This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its determination in Ecosfera Inc. v. Canada (Department of the Environment), the Canadian International Trade Tribunal found that the federal government’s debriefing duties are far broader than had previously been assumed. By expanding the scope of debriefing duties, the Tribunal launched a legal tidal wave at the federal government. Those institutions outside the federal government that also conduct debriefings based on trade treaty or statutory duties, as opposed to voluntary procedures, may want to brace themselves against the potential ripple effect.
It has long been understood that the focus of bidder debriefings should be forward-looking to help unsuccessful bidders understand how they can improve their future submissions. However, the Tribunal found in Ecosfera that these debriefings should also be backward-looking and should provide losing bidders with information that explains why they lost the recent bidding process. While on the surface this may appear to be a minor nuance, in practice this could turn the tide heavily against the government.
Debriefings have always had the inherent risk of becoming fishing expeditions used by losing bidders to contest the outcome of a bidding process or to obtain valuable information about their competitors. Given these intrinsic risks, an uneasy balance has been struck. While purchasers often discuss the strengths and weaknesses of the supplier’s unsuccessful submission, they tend to steer clear of making any comparisons to the winning bidder for fear of disclosing the winning bidder’s confidential business information. Given the litigious climate in public tendering, purchasers also try to avoid providing any information that could be used to legally challenge their evaluation process. However, the Tribunal’s determination makes it much harder to maintain these litigation barriers.
In Ecosfera, the complainant argued that the government failed to provide a sufficient explanation of the evaluation process or sufficient information about the winning tender. The Tribunal agreed, finding that the government had interpreted its debriefing duties too narrowly and that those duties extended beyond merely assisting a bidder in preparing for future bids:
Contrary to EC’s suggestion, the requirement set out in Article 1015(6)(b) of NAFTA is intended to do much more than simply allow unsuccessful bidders to understand how they can better respond to future procurement opportunities…. While the Tribunal has stated in the past that the purpose of Article 1015(6)(b) of NAFTA is to allow unsuccessful bidders to understand how they can better respond to future procurement opportunities, it is unlikely that the latter meant for the provision to be applied so narrowly.
The Tribunal acknowledged the balancing act that must be struck between promoting the transparency of the process and protecting the confidential business information of competing bidders; however, it found that the legal duty to protect confidential information could not be used as a reason to completely deny a losing bidder an explanation of why it lost the opportunity. The Tribunal then made the following general statements about the government’s debriefing duties:
[T]he information should focus on the considerations of those who were involved in making the decision that resulted in the proposal of the unsuccessful bidder not being selected. This includes, obviously, the communication of the reasons why the proposal was not selected, the communication of the justification for taking those reasons into account and the approach used to examine them. In fact, the entity concerned ought to provide any information that could reasonably be expected to reveal the reasons for which the proposal was not selected.
Since it is often impossible to explain why one tender was not selected without discussing the relative merits of the winning tender, this determination brings the government far closer to the danger zone of having to disclose information that could arguably be the confidential and proprietary information of competing bidders. The clear dividing wall that restricted debriefing disclosures to information about the supplier’s own proposal is eroding. In its place is an ambiguous new reality that could place purchasers in a legal whirlpool of conflicting disclosure and confidentiality duties.
This broadly stated obligation to provide “any information” that could “reveal the reasons for which the proposal was not selected” can only serve to strengthen the hands of disgruntled bidders who are fishing for information about their competitors or are looking for information that could help fuel their next legal challenge against the government. While in principle transparency is a good thing, when taken to extremes it only serves to put inordinate administrative burdens on our already strained public purchasing processes. While this decision technically only applies to the Canadian federal government, it serves as a wake-up call to all public institutions to revisit their debriefing practices and test the strength of their litigation breakwaters.
