Recent cases reflect an increase in inside advantage and biased specification cases in Canadian public procurement, particularly when purchasing institutions fail to properly manage their external consultants. While this is not a new issue, these new rulings underscore the importance of implementing proactive conflict of interest safeguards to prevent unfair bidding practices.
Unfair inside advantage is not limited to public sector tendering. In fact, these types of conflicts can undermine the integrity of both public and private sector bidding. For example, in its April 2021 decision in Di Sarra v. Ontario Assn. of Architects, the Ontario Superior Court of Justice – Divisional Court dismissed an appeal from a decision of the Discipline Committee of the Ontario College of Architects which found an architect guilty of misconduct due to a conflict of interest. The architect was found to be in a conflict of interest because he provided millwork drawings used by his private client to solicit quotes for a home renovation and at the same time acted as the owner of a company that submitted a quote for that same work. The discipline committee found that this conduct breached the professional regulations that prohibit an architect from submitting bids or tenders on a project when that architect is also providing architectural services for that same project. This case serves to further underscore the importance of maintaining a clear division between those who work on behalf of an owner on a project and those who work for parties who are bidding on that same project.
Moving to the federal public sector sphere, 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 Tribunal found that the government was not aware of the potential conflict when, on the recommendation of the complainant, who would later submit a bid the project, 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. DE did not notify the government of the potential conflict until October 2020, at which point he had already been working on the RFP as a government employee for about a month. The Tribunal found that prior to ultimately resigning from the government 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. 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.
Even more recently, in its June 2023 report entitled Report on the Rehabilitation of the Roussin Centre (Calls for Tenders IMM.SP20-05, IMM22-01 and IMM22-08), Montreal’s Inspector General found that two municipal tender calls for a community centre upgrade project included biased specifications and that those tender calls did not include a required clause allowing potential bidders to submit equivalency requests during the pre-bid tender posting period. As the Inspector General noted, the applicable legal standards required the municipality to prepare specifications that were described in terms of neutral performance or functional requirements rather than descriptive characteristics and, if that was not possible, required that bidders be permitted to propose equivalencies.
However, the Inspector General found no evidence that the consultant retained by the municipality to draft the requirements had attempted to prepare neutral specifications before adopting specific brands and models into those specifications. The Inspector General concluded that the consulting contract in question should be rescinded, and that the municipality should develop a plan to better ensure that future specifications are prepared in a manner that is compliant with applicable neutrality standards. The Inspector General also prescribed mandatory training for all municipal employees involved in the design and preparation of tender documents and instructed that those employees responsible for managing external technical consultants advise those consultants of applicable neutrality standards at the beginning of each project.
As these cases illustrate, the failure to manage external consultants can undermine the integrity of a bidding process. 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 or from introducing biased specifications into tender call requirements.
