplier”. This was not followed.

    . . .

    4. Within the Determination and Reasons for PR-2015-070 many concerns were raised which have yet to be responded to by the RCMP, specifically the use of the NSE[.]

  5. Under the heading “Detailed Statement of Facts and Arguments” in its complaint form, M.D. Charlton alleged that the re-tendering has not satisfactorily implemented the Tribunal’s recommendations:[23]

    . . .

    The remedy proposed by CITT [in File No. PR-2015-070] was not followed. The new solicitation (M7594-5-4254/B) contained only a few changes with two minor changes to the technical requirements. It basically was the same solicitation. . . . MDC couldn’t ascertain what the exact changes were as we were denied a copy of the original solicitation . . . .

  6. In sum, M.D. Charlton is alleging that the RFSO does not sufficiently implement the Tribunal’s recommendation in File No. PR-2015-070. M.D. Charlton seeks an inquiry into the practices of the RCMP and PWGSC on the basis that they have failed to ensure that the re-tendering is “open, fair and transparent”. It claims that the RCMP has improperly refused to communicate with M.D. Charlton and that PWGSC has improperly insisted on communicating only in writing and provided non-responsive written answers to its questions. M.D. Charlton’s objection to the NSE invocation has already been dealt with in File No. PR‑2015-070.
  7. The conclusion that M.D. Charlton’s complaint is backward-facing rather than focused on raising new, independent grounds of complaint is buttressed by its failure to include evidence or particularized allegations in its complaint to demonstrate how the remaining requirements impermissibly favour a specific manufacturer. It implicitly assumes that the Tribunal will compare the RFSO with the one at issue in File No. PR-2015-070 to determine whether it is wanting based on the evidence submitted and the findings made in the prior proceeding. This is not an exercise that the Tribunal embarks on.[24]

The Complaint Does not Disclose a Reasonable Indication of a Breach of a Trade Agreement

  1. Irrespective of the Tribunal’s findings above, the Tribunal finds that the complaint does not disclose a reasonable indication of a breach of an applicable trade agreement, here, the AIT. M.D. Charlton has raised four grounds of complaint, but none of them satisfies the conditions for the Tribunal to commence an inquiry. This is so because they either involve grounds not subject to challenge before the Tribunal or grounds for which M.D. Charlton has failed to bring sufficient evidence to establish even the minimal (prima facie) threshold for establishing a violation of the trade agreements.

Purported Deficiencies of the Solicitation—Unsubstantiated

  1. M.D. Charlton argues that PWGSC’s insistence on written communications is unfair. M.D. Charlton also argues that the procurement process is vitiated because the RCMP’s purported objective was to “sole-source this procurement from the start”, and because it may have been in contact with other vendors and public sector agencies. More fundamentally, M.D. Charlton objects to the RCMP not wanting to adopt M.D. Charlton’s view of what the solicitation requirements should be.
  2. The Tribunal finds no evidence of a breach of the AIT in regards to manner in which PWGSC has communicated with M.D. Charlton. The Tribunal notes that PWGSC answered each of M.D. Charlton’s questions. The Tribunal also finds no evidence (or allegation for that matter) that M.D. Charlton was prevented from effectively submitting a proposal because of any lack of willingness by PWGSC to answer questions posed by M.D. Charlton. Likewise, the Tribunal was presented with no evidence of favoritism towards any bidder resulting from the manner in which PWGSC has conducted itself in the Q&A process. That M.D. Charlton is unsatisfied with the level of disclosure in the Q&A process regarding the reasons that motivated the RCMP to choose the requirements that it did is not in itself a valid ground of complaint.
  3. More fundamentally, the Tribunal remarks that M.D. Charlton’s allegations towards the RCMP are mostly, if not entirely, based on innuendo or speculation and therefore do not provide a basis for inquiry. 

Purported Favouring of a Particular Supplier—Unsubstantiated

  1. Article 504(3)(b) of the AIT prohibits

    the biasing of technical specifications in favour of, or against, particular goods or services, including those goods or services included in construction contracts, or in favour of, or against, the suppliers of such goods or services for the purposes of avoiding the obligations of this Chapter.

  2. When analyzing a complaint regarding alleged biased RFP requirements, the Tribunal has repeatedly held that the government institution is entitled to define its legitimate operational requirements, though it must do so reasonably, and may not establish conditions that are impossible to meet.[25] As long as these conditions are met, the Tribunal held that there is no obligation to structure a procurement to accommodate any particular supplier.[26] Moreover, the Tribunal has found that, while certain bidders may have a competitive advantage regarding a particular procurement process, it does not necessarily follow that the solicitation is biased. Rather, such advantages may simply be “part of the ordinary ebb and flow of business.”[27] The Tribunal has noted that competitive advantages could arise from incumbency,[28] but that “that, in itself, is normal and is not considered to be unfair.”[29] In addition, the Tribunal has noted that “there is no obligation to offset the effect of incumbency in the formulation of solicitations.”[30] Finally, when applying Article 504(3)(b) of the AIT, the Tribunal has held that in order to establish bias, the complainant must establish that the government institution deliberately structured the procurement to favour a particular supplier or to exclude a particular supplier.[31]
  3. With varying degrees of specificity, M.D. Charlton has alleged that the RFSO as re-tendered continues to favour a specific supplier. However, it has not identified with any particularity or evidence why any individual requirement of the RFSO is impermissibly stringent or designed to evade an open competition. The questions M.D. Charlton has posed to PWGSC challenge the RFSO requirements as not presenting best value for Canada or as not being bona fide RCMP requirements, but M.D. Charlton does not provide any specific evidence for why these requirements are unreasonable or impossible to meet or deliberately favour a specific vendor—it simply states in conclusory fashion that they do. M.D. Charlton provides no salient rationale (or evidence) as to why a specific requirement would favour a specific supplier or exclude M.D. Charlton, as opposed to simply not being, in M.D. Charlton’s opinion, what it views as the best value for Canada.

Purported Breaches of Contracting Policies—Not Valid

  1. M.D. Charlton alleges that PWGSC has violated various provisions[32] of PWGSC policy documents by issuing a RFSO that does not represent the minimum essential requirements of the RCMP for night vision binoculars.
  2. As previously mentioned, Article 504(3)(b) of the AIT prohibits “the biasing of technical specifications in favour of, or against, particular goods or services, including those goods or services included in construction contracts, or in favour of, or against, the suppliers of such goods or services for the purpose of avoiding the obligations of this Chapter.” This trade agreement obligation is wider than those contained in the various contracting policy documents that M.D. Charlton refers to when alleging other purported failures by the RCMP. As examined above, because M.D. Charlton failed to substantiate any biasing of technical requirements whatsoever under the applicable trade agreement, the Tribunal gives no credence to M.D. Charlton’s allegations in regard to purported improper policy adherence.
  3. In any event, the Tribunal examines trade agreement obligations only. The Tribunal has consistently held that it does not have the jurisdiction to inquire into whether a contracting authority acted consistently with its own policy unless that policy is incorporated into the solicitation documents, which has not been alleged here.

National Security Exception Issue—No Prejudice

  1. M.D. Charlton challenges PWGSC’s invocation of the NSE in the re-tendering but does not explain how that event was prejudicial to it specifically. As such, the Tribunal does not see in this issue, either, any ground for inquiry.

DECISION

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

[1].     R.S.C., 1985, c. 47 (4th Supp.) [CITT Act].

[2].     S.O.R./93-602 [Regulations].

[3].     Pursuant to subsection 30.12(2) of the CITT Act, the Tribunal deemed the complaint to be incomplete pending the filing of the RFSO at issue. The Tribunal accepted the complaint as complete and filed as of the date of filing of the RFSO on April 13, 2017. For the purposes of its timeliness analysis under subsection 6(1) of the Regulations, the Tribunal treats the complaint as filed on April 10, 2017, even though it was not accepted as complete until the submission of the RFSO.

[4].     M.D. Charlton Co. Ltd. v. Department of Public Works and Government Services (10 August 2016), PR‑2015‑070 (CITT) [M.D. Charlton] at para. 67.

[5].     Complaint at 5.

[6].     18 July 1994, C. Gaz. 1995.I.1323, online: Internal Trade Secretariat <http://www.ait-aci.ca/agreement-on-internal-trade/> [AIT]. See M.D. Charlton at para. 52.

[7].     Complaint, Annex H.

[8].     Complaint, Annex G at 1.

[9].     Complaint, Annex H at 1.

[10].   Complaint, Annex E.

[11].   Complaint, Annex E2.

[12].   Complaint, Annex H at 5. Questions 34-35, 42 and 44 essentially re-phrase the questions in Q9 and Q10. Regardless, even if considered to be new, the vagueness of the questions (“explain how the manufacturers were picked” (Q34), “explain how this solicitation better expresses Canada’s operational requirements with respect to the last solicitation” (Q35), “[w]here is this new requirement coming from” (Q42), and “[w]ould the crown consider removing the mandatory of white phosphor” (Q44)) and the manner in which they fail to present any evidence of how a specific requirement is biased and simply refer back to the prior solicitation render them improper grounds of complaint.

[13].   The seven other questions do not raise potentially valid grounds of complaint. Questions 36-37 involve the NSE, which is not a valid ground of complaint as discussed below. Questions 38-39 involve procedural questions about the debriefing and recourse process. Question 40 inquires about why the RCMP did not issue a Request for Information or Pricing before issuing the RFSO. Question 41 asks why the RFSO prohibits faxing of bids. Question 45 is a request that the mandatory requirements be minimized, consistent with section 4.35.1 of the SACC Manual (which is not a valid ground of complaint as discussed below), without any evidence or allegation as to why a specific requirement is biased.

[14].   Complaint, Annex H at 5.

[15].   Complaint, Annex H at 6.

[16].   Complaint, Annex H at 9.

[17].   Shaw Industries Inc. (11 August 2014), PR-2014-022 at para. 32; Genesis Security Inc. (2 February 2016), PR‑2015-055 (CITT) at para. 13; Toromont Cat (22 January 2016), PR-2015-054 (CITT) at para. 15; 2040077 Ontario Inc. o/a FDF Group (27 August 2014), PR-2014-024 (CITT) at para. 14; APM Diesel 1992 Inc. (15 February 2012), PR-2011-052 (CITT) at para. 15; IBM Canada Ltd. v. Hewlett Packard (Canada) Ltd., 2002 FCA 284 (CanLII).

[18].   Siemens Westinghouse Inc. v. Canada (Minister of Public Works and Government Services), 2001 FCA 241 (CanLII) at paras. 37-38.

[19].   Canada (Attorney General) v. Northrop Grumman Overseas Services Corporation, 2007 FCA 336 (CanLII) at paras. 18-21.

[20].   M.D. Charlton at para. 67.

[21].   Complaint at 4.

[22].   Complaint at 5.

[23].   Complaint at 7.

[24].   Adirondack Information Management Inc. v. Department of Public Works and Government Services (24 July 2015), PR-2015-019 (CITT) at para. 5.

[25].   Springcrest Inc. v. Department of Public Works and Government Services (21 November 2016), PR-2016-021 (CITT) [Springcrest] at para. 53; 723186 Alberta Ltd. (12 September 2011), PR-2011-028 (CITT) [Alberta Ltd.] at para. 19; Diagen Communications (23 August 2011), PR-2011-021 (CITT) [Diagen] at para. 15.

[26].   Alberta Ltd. at 20; Diagen at para. 16.

[27].   Alberta Ltd. at 21; Diagen at para. 17.

[28].   CAE Inc. v. Department of Public Works and Government Services (7 September 2004), PR-2004-008 (CITT) at para. 43.

[29].   Array Systems Computing Inc. (25 March 1996), PR-95-024 (CITT).

[30].   Corel Corporation v. Department of Public Works and Government Services (26 October 1998), PR-98-012 and PR-98-014 (CITT).

[31].   Springcrest at para. 53; R.P.M. Tech Inc. v. Department of Public Works and Government Services (25 March 2015), PR-2014-040 (CITT) at para. 30.

[32].   Specifically, Supply Manual: 1.10.5 (Guiding Principles), 1.30.5 (Treasury Board Contracting Policy), 2.1 (Requirements Definition), 4.25 (The Requirement), 4.35.1 (Mandatory Criteria); SACC Manual: A0012T Contact During Bid Period; and the Code of Conduct for Procurement.

Case Number(s)

PR-2017-002

Attachment(s)

pr2r002_e.pdf (91.39 KB)

Status

Publication Date

Tuesday, May 23, 2017

Modification Date

Tuesday, May 23, 2017