(This article was published in the October 2021 edition of Supply Professional magazine.)
As illustrated in the following recent decisions, Canadian public purchasing institutions are facing an increasing level of complexity in meeting the legal standards for defensible bid evaluations.
For example, in its November 2020 decision in Canada Forgings Inc. v. Atomic Energy of Canada Limited, the Ontario Superior Court of Justice determined that the factual, technical, and legal issues raised in a challenge to a government tendering process were too complex for a jury trial. The dispute dealt with a bidding process for the refurbishment of the Bruce “A” CANDU 9 nuclear reactor. Atomic Energy of Canada Limited received three bids but failed to accept any of those bids during the 180-day bid validity period and, after that period expired, bypassed those bids and decided to deal with a different supplier for its requirements. One of the bypassed bidders, Canada Forgings Inc., brought a legal challenge claiming nearly $20 million in damages. The Court rejected the plaintiff’s request for a jury trial, ruling that the issues were so complex that laypersons on a jury could not adjudicate them even with proper instructions from a judge. The case was directed to a six-and-a-half-week trial by judge alone.
In fact, even specialized tribunals face challenges in adjudicating bid protests due to the complexity of the subject matter. For example, in its February 2021 decision in Heiltsuk Horizon Maritime Services Ltd. v. The Attorney General of Canada, Canada’s Federal Court of Appeal overruled the Canadian International Trade Tribunal, a specialized body recognized for its expertise in government procurement disputes, after concluding that the Tribunal made significant errors in its adjudication of a bid protest. The dispute involved a federal government RFP for emergency towing vessels for the British Columbia coastline. The controversy turned on an evaluation criterion for minimum towing power that required the ships to “exert a minimum continuous bollard pull of no less than 120 tonnes when all required engine driven consumers (shaft generators, etc.) are taken into account.”
A losing bidder challenged the government’s evaluation process, claiming that the winning bidder’s vessels did not meet the technical towing requirement. The Tribunal made a series of rulings in response to the legal challenge, including two separate re-evaluation orders. On appeal, the Court found that the Tribunal’s second re-evaluation order was flawed since the Tribunal directed the government’s re-evaluation panel to consider technical factors outside of the scope of the RFP. While the Court ultimately dismissed the complaint and upheld the original award, this case serves as a reminder to avoid bid compliance criteria that are based on complex technical factors and unclear verification procedures since those complexities expose evaluations to protracted legal proceedings.
In addition to tender compliance challenges, government evaluation decisions are also subject to challenge on the scoring process used to identify the top-ranked bidder. Many of these scoring challenges involve disputes over the assessment of a bidder’s prior experience. For example, in its March 2021 determination in Brion Raffoul v. Department of Public Works and Government Services, the Canadian International Trade Tribunal rejected a bid protest filed by a losing bidder who alleged that the government relied on unnecessarily restrictive and biased prior experience criteria. The case dealt with a federal Request for Standing Offer (RFSO) for patent agent services. The complainant took issue with the RFSO’s mandatory evaluation criterion that required bidders to have successfully prosecuted one patent family, in which the patents were issued in Canada, the United States, and at least two other countries outside of North America, and where each patent was issued in the past ten years. The complainant alleged that the ten-year time limit and the geographical restrictions were unreasonable. While the challenge was ultimately rejected after the government proved that its criteria were rationally connected to legitimate operational requirements, this case shows how suppliers are becoming increasingly active in challenging bid evaluation criteria and resulting contract award decisions.
All too often, public institutions underestimate the complexity of government procurement processes and are caught off guard when their evaluation and award decisions are legally challenged. However, in the aftermath of legal proceedings, the complexity and risks of the evaluation process become all too apparent. Moving forward, purchasing institutions should not underestimate the inherent challenges contained in the bid evaluations process and should ensure that their project teams are adequately resourced to run defensible evaluations.
