In its January 2023 determination in Cistel Technology Inc. v. Department of Health, the Canadian International Trade Tribunal upheld the government’s decision to cancel an award and retender the requirement due to procedural defects in the original bidding process. The dispute dealt with a request for proposal issued by the Department of Health for information management services. The government cancelled the initial contract award after discovering defects in its pre-bid question and answer process. The initial awardee challenged that decision.
However, the Tribunal upheld that government’s cancellation. While the Tribunal cautioned that “a cancellation clause cannot be invoked in a totally arbitrary manner” it also recognized that “it is incumbent on government institutions to take appropriate steps to rectify mistakes in the procurement process, in keeping with the terms of the solicitation and in a manner that preserves the integrity of the competitive procurement system.” The Tribunal stated that cancellations should only be relied on as a last resort since cancellation and re-tender decisions “should not be taken lightly if there are other options available.”
Turning to the facts of the case, the record indicated that “the Department of Health failed, apparently by oversight, to consistently follow the question-and-answer process it had set out for the solicitation” and that this error was only discovered after the contract award. More specifically, the Tribunal noted that the Department failed to answer a pre-bid question submitted by a losing bidder, which likely affected that bidder’s understanding of the evaluation criteria and potentially affected the content and evaluation of its bid. The Tribunal found that this oversight denied the bidder “an opportunity to participate in the solicitation process on the same terms as other bidders” which “put into question the integrity of the procurement process.”
While the Tribunal noted that the cancellation was not the fault of the complainant, the winning bidder was “not entitled to the award of a contract made pursuant to an unfair solicitation process.” The Tribunal concluded that since the Department of Health only became award of the mistake after the contract was awarded, cancelling the contract and retendering was the “only course of action available.” The Tribunal therefore dismissed the legal challenge. As this case illustrates, public institutions should be careful to ensure that they manage their bidding processes in a procedurally correct manner since procedural defects can undermine the validity of any resulting contract award and can result in unnecessary legal disputes.
