This article is an extract from the 5th edition of Government Procurement.
In its January 2017 determination in L.P. Royer Inc. v. Department of Public Works and Government Services, the Canadian International Trade Tribunal awarded lost profit damages and ordered the government to cancel a contract award and award the remainder of the contract to the complainant after finding that evaluators applied a hidden evaluation stage to improperly disqualify the complainant as non-compliant. The dispute dealt with a request for proposal issued by the Department of Public Works and Government Services on behalf of the Department of National Defence for the purchase of Mukluk boots for extreme cold weather.
The Tribunal determined that the complainant should have been awarded the contract as the top-scoring compliant proposal but was improperly disqualified after the evaluators applied an undisclosed post-field test compliance assessment to the complainant’s sample products:
PWGSC’s position is ill-founded, as PWGSC erred with regard to the sequence of the method and evaluation criteria that it itself set out in the RFP.
As was stated above, the mukluks that had passed Phase 1 and Phase 2 of the evaluation underwent Phase 3 of the evaluation. Phase 3(a) was designed to evaluate quality of workmanship and conformance to the required specifications in Annex B to the RFP, but only “prior to the user trials”[emphasis added, translation] in Phase 3(b), which themselves were used to evaluate the criteria in Annex G to the RFP.
Here, PWGSC attempted to apply a criterion from Annex B in Phase 3(b), whereas only the criteria identified in Annex G are applicable at that stage of the evaluation. According to the RFP, the examination of the mukluks in accordance with the performance specifications in Annex B, including the presence of abrasions, was not supposed to happen after the trials, but before–using samples that had not yet been worn. According to the terms of the RFP, the mukluks could not have been re-evaluated in such a manner after having been subjected to field use.
The sequence of steps in the RFP is clear, and the PWGSC evaluators could not conduct an additional unplanned evaluation at this stage, after the evaluation conducted by the soldiers.
The Tribunal is of the view that the RFP was structured in such a way that the mukluks could not be disqualified on the basis of wear caused during the user evaluation trials. Therefore, PWGSC cannot rely on the reason it invoked for disqualifying Royer–that “following the trials, its boots demonstrated signs of wear exceeding the tolerances outlined in the solicitation” [translation]–precisely because the RFP contained no such criterion or “tolerances”. This is either a case of failure to respect the sequence of steps in the evaluation process or an arbitrary addition of a new evaluation procedure, both cases necessarily being non-compliant procedures.
The Tribunal ruled that the government’s application of a hidden evaluation stage breached the trade treaty rules. The Tribunal determined that the contract that was improperly awarded to a competing bidder should be terminated and awarded to the complainant and that the complainant should be compensated for lost profits for any purchases that were made under the improperly awarded contract. While the government sought a judicial review of this determination, the Federal Court of Appeal dismissed that application in a January 2018 decision after finding that the Tribunal’s determination was reasonable. As this case illustrates, government evaluators should be careful to disclose all of their planned evaluation stages and should avoid using undisclosed criteria and procedures since non-transparent evaluations can undermine the defensibility of any resulting evaluation and award decision.
