In its May 2024 determination in PricewaterhouseCoopers LLP v. Department of Public Works and Government Services, the Canadian International Trade Tribunal upheld the government’s use of a best-and-final-offer tie-breaker process to resolve a tie score impasse. The dispute dealt with an RFP issued by the Department of Public Works and Government Services on behalf of the Royal Canadian Mounted Police for task-based informatics professional services.
As the Tribunal summarized, after the initial evaluation resulted in a tie between the top two proponents, the government could not reach a consensus with those proponents on how to resolve the impasse. At that point, the government reached outside the express rules of the RFP to rely on a provision in the Canadian Free Trade Agreement that allows government institutions to resolve a tie by inviting all compliant proponents to submit a best-and-final-offer (BAFO). The proponent that was initially ranked third behind the two top-ranked tied proponents won the tie-breaker BAFO process and was awarded the contract. The complainant, who was one of the two top-ranked tied proponents, objected to the BAFO process in general and, more specifically, objected to the government allowing the third-ranked proponent to participate in the tie-breaker and win the contract award.
However, the Tribunal upheld the government’s BAFO tie-breaker process. The Tribunal noted that Canadian Free Trade Agreement, as well as other applicable trade treaties, recognizes the use of negotiations in two separate situations: (i) when the intention to rely on negotiations is announced as part of an RFP process (meaning a negotiated RFP that enables dialogues between the government and proponents throughout the various stages of a bidding process, which can include the use of BAFOs with short-listed proponents, as well as contract awarded negotiations with the top-ranked proponent; and (ii) in narrower circumstances where no intention to negotiate is announced in the original solicitation but a tie score requires the use of a BAFO among all compliant and eligible bidders to determine who should win the contract award. As the Tribunal noted, the use of negotiations in the challenged procurement fell under the second narrower category.
The Tribunal found that the treaty-based BAFO tie-breaker provisions relied on by the government “allowed it to request that the three responsive bidders each provide new financial proposals to select a winning bidder” and rejected the complainant’s argument that the process constituted an improper hidden evaluation stage that was not referred to in the original RFP.
As the Tribunal concluded, since the tie could not be resolved within the express rules of the RFP, the relevant trade treaty provision “authorizes the procuring entity to act in a manner that was not contemplated by the RFP and take steps that were not disclosed to bidders prior to the evaluation of the proposals to be in a position to select a winning bidder.” In such a situation, the use of the BAFO did not constitute an improper hidden evaluation stage since the right to use that process in the circumstances is recognized under applicable trade treaties. As the Tribunal noted, “the exercise of this right is governed by Canada’s international trade obligations” and the “terms of the RFP cannot trump these obligations.” Since the BAFO tie-breaker protocol is expressly recognized under applicable trade treaty provisions, the Tribunal concluded that “this course of action does not constitute the wrongful introduction of an undisclosed evaluation procedure or an improper amendment of the RFP after the submission of the bids.”
The Tribunal also rejected the complainant’s argument that even if permitted, the BAFO tie-breaker should have been restricted to the two top-ranked tied proponents and should have excluded the third-ranked compliant proponent who eventually won the contract award. As the Tribunal stated, in the event of a tie, the trade treaty rules require that “any supplier that satisfied the conditions for participation and whose bid met the mandatory evaluation criteria should similarly remain eligible.” More specifically, the Tribunal stated that there is “no obligation to negotiate only with the two bidders that were tied at the end of the initial evaluation.” In fact, the applicable trade treaty provisions “indicate that this would be inappropriate” given that all eligible bidders should be allowed to participate.
While this case confirms that government institutions are allowed to use treaty-based BAFO processes to resolve tie scores, relying on obscure trade treaty provisions to use BAFOs in an ad-hoc manner to deal with tie bids is no substitute for proactively adopting the broader use of Negotiated RFP formats to properly enable dialogues, BAFOs, and contract award negotiations as part of a transparent and pre-defined evaluation and award process.
This ruling, which illustrates why public institutions should adopt formal protocols and templates enabling the use of more flexible NRFP tendering formats that allow transparent negotiations as part of their procurements, will be covered in the Leveraging Negotiated RFPs module of our new Negotiated RFPs in the Canadian Public Sector certificate program that runs in May and returns in November. Please see our current training schedule for more details.
