This article is an extract from the 5th edition of Government Procurement.
In its August 2021 determination in Aqua Valley Water v. Canada (Department of Public Works and Government Services), the Tribunal found that the government put the incumbent complainant at an unfair disadvantage by extending its existing contract on an emergency basis and then failing to warn the incumbent that a new bidding process was pending. The dispute involved a solicitation for bottled water at a military base in Nova Scotia. The government extended the incumbent’s existing contract on an emergency basis during the pandemic on multiple occasions but then issued a solicitation for the requirement less than a month after the last extension. The incumbent did not respond to the new solicitation. The incumbent challenged that bidding process, arguing that it was misled by the government’s communications and repeated emergency extensions. The Tribunal agreed, finding that the government’s miscommunications put the incumbent at a disadvantage over other bidders since the incumbent, through the government’s silence, was led to believe that there was no pending new solicitation when in fact the government was already working on the release of the new bidding opportunity:
It is well established that an incumbent supplier should not be provided with a special advantage concerning an upcoming tender, as might be conveyed, for example, by advance notice that serves to place that supplier in a preferential position vis-à-vis other prospective bidders. This would be problematic having regard to Article 503(5)(g) of the CFTA, which provides as follows:
6. Except as otherwise provided in this Chapter, including Article 513, the following is an illustrative list of practices that are considered to be inconsistent with Articles 502.1, 502.2, or 502.3:
. . .
d) providing information to one supplier in order to give that supplier an advantage over other suppliers;
However, just as an incumbent supplier should not be given an advantage, the incumbent should likewise not be placed at a disadvantage.
The Tribunal concurs that PWGSC had no duty to specifically invite Aqua Valley to bid on the RFSO. However, by the same token, it should have taken care to ensure that its statements and actions did not mislead Aqua Valley.
The CFTA requirements of openness, transparency and fairness must be assessed in light of the relevant circumstances. The Tribunal considers the timeline here to be highly relevant.
Aqua Valley’s email of January 6 stated that Aqua Valley was prepared to extend the contract until “some kind of normalcy” was restored. Given that the RFSO was published on February 16, 2021, the Tribunal finds that the preparation of the tender documents was at an advanced stage, if not by January 6, 2021, then certainly by the time that Aqua Valley executed the documents to extend the term of the Prior Contract. Preparation of the RFSO was not handled by Ms. Taylor, but by one of her PWGSC colleagues. Ms. Taylor indicated that she was unaware of the publication of the RFSO. However, there is no evidence stating that she was unaware of the status of the RFSO preparation during her communications with Aqua Valley, given that it was published shortly after the Prior Contract extension was implemented. The Tribunal concludes that the status of the RFSO would have been a prerequisite to the decision that a further extension was needed, which was in turn implemented by means of communication to Aqua Valley.
As such, PWGSC was well aware that contract extension until “some kind of normalcy” was restored was not required. However, it chose to remain silent and not advise Aqua Valley of that fact.
These events must be viewed in their overall context. The first extension was represented to Aqua Valley as being required “due to COVID-19”, as opposed to delays in preparing tender documentation. By early January 2021, the state of emergency that began in Nova Scotia in the spring of 2020 had accelerated to lockdown conditions throughout the province. The Tribunal finds that this was known to both Aqua Valley and to PWGSC.
In view of those circumstances, the Tribunal finds that the correspondence between PWGSC and Aqua Valley can be reasonably taken as communicating that a new procurement for the supply of bottled water to 14 Wing Greenwood was being deferred indefinitely.
Based on the evidence, the Tribunal finds that PWGSC was aware that issuance of the RFSO was well in the works, if not imminent, at least as early as mid-January 2021. Notwithstanding, it did not correct or rebut the premise in Aqua Valley’s email of contract extensions being required until “some kind of normalcy” had returned.
By staying silent, PWGSC placed Aqua Valley at a competitive disadvantage within the framework of the tender. Other prospective suppliers were not privy to the communications between PWGSC and Aqua Valley. As such, unlike Aqua Valley, they had no reason to stop monitoring buyandsell.gc.ca.
Given the lockdown conditions then in effect and the state of the pandemic, the return of “some kind of normalcy” would, at that time, have been understood by a reasonable person as referring to a point in time that was longer than a few weeks. The Tribunal finds that Aqua Valley’s continued willingness to extend the Prior Contract should have served as a reasonable indicator to PWGSC that Aqua Valley had an interest as a prospective bidder on the RFSO. As such, there was an obligation for a tender process that provided neither an advantage or a disadvantage to Aqua Valley or any other prospective bidder.
A correction of Aqua Valley’s obvious misunderstanding of PWGSC’s intentions did not have to rise to the level of extending Aqua Valley an invitation to bid on the upcoming RFSO. Simply advising Aqua Valley that no further extensions would be required and then leaving Aqua Valley to its own devices concerning next steps would have been sufficient. Such an alert would not have conferred an unfair advantage upon Aqua Valley but would have levelled the playing field between prospective bidders.
Aqua Valley might have exercised an abundance of caution by continuing to monitor buyandsell.gc.ca. However, that contingency cannot operate to excuse a procedural deficiency that renders the procurement non-compliant with the trade agreement requirements.
In these circumstances, the Tribunal finds that there was a lack of openness and transparency in the procurement process, which caused consequent unfairness to Aqua Valley. As a result, Aqua Valley was deprived of its capacity to submit a bid in response to the RFSO.
However, since the Tribunal found no evidence of bad faith on the part of the government, it ultimately ruled that terminating the awarded contract or requiring a new bidding process would be disproportionate and limited the complainant’s remedy for the lost bidding opportunity to $2000. While the remedy was nominal in this case, the decision serves as a useful reminder to all purchasing institutions to ensure that they do not mislead incumbents regarding the timing of new tendering opportunities.
