In an April 2019 Canadian Free Trade Agreement (CFTA) arbitration ruling in the matter of Parkland Geotechnical Consulting Ltd. v. Alberta Infrastructure, an arbiter ruled that the treaty did not apply to purely local public procurements involving suppliers located within the same jurisdiction as the challenged purchasing entity. The dispute involved an Infrastructure Alberta bidding process for geotechnical consulting services for the Red Deer Justice Centre. The complainant’s bid was disqualified by Alberta Infrastructure due to conflict of interest concerns.
The complainant brought a bid protest, challenging its disqualification as a breach of the CFTA. Alberta Infrastructure argued that the scope of the CFTA did not allow Alberta suppliers to challenge Alberta public institutions since the treaty was created to prevent discrimination between provinces, not within them. The complainant countered by asserting that this interpretation of the scope of the CFTA would amount to reverse discrimination against Alberta suppliers, who would enjoy fewer protections than out-of-province suppliers. The complainant also argued that prior arbiter rulings in Alberta under the same bid protest mechanism had dealt with Alberta suppliers challenging Alberta public institutions. However, the arbiter ruled against the complainant, finding that the CFTA regulated inter-provincial procurement but did not apply to intra-provincial procurement:
Counsel for both parties in this dispute very ably presented their arguments and I am thankful for their efforts. I am persuaded by the arguments presented by AI that the purpose of the CFTA and its dispute resolution process are intended to reduce barriers between Provinces impeding the free movement of goods, services and labour.
While there may be cases in which a totally local procurement may fall under the ambit of the CFTA, in this case what is being complained against is a decision of a local authority concerning a local supplier that does not relate to the basic subject matter of the CFTA.
I agree that the CFTA procurement rules are not intended to provide an avenue for proponents to challenge any procurement decision made by any Party to the agreement but are intended to ensure free movement of trade, goods and services across Canada by, in part, providing oversight to procurements where there may be restrictions to such free movement.
To support this ruling, the arbiter distinguished the prior Alberta bid protest rulings, noting that they may have involved local suppliers, but that those local suppliers had raised inter-provincial issues relating to general barriers to competition, while in this case the local complainant challenged a specific conflict of interest ruling that related to a single project:
The cases, PMH Insights v. Parkland (“PMH”) and Parkland Geotechnical Consulting v The City of Red Deer (“Red Deer”) are distinguishable as they were not cases under the CFTA and both have cross-territorial implications. In PMH the issue was sole-sourcing a technology contract that exceeded the minimums set in the NWTPA for public tender. In Red Deer issues were raised concerning prequalification restrictions as well as restrictions on experience. Both cases limited the ability of contractors from other Provinces competing.
As this case illustrates, the scope of the trade treaties, and the standing of suppliers to bring challenges under trade treaty bid protest mechanisms, remains subject to uncertainty. While this ruling may stand for the proposition that purely intra-provincial procurement matters involving a single local supplier may not be captured by the inter-provincial trade treaty rules, in practice, drawing the line between a purely local matter that only impacts a specific local supplier, and a general inter-provincial procurement issue that impacts both local and out-of-province suppliers, creates unnecessary complexity in administering the day-to-day public tendering process.
Notwithstanding this ruling, moving forward, Canadian public institutions should continue to maintain common fair process standards that apply to all suppliers, while also avoiding local preferences and other restrictive practices that breach the trade treaties. In the final analysis, even if treaty-based bid protest mechanisms prove to be a dead end for local complainants in some situations, those suppliers will continue to have recourse to the courts. As evidenced by a long history of court-based challenges, local suppliers are already well aware of their ability to challenge public procurement processes through the courts.
