This article is an extract from the 5th edition of Government Procurement.
In a May 2019 Canadian Free Trade Agreement arbitration ruling in the matter of Parker Johnston Industries Ltd. v. The Calgary Board of Education, an arbiter struck down The Calgary Board of Education (School Board) local warranty requirement as unnecessarily restrictive. The dispute involved a roofing replacement project at two Calgary schools. The complainant challenged the process as being discriminatory against out-of-province suppliers and unfairly favouring Alberta suppliers due to the specification that required an Alberta Roofing Contractor’s Association (ARCA) warranty. The complainant, a British Columbia contractor, had attempted to register for certification under the Alberta warranty program but its application was rejected.
The complainant sought a pre-bid clarification, seeking approval for providing a substitute warranty that was “as good or better” than the specified local ARCA warranty. The School Board issued an addendum confirming that it would accept substitute warrantees with the bids. As the arbiter summarized, the complainant challenged this addendum, asserting that the School Board failed to provide pre-bid guidance to bidders regarding the requirements for those substitute warranties, and therefore left out-of-province bidders at a disadvantage in the bidding process:
… the Calgary Board of Education issued an addendum subsequent to the original request for bids amending the solicitation to include warranties and certifications “equivalent” or superior to ARCA’s. Parker Johnston Industries Ltd. contends that what was “equivalent or superior” was not specified, leaving the issue to the procurement authority’s discretion, putting non-ARCA bidders on an unequal footing with those who were ARCA certified.
As the arbiter stated, the School Board failed to respond to the complainant’s request for pre-bid consultations to address the issue and this non-responsiveness was not conducive to resolving the issue:
In my review of the procedures followed by the supplier in bringing this case forward I am satisfied that the steps taken were the correct ones as per the stipulations of the Bid Protest Mechanism. In the case of the government entity, however, their apparent ignoring the request for consultation with the supplier, though not in contravention of any regulations, was not conducive to dealing with a legitimate issue.
The arbiter also ruled that the School Board’s vague commitment to accepting equivalent warranties was not clear enough to allow potential bidders to assess whether they could meet the requirements before deciding to bid:
The issuance of an addendum by the government entity during the bid preparation period that broadened the criteria for warrantees and certification to be equivalent or superior to those of ARCA was not entirely useful in that it did not provide any specific details. It is my understanding that when a procurement authority, for the purposes of its solicitation, relies on mandatory requirements based on standards or a trade name it is required to set out with precision applicable mandatory requirements pertinent to the solicitation. This would enable the potential supplier to assess and demonstrate the equivalency requirements. Furthermore, if there is a requirement of a trade name or equivalent, the procuring entity must provide the necessary information to suppliers to assess and demonstrate equivalency. The Calgary Board of Education did not do this with the original request nor with the addendum.
The arbiter noted that Alberta Infrastructure had recently addressed this discriminatory practice by removing the local warranty requirements from its provincial guidelines. However, the arbiter found that the School Board had chosen to ignore those guidelines:
The issue of discrimination in the roofing issue has recently been addressed by Alberta Infrastructure, which issued guidelines by way of a template tender document that removed the ARCA warranty requirement. In doing so, Alberta Infrastructure addressed this discrimination, which Parker Johnston Industries Ltd. had identified. The government entity in this case, the Calgary Board of Education, has chosen to ignore Alberta Infrastructure’s guidelines.
Going forward, the arbiter recommended “The Calgary Board of Education, in compliance with Alberta Infrastructure directions, should drop all refence to ARCA warrantees, and should specify in detail its warranty and certification roof requirements, much as it does in other aspects of its project manual for roofs.”
The complainant sought a redirect remedy, asserting that it should be awarded the tendered contract due to the treaty breach. The arbiter rejected that remedy since the work was already started with another bidder. As alternative remedies, the complainant sought a retender order or lost profits. However, the arbiter rejected those remedies as well, ruling that the warranty issue had no impact on the outcome of the bidding process since the complainant submitted an uncompetitive bid that ranked seventh out of nine bidders. However, the complainant was able to obtain a ruling directing the School Board to discontinue the warranty practice moving forward, as well as complaint-related costs.
As this case illustrates, unfair local preference practices breach applicable procurement treaty standards and are subject to legal rulings that nullify those practices. However, to obtain a specific remedy under procurement rules, complainants must typically show that the challenged breach directly impacted the outcome and cost them a contract award. In this case, the arbiter confirmed that the local preference practice was in contravention of the treaty and should be discontinued moving forward, but refused to grant any other remedies since the breach was immaterial to the outcome in the specific bidding process.
