This article is an extract from the 5th edition of Government Procurement.
In its August 2021 determination in Visiontec (2008) Ltd. v. Canada (Department of Public Works and Government Services), the Canadian International Trade Tribunal upheld the federal government’s decision to disqualify a bidder due to an apparent conflict of interest. The dispute dealt with an RFP issued by the Department of Public Works and Government Services (PWGSC) on behalf of Correctional Service Canada (CSC) for the acquisition of two full-body X-ray scanners used to scan inmates for contraband, including narcotics and weapons.
The complainant, Visiontec, challenged the government’s decision to exclude it from the bidding process, arguing that the government took contradictory positions with respect to the complainant’s eligibility to submit a bid and failed to implement measures to eliminate or mitigate the apparent conflict. The Tribunal disagreed, finding that the government was not aware of the potential conflict when, on the recommendation of the complainant, it hired an individual, referred to as “DE” in the ruling, to assist in preparing the RFP, while that individual was concurrently retained by the complainant as a consultant.
By way of background, the Tribunal noted that DE had previously worked for the Ontario provincial government at the Ministry of Community Safety and Correctional Services (MCSCS) as a technical advisor on the Ministry’s body scanner project until his retirement in 2018. In January 2020, Visiontec recommended DE to CSC to assist CSC in the development of the new RFP. In April 2020, DE was contacted by CSC and provided his resume to the federal government. He was ultimately hired by CSC in September 2020 to work on the RFP. In the interim, in May 2020, DE also entered into a consulting contract with Visiontec.
The evidence showed that DE did not notify CSC of the potential conflict until October 2020, at which point he had already been working on the RFP as a CSC employee for about a month. The Tribunal found that prior to ultimately resigning from CSC in December 2020, DE contributed to the development of the RFP statement of work, evaluation criteria, and scope definition, which gave him access to information that was not available to other bidders:
As noted by PWGSC, by the time DE disclosed his work with Visiontec, he had been involved in preparing the RFP for a period of approximately one month.
After informing CSC, DE continued to be involved with the development of the RFP and was sent numerous emails and meeting invitations for discussions concerning the procurement process, including the statement of requirement, the evaluation criteria, the acceptance test document and criteria, and the site planning workbook. PWGSC submitted as evidence emails reflecting the aforementioned work dated between October 21, 2020, and November 12, 2020. On November 25 and December 4, 2020, DE sent emails to CSC regarding his concerns related to Visiontec and his work with CSC. DE submitted his resignation on December 7, 2020.
The evidence on the record indicates that DE was hired to work on the RFP and that he carried out this work for a period of time prior to the issuance of the RFP. This is evident from Mr. Bisson’s email to DE on April 22, 2020 (before he was hired), which described the work as, among other things, helping to complete the statement of work and evaluation criteria for the RFP, scope definition for site preparation work and addressing the legal and health questions relating to the project. The “Body X-Ray Scanner Procurement and Implement Project — Scope of Work Discussion Paper” prepared by DE and sent to CSC on April 23, 2020, also reflected that the nature of the work would be to develop the RFP.
The employment contract with CSC specified the duties to be performed as follows: “Assist with the procurement process of the full body scanner.” According to CSC, due to the nature of his work, DE had access to information related to the solicitation documents that was not available to bidders. As evidence of his work, PWGSC provided examples of correspondence between DE and officials at CSC relating specifically to the RFP between September 11 to October 9, 2020. The evidence on the record supports that DE was a key contributor in providing comments on the draft statement of work and technical requirements, and technical evaluation criteria. He was also consulted on a privacy impact assessment, site planning workbook and the “acceptance test document”.
The Tribunal concluded that, at minimum, DE’s involvement in the preparation of the RFP for CSC, and his concurrent engagement as a consultant for Visiontec, created the appearance of conflict of interest and unfair advantage:
On balance, the Tribunal finds that there is sufficient evidence on the record to indicate that Visiontec’s consultant was involved in the preparation of the bid solicitation and therefore that, at the very least, an appearance of conflict of interest reasonably exists. Similarly, Visiontec’s consultant had access to information concerning the RFP that was not available to other bidders. The Tribunal finds that PWGSC’s opinion that there existed an appearance of conflict of interest or unfair advantage to be reasonable.
The Tribunal confirmed that the risk of unfair advantage was not limited to having advance access to information directly included within the published RFP, but was also comprised of access to information obtained through general discussions regarding the scoping of the RFP requirements. Given the paramount importance of eliminating unfair advantage to protect the integrity of the procurement process, the Tribunal determined that even the appearance of a conflict was sufficient to justify the disqualification:
An actual conflict of interest or unfair advantage is not required. The appearance of a conflict of interest or unfair advantage is sufficient given that it is impossible to know with certainty that during the time that DE was simultaneously working for CSC and Visiontec, information concerning the RFP was either advertently or inadvertently disclosed in advance of the RFP being issued. Further, the Tribunal is of the view that the risk of unfair advantage is not limited to information concerning the requirements that were published in the RFP, but also includes information from general discussions regarding the requirements, even those that may not have been included in the final published version of the RFP. The elimination of such risk is of paramount importance to preserving the integrity of the procurement process.
As the Tribunal explained, allowing the complainant to bid in these circumstances would constitute a contravention of the government’s trade treaty duties, including those set out in the Canadian Free Trade Agreement (CFTA), and would expose the government to complaints from other bidders:
In the GIR, PWGSC submitted that DE was directly involved in the preparation of the bid solicitation at issue at the same time as he was providing services as a consultant to Visiontec. The fact that Visiontec would be seen to have an interest in advance drafts of the RFP, which its consultant DE would have had full access to, created the apparent conflict of interest or unfair advantage compared to those potential suppliers who did not have an employee or subcontractor who worked on the solicitation documents.
As submitted by PWGSC, the trade agreements require it to conduct a fair procurement process–not affected by conflict of interest or unfair advantage–and this obligation must be considered in respect of all bidders. In this regard, PWGSC has referred to relevant provisions of the trade agreements including, for instance, Articles 500, 502, 512.3 and 515 of the CFTA. If PWGSC fails to adequately address a real or apparent conflict of interest or unfair advantage pursuant to its obligations under the trade agreements, it could expose itself to reasonable complaints from other bidders.
Having considered the relevant facts, as they are further described below, the Tribunal is of the view that PWGSC acted consistently with its obligations under the trade agreements in finding that Visiontec had an apparent conflict of interest or unfair advantage, as these terms are used in clause 18 of the Standard Instructions.
As the Tribunal concluded, even if unintentional, Visiontec’s actions compromised its ability to participate in the bidding process since the government was left with little choice but to disqualify the complainant or expose itself to liability for breaching the fair process duties owed to other bidders:
However, in the present circumstances, after disclosing to CSC the name of a candidate for a consultancy position relating to the development of a tender to fulfill a requirement for X-ray scanners, Visiontec chose to hire the same person it had referred to CSC to work on a project that relates to X-ray scanners (albeit not in a procurement context). While the Tribunal recognizes that Visiontec’s actions may have been unintentional, it nevertheless placed itself in a position that posed a risk to its ability to participate in the procurement process. On these facts, the Tribunal does not agree that PWGSC must act to enable Visiontec to participate in the solicitation process, thereby exposing it to liability vis-à-vis other bidders for breach of its obligations to ensure a fair and impartial procurement process. The importance of preserving the integrity of the process underlies the manner in which the trade agreements have been interpreted, i.e. even the “appearance” of a conflict of interest may be prohibited.
As this case illustrates, organizations that advise government institutions on procurement matters run the risk of conflicting themselves out of opportunities to bid on related work. To comply with their fair process duties, public institutions should establish measures to screen for potential conflicts and implement procedures to preclude those who participate in the preparation of solicitation documents from bidding on those same opportunities.
