This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In most rule-of-law jurisdictions, losing bidders can bring bid protest challenges against government institutions and seek procedural remedies that can include redraft, re-evaluate, rescind, and redirect orders. The following cases provide recent examples of redraft orders that direct the public institution to repair a defect in its solicitation document; re-evaluation orders that require the public institution to fix an evaluation error by conducting a new evaluation; rescission orders that strike down a contract award; and redirect orders that involve the court or tribunal directly re-evaluating the competing bids, and then directing the institution to either revoke the initial contract award and direct it to the complainant, or, in some circumstances, even compensate the complainant for its lost profits.
Process Remedies in the US
Procedural remedies are well established within the United States federal system. For example, in its January 2015 decision in the matter of Smith and Nephew, Inc., the United States Government Accountability Office (GAO) found that the Department of Veteran’s Affairs issued a solicitation with unnecessarily restrictive specifications. The case dealt with a solicitation for sterile wound dressings. The complainant alleged that the required dressing absorption capacity was not necessary to meet the Department’s needs and therefore undermined fair and open competition. Rather than explaining how the requirements were geared to actual needs, the Department maintained that its goal was to “procure the most absorbent and fluid-handling capable dressings available” and therefore selected a “top tier” product. The GAO found that the Department had the onus of establishing that the requirements reasonably met its needs and that it failed to meet that onus. Further, the GOA found that in developing its restrictive specifications, the Department ignored the market information it had collected in a prior Request for Information (RFI) process. The GAO directed the Department to engage in an internal review process that properly documented its product requirements and to redraft revised Request for Quotations (RFQ) specifications that were appropriately aligned to those needs.
Similarly, in its December 2016 decision in Xtreme Concepts Inc, the GAO ordered a re-evaluation after deciding that the Army had unfairly evaluated the complainant’s lack of past government experience. As the GAO noted, the relevant federal acquisition regulations and Request for Proposals (RFP) rules called for a neutral evaluation score when a bidder had no record of relevant past performance with the government. However, the GAO found that the complainant was improperly rejected on past performance grounds even though it offered the lowest cost and its overall score was higher than an accepted competing bidder. The GAO therefore ordered a re-evaluation of the unfair contract award process.
In another recent example of a successful challenge, in its February 2017 decision in Pitney Bowes, Inc., the GAO ordered the redraft of a solicitation document after finding that the government failed to justify the challenged specifications. The case dealt with an RFQ for mail inserter/folder machines that could be reloaded “on the fly” and could handle all types of envelopes. The complainant challenged the specifications as unduly restrictive and asserted that they constituted a de facto sole-source. The GAO agreed, finding that the government failed to establish that the specifications were reasonably necessary to meet its operating needs.
Finally, its November 2017 decision in Global SuperTanker Services, LLC., the GAO ordered the redraft of a solicitation after finding that the government was unable to defend the challenged specifications. The case dealt with an RFP for airtanker services for wildlife firefighting. The complainant challenged the government’s 5000- gallon maximum size restrictions, arguing that it unduly limited competition. The GAO agreed, noting that the government had the onus of justifying restrictive specifications and stating that after reviewing the record it was “unable to conclude that the specifications included in the RFP [were] necessary to meet the agency’s needs.”
These procedural remedies are also available at the state level in the US. For example, in its July 2009 decision in Textron Inc., the Office of the New York State Comptroller rejected a contract award by the Department of Parks and Recreation due to branded specifications. The dispute involved a solicitation for 50 electric golf carts that named a specific manufacturer. The Department defended the specifications on the basis that the branded golf carts came with lighter aluminium frames, which caused less wear and tear on the golf course. The Comptroller disagreed, finding that the Department was unable to provide any empirical evidence to support its claim regarding the branded technical specifications. The contract award was denied.
Further, in its September 2010 decision in Robert Konefal, the Office of the New York State Comptroller rejected a Department of Environmental Conservation contract award due to unnecessarily restrictive prior experience requirements. The dispute involved an Invitation for Bids (IFB) for a cafeteria and cocktail lounge concession. The solicitation required five years’ experience over the last ten as a concessionaire. This led to only one responsive bid. The Comptroller ruled that the requirement of experience as a concessionaire, as opposed to general food and beverage experience, was unnecessary since other state contracts did not contain that same requirement. The contract award was rejected.
In its May 2014 decision in C&H Industrial Services, Inc. v. City of Vineland, the Superior Court of New Jersey struck down the City of Vineland’s power plant contract award after finding that the winning bidder, Infrastructure and Industrial Energy, LLC, failed to comply with applicable ownership disclosure rules. As the Court noted in its decision, the New Jersey Local Public Contracts Law required bidders to disclose the names and addresses of all partners or owners who hold a ten percent or greater ownership stake in their partnerships or corporations. The Superior Court found that the ownership information submitted by the ownership group was incomplete and that this omission rendered that selected bid non-compliant and legally incapable of acceptance. The Court concluded that the municipality could not waive the non-disclosure and accept the bid in question, since permitting a municipality “to waive non-compliance under such circumstances would subvert…the strong public policy underlying compliance with the disclosure statute.” On these grounds, the Superior Court upheld a prior trial decision that struck down the contract award as legally void.
In its January 2018 decision in Re: Motor Vehicle Commission Surcharge System Accounting and Billing Services, the Superior Court of New Jersey struck down a contract award after finding that the winning bidder submitted a counteroffer in its bid that rendered it non-compliant and incapable of acceptance. The dispute dealt with an RFP for a new billing and collection system that manages motor vehicle charges under applicable state laws. The contract was awarded by the New Jersey Motor Vehicle Commission (MVC) Division of Purchase and Property (named as the Division in the decision) to Gila, LLC, doing business as Municipal Services Bureau (MSB). The award was challenged by the losing incumbent, Xerox State & Local Solutions, Inc., on the basis that MSB’s pricing form contained conditions that rendered its bid non-responsive. The Court agreed that the bid was materially non-compliant due to its variations from the pricing required in the RFP. The Court concluded that MSB “hedged its bets” on a key pricing element relating to the recovery of transaction costs and the “Division impermissibly allowed MSB to do so without affording the same flexibility to the other bidder, Xerox”. The Court concluded that the process was flawed, as Xerox was not afforded an equivalent opportunity to submit a “hedged bid”, and the outcome was flawed because the contract was awarded to a non-compliant bidder. It therefore ordered that the contract be retendered.
In its May 2018 decision in the Matter of Employee Benefits: Pharmacy Benefit Management Contract, the New Jersey Superior Court struck down a $6.7 billion contract that was awarded to a non-compliant conditional bid. The case dealt with an RFP for the provision of pharmacy benefit services that was awarded to a $6,692,234,901 bid proposed by Optum Rx, Inc. The award was challenged by a losing bidder who claimed that the winning bid contained material price adjustments that rendered the bid non-compliant and resulted in an unfair process for the other bidders. The Court agreed. The Court found that by “carving-out” certain price conditions, the winning bidder was allowed to avoid the future price variation risks that were part of the tendered contract. This gave the bidder an unfair advantage over other bidders who had to accept those future price risks. The Court ruled that these conditions rendered the bid non-conforming and legally incapable of acceptance and, despite the government’s assertions that the new contract would save the state $1.6 billion, ordered the government to retender the contract due to irregularities in the award.
Finally, in its December 2018 decision in Active Network, LLC v. The Department of Central Management, the Fourth District Appellate Court of Illinois rejected a supplier’s challenge to a bidding process since that supplier never submitted a bid and therefore had no legal standing to challenge the process. The dispute dealt with a Request for Proposals (RFP) issued by the Department of Central Management seeking a statewide single portal online permit and licensing solution for the State of Illinois. As the Appellate Court noted, at the time of the RFP, Illinois had more than 50 individual or business license and permit applications that it sought to streamline through the new procurement process. The complainant brought a legal challenge alleging that the RFP circumvented applicable competitive bidding rules since it lacked the necessary specificity to inform bidders as to the scope of the work to be performed. A lower court rejected that challenge, ruling that the complainant lacked legal standing to bring the action since it never submitted a bid and failed to file a timely application to challenge the process. The Appellate Court agreed with the trial court, noting that under the Illinois Procurement Code, the determinations of the chief procurement officer are “final and conclusive unless they are clearly erroneous, arbitrary, capricious, or contrary to law.” The Appellate Court found no reason to revisit the government’s original contract award decision or the trial court’s prior rejection of the complainant’s legal challenge and dismissed the appeal.
As this case illustrates, while suppliers may have bid protest rights, there are certain conditions that apply to the exercising of those rights.
While some bid protest systems compensate successful complainants for bidding costs and complaint costs, lost profit damages are generally not available in the US bid protest systems.
European Procedural Remedies
Losing bidders in the European Union also have access to procedural remedies for breaches of the European procurement Directive based on enforcement mechanisms established at the national and European Union level. For example, in its January 2016 decision in Ostas celtnieks SIA v. Talsu novada pašvaldība, the European Court of Justice ruled that a Latvian municipality’s requirement that contractors enter into prescribed co-operation agreements with their subcontractors was unnecessarily restrictive and contrary to the European procurement Directive. The case dealt with a road repair contract. The bidder successfully challenged the cooperation agreement requirement since the Court found that under European law, “the tenderer is free to choose…the legal nature of the links it intends to establish with the other entities on whose capacities it relies in order to perform a particular contract.”
Furthermore, in its February 2018 decision in Lloyd’s of London v. Agenzia Regionale per la Protezione dell’Ambiente della Calabria, the European Court of Justice struck down an Italian anti-bid-rigging law as unnecessarily restrictive, ruling that bids could not be rejected unless there was unambiguous evidence of collusion. The case dealt with a tendering process initiated by Agenzia Regionale per la Protezione dell’Ambiente della Calabria, an Italian institution, for the provision of insurance services. Two different syndicates, who were both owned by the UK firm, Lloyd’s of London, submitted bids signed by the same agent. Those bids were rejected based on Italian anti-collusion laws. Lloyd’s challenged this disqualification, arguing that the two syndicates were acting independently and dismissing the fact that both bids were signed by the same agent as a mere formality that was permitted under United Kingdom law. While the two bidders formed part of the same legal entity and had their bids signed and submitted by the same supervising agent, the European Court of Justice ruled that this alone was insufficient evidence of collusion to justify the automatic rejection of their bids. The Court ruled that the Italian anti-collusion law, which called for the automatic disqualification of bidders in these circumstances without actual evidence of collusion, was unnecessarily restrictive to competition and contrary to the European procurement rules.
Some European jurisdictions also allow for financial compensation for bidding costs and complaint costs and, depending on the rules of each specific country, may also allow for lost profit damages, but those remedies are generally far more remote and rare across the continent when compared to well-established procedural remedies.
Rescission, Re-Evaluations, and Redirects in South Africa
The courts in South Africa have a long history of granting procedural remedies to losing bidders due to irregularities in the government tendering process. For example, in its 2011 decision in Sanyathi Civil Engineering & Construction v. Thekwini Municipality, the Kwazulu-Natal High Court in South Africa struck down a government contract award for the construction of a 50-kilometre pipeline after determining that the tendering process was tainted by irregularities in the tender evaluation weightings. The Court found that the evaluation scheme was inconsistent with the governing statutory framework and therefore legally invalid. As the Court explained, “procurement law is prescriptive precisely because the award of public tenders is notoriously prone to influence and manipulation.” It ordered the government to cancel the contract award as a procedural remedy. This case is an example of the rescission remedy, which results in the voiding of contract that was awarded based in improper procedures.
In its April 2016 decision in Afri-Infra (Pty) Ltd v. City of Tshwane Metropolitan Municipality, the High Court of South Africa set aside a contract award for civil engineering services and ordered a re-evaluation after finding serious flaws in the initial stages of the bid evaluation process. While the complainant had asked the Court to conduct its own re-evaluation and then redirect the contract award to the complainant, the Court declined that further relief. The Court cited the technically complex nature of some of the later stages of the government’s evaluation process as a reason for directing a government re-evaluation rather than granting a substitute order based on its own re-evaluation.
By contrast, in its December 2015 decision in Cape Book and College Supplies t/a University Bookshop v. Northlink TVET College, the High Court of South Africa conducted its own re-evaluation and granted a substitute order that directed a college bookstore to rescind its original contract award and redirect that award to the complaint since the original contract was improperly awarded to a non-compliant bidder. While the Court expressed reluctance in granting a substitute order that replaced the public institution’s evaluation decision with its own decision, it found that in the circumstances the redirect remedy was appropriate since the original contract to the non-complaint bidder was invalid and the complainant had submitted the best compliant bid.
Finally, in its July 2017 decision in Passenger Rail Agency of South Africa v. Swifambo Rail Agency (Pty) Ltd., the High Court of South Africa struck down a contract award after determining that the multiple irregularities in the tendering process were a manifestation of corruption, collusion, or fraud. The case dealt with a contract award for the sale of 70 train locomotives. The Court found that the specifications were biased toward the winning bidder and that the contract terms were improperly changed from a lease to a purchase during the tendering process. The Court also found that the winning bidder’s tender was non-compliant and was inappropriately rescored to enable the tainted award.
While the South African courts are highly interventionist with procedural remedies, they do not appear to recognize lost profit remedies for losing bidders.
Redirects and Lost Profits in the UK
Both procedural and lost profit remedies are available to losing bidders in the UK under the procurement regulations. It should be noted that lost profits under the UK rules are no longer contingent on the creation of a Contract A process contract since they are now recognized in the statutory framework; therefore, they cannot be circumvented by avoiding that process contract as would otherwise be possible in jurisdictions where lost profit claims are based on common law rules rather than statutory remedies.
For example, in its July 2015 decision in Woods Building Services v. Milton Keynes Council, the High Court of Justice of England and Wales conducted a re-evaluation after finding flaws in the initial evaluation and award decision for a municipal asbestos removal contract. The Court found that government evaluators committed manifest errors in their review of the bids. The Court adjusted the score of the top bid from 94 to 64 and increased the complainant’s score from 88 to 94. However, notwithstanding its intervention in the evaluation process, the Court refused to reverse the municipality’s contract award decision and instead decided to award the complainant its lost profits as an alternative statutory remedy. This case in an example of a redirect remedy, with lost profits serving as an alternative to directly awarding the contract to the complainant.
By contrast, in its May 2018 decision in MLS (Overseas) Limited v. The Secretary of State for Defence, the England and Wales High Court of Justice – Technology and Construction Court struck down a flawed contract award and ordered the government to redirect the award to the complainant. The case dealt with a tendering process for the award of a port services contract. The complainant brought a legal challenge after it lost that bidding process, asserting that the government improperly rejected its tender as non-compliant when it should have been awarded the contract as the best compliant bidder. The Court agreed. While the complainant was entitled to its lost profits as a statutory remedy under the applicable bid protest rules, it instead sought the actual award of the contract since losing that work would have a detrimental impact on its larger business operations. The Court granted that redirect remedy, striking down the contract awarded to the competing bidder and directing the government to award the contract to the complainant instead.
In addition to these statutory remedies, bidders in the UK also have access to common law procedural and lost profit remedies based on administrative law judicial review precedents and commercial law Contract A process contract principles.
Judicial Review in New Zealand
The availability of procedural remedies is more complex in New Zealand, where those remedies are governed by common law principles rather than statutory rights. For example, in its June 2016 decision in Mita Michael Ririnui v. Landcorp Farming Limited and The Attorney General, the Supreme Court of New Zealand recognized that common law procedural remedies may be available against government contracting decisions in New Zealand. While the Court ultimately refused to grant a remedy in a dispute over a cancelled tendering process involving complex parallel land treaty claims, it cited existing New Zealand and UK case law that recognized the applicability of judicial review remedies against government commercial contracting decisions involving fraud, corruption, or bad faith. The Court also recognized potential judicial review remedies where contracting decisions are not strictly commercial but involve a “substantial public element.”
By way of illustration, in its July 2015 decision in Problem Gambling Foundation of New Zealand v. Attorney General, the High Court of New Zealand struck down a contract award after finding flaws in the government’s evaluation and award process. The dispute dealt with an RFP for treating problem gamblers. As this case detailed, the use of undisclosed criteria, unsound processes, and improperly documented procedures can prove fatal to the ultimate defensibility of government contract award decisions. However, in its December 2016 appeal decision, the New Zealand Court of Appeal overturned the trial decision. While the trial court took issue with how the government used an undisclosed “moderation stage” to change proponent scores, the Court of Appeal found that the trial court was overly interventionist in its review of the evaluation process. The Court of Appeal also found that the moderation stage did not breach the procurement rules.
The Court of Appeal was also careful to distinguish the Ririnui decision, which involved the special circumstances of land claim settlement issues that triggered a more expanded approach to judicial review in the challenged tendering process, from the less interventionist approach set out by the Privy Council in its 1994 decision in Mercury Energy Ltd v Electricity Corp of New Zealand Ltd. In adopting a non-interventionist approach to government procurement, the Court of Appeal ultimately concluded that the electoral process, as well as other existing oversight mechanisms, including complaints to the Ombudsman or Auditor-General, created sufficient checks and balances in the area of government procurement so that an expanded approach to the judicial review of government procurement decisions was unnecessary. The Court of Appeal therefore overturned the trial court’s decision since there was no evidence of bad faith, fraud, or corruption in the moderation stage used by the government in the challenged RFP process.
As this case illustrates, the outcome of bid protest challenges can turn on the scope of judicial review applied by the reviewing body. Where the courts adopt a non-interventionist approach to the judicial review of government procurement decisions, this puts those decisions at a lower risk of successful challenge when compared to jurisdictions that have adopted an interventionist approach to judicial review or have created statutory bid protest regimes.
However, while the New Zealand courts appear to be adopting less interventionist approaches to the judicial review of government contracting decisions, lost profit damages are available in that jurisdiction under the common law Contract A process contract in situations where public entities run a bidding process under those process contract rules.
Canadian Process Remedies
In contrast to New Zealand, Canada is a highly interventionist jurisdiction for procedural remedies. These remedies are available both as statutory bid protest remedies at the federal level and common law judicial review remedies at both the federal and provincial levels. Some provinces also have additional procedural remedies available under regional trade treaty arbitration proceedings.
At the federal level, the Canadian International Trade Tribunal has the statutory power to grant both procedural and monetary remedies. Its procedural remedies include redraft, re-evaluation, rescission, and redirect orders. The Tribunal can also order financial remedies to losing bidders for bidding costs, complaint costs, and lost profit damages.
For example, in its November 2016 determination in Springcrest Inc. v. Department of Public Works and Government Services, a dispute over a frigate pump RFP, the Tribunal issued a redraft order after finding that the Department of National Defence had imposed unfair timing requirements for alternate product certifications. The Tribunal found that the timing requirements were unfair since they required the testing of alternate products prior to bid closing. It therefore ordered the Department to redraft the solicitation to remove the testing requirement or to permit more time to obtain the required certifications.
As in the UK, lost profit remedies are also available at the federal level in Canada, based on statutory enforcement mechanisms. For example, in its June 2018 determination in ALS Canada Ltd v. Statistics Canada, the Canadian International Trade Tribunal rendered one of its first rulings under the Canadian Free Trade Agreement (CFTA) and the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). The case dealt with a direct award for the provision of municipal wastewater testing for evidence of cannabis consumption. The government issued an Advanced Contract Award Notice, as required by the procurement rules, announcing its intention to directly award the contract instead of putting it out to tender. The government maintained that the awardee was the sole provider of the required testing methodology and that the services were required on an urgent basis, as Statistics Canada needed data of cannabis levels prior to legalization to acquire the pre-legalization data to support before-and-after statistics.
The Tribunal rejected the government’s assertions of only one available service provider who could perform the required sampling, finding that the government failed to prove that the testing performed by the selected service provider was the only available test method, or that other available test methods could not achieve the required results. Furthermore, the Tribunal found that the requirements did not fall under the trade treaty extreme urgency exceptions that permitted direct awards since the requirements were foreseeable in advance. The complainant was therefore awarded its lost profits for being denied an opportunity to compete for the contract award.
At both the federal and provincial levels, the Canadian courts have also been highly interventionist in recent years in granting common law judicial review remedies. For example, in its April 2015 decision in Rapiscan Systems Inc. v. Canada (Attorney General), the Federal Court of Appeal upheld a February 2014 Federal Court of Canada trial decision that struck down a contract award by the Canadian Air Transport Security Authority (CATSA) after finding that CATSA relied on hidden criteria to reject the complainant and award to the incumbent supplier. The bid dispute dealt with a tendering process for the purchase of airport security screening equipment. While the trial court agreed that the challenged tendering process was not subject to a commercial law Contract A lost profit claim, it ruled that the commercial decisions of CATSA could still be challenged by judicial review under administrative law proceedings. The trial court ruled that CATSA’s contracting decision contained a sufficient public interest element to justify judicial scrutiny, and determined that reliance on a hidden evaluation factor was fatal to the fairness and defensibility of the resulting contract award, which it struck down as unlawful. CATSA appealed the decision. However, the Federal Court of Appeal agreed with the trial court in finding that that the non-Contract A bidding process remained subject to challenge by way of judicial review. In fact, the Appeal Court ruled that the government remained subject to a strict procedural correctness standard of review in its procurement decisions and that the award, which was based on non-transparent technical criteria, breached the applicable due process duties and invalidated the contract award.
More recently, in its January 2019 decision in Murray Purcha & Son Ltd. v. Barriere (District), the British Columbia Court of Appeal determined that the District of Barriere did not breach its tendering duties in the evaluation and award of a contract. The case dealt with a non-Contract-A RFP for winter road maintenance services. A losing bidder brought an application for judicial review, challenging the validity of the evaluation and award process. The Court ruled that the RFP did not create a Contract A contractual duty of fairness that would give rise to a commercial lost profit remedy claim by a proponent. However, the Court ruled that even if no Contract A was created to give rise to a lost profit claim, government procurement decisions remain subject to two different standards of review under administrative law. As the Court of Appeal determined, procedural decisions are subject to the strict standard of procedural correctness, whereas substantive decisions are subject to a more deferential reasonableness standard.
As this case illustrates, while Canadian sub-federal public institutions can conduct their competitive bidding processes without creating the Contract A process contract and can thereby avoid exposure to a lost profit claim, those institutions remain subject to potential judicial review challenges whereby losing proponents can seek procedural relief that could include, among other non-monetary remedies, a re-evaluation order or the quashing of a contract award. However, to win an administrative law remedy, an applicant must convince the court that the contract award decision was procedurally or substantively unsound, which it failed to do in this case.
Procedural remedies also apply within some Canadian provinces based on regional trade treaty enforcement mechanisms. For example, recent bid protests under the regional New West Partnership Trade Agreement (NWPTA) have brought greater attention to the sole-sourcing and prequalification practices of Alberta municipalities. In an April 2017 ruling in PMH Insights Inc. v. Parkland County, an arbiter found that the County’s software sole-source breached the NWPTA. The dispute dealt with the direct acquisition of management software. The award was challenged by another software provider. The County maintained that the acquisition fell under the open tendering thresholds, however, the arbiter ruled that the County failed to properly document its expenditure to establish that the award fell below the thresholds. The arbiter found the County in breach of the treaty and ordered the County to pay the complainant $10,000 in fees and costs.
Similarly, in a March 2018 ruling in Parkland Geotechnical Consulting Ltd. v. The City of Red Deer, an arbiter found that the municipality breached the NWPTA by introducing unnecessarily restrictive conditions in a pre-qualification process for land development consulting services. The arbiter ruled that reducing the prequalification list to only five consultants and extending the duration of the closed framework arrangement to five years was too restrictive to competition and was therefore in violation of the trade treaty. The arbiter directed the municipality to rectify the breach and ordered it to pay the complainant $28,000 in fees and costs.
In its January 2019 decision in B&G Sprinklers Ltd. v. Her Majesty the Queen, the Court of Queen’s Bench of New Brunswick rejected a losing bidder’s judicial review challenge after finding that the challenge was raised after the relevant limitation period. While the Court recognized that the government’s contract award decisions were subject to legal challenge under the statutory and regularity framework established in New Brunswick, the Court also ruled that those challenge rights were subject to a three-month limitation period and that the bidder failed to file its claim within that period. The action was therefore dismissed before the merits of the challenge to the evaluation process could be considered.
Similarly, in its January 2019 decision in Leading Edge Geomatics Ltd. v. Service New Brunswick, the Court of Queen’s Bench of New Brunswick recognized the right to challenge government evaluation decisions under applicable statutory frameworks, finding that the government was not immune from judicial review challenges to its procurement processes. The dispute dealt with a Request for Proposals (RFP) issued by Service New Brunswick (SNB) for aerial surveying services. A losing respondent brought a judicial review challenge, alleging that the evaluation and award process was conducted in an unfair manner and seeking to strike down the contract award. The Court ultimately concluded that the government’s evaluation process was reasonable. As the Court stated “SNB, at all material times, fulfilled the requirements of fairness and transparency in the procurement process”, that “all prospective bidders received the same RFP documents and information”. The Court also noted that the complainant’s pricing was “exorbitantly high” and that “the evaluation committee gave appropriate credit to both the applicant and respondent in both the technical portion of the evaluation and the pricing portion.” In so ruling, the Court found that “SNB meets the threshold of justification, transparency and intelligibility” and the judicial review challenge was therefore dismissed.
Conversely, in its June 2019 decision in Wauzhushk Onigum Nation v. Minister of Finance (Ontario), the Ontario Superior Court of Justice – Divisional Court, ruled that the government institution’s decision to proceed to tender and its contract scoping decisions were policy and commercial decisions that were not subject to judicial review. The dispute dealt with decisions made by the Ontario Lottery and Gaming Corporation (OLG) to privatize casino operations and award those outsourced contracts pursuant to competitive bidding processes. A member of a bidding consortium brought a judicial review application, challenging a series of OLG decisions in relation to that bidding process. However, the Court ruled that the decisions of the provincial government and the OLG regarding the privatization of casino operations were policy decisions that were not subject to judicial review. Furthermore, the Court ruled that the scoping decisions that bundled the contract opportunities together for award were commercial decisions that were also beyond the scope of judicial review. Finally, the Court ruled that even if those decisions were justifiable, they did not breach any procedural fairness duties owed to the applicant. The complaint was therefore dismissed.
As this case illustrates, the scope of government procurement judicial review challenges remains a complex and situation-specific question of fact and law and is subject to ongoing jurisprudential evolution. While the overall trend appears to be moving toward more oversight and judicial intervention, this trend is not absolute, and open questions remain regarding the scope of judicial review in government procurement decisions.
The above-noted remedies are in addition to the common law commercial lost profit remedies that are also available against public institutions across Canada when those institutions use the Contract A process contract rules to run a tendering process.
The Rise of Australian Process Remedies
While many jurisdictions recognize procedural remedies in their government procurement systems, other legal systems have historically failed to recognize judicial review remedies against government procurement decisions. For example, in its November 2016 decision in Aurukun Bauxite Development Pty Ltd. & Anor v. State of Queensland, the Supreme Court of Queensland maintained Australia’s non-interventionist approach to the judicial review of government contracting decisions. The case involved a tendering process for a bauxite resources development project. A losing bidder brought an application for judicial review to legally challenge the process. The Supreme Court cited prior Australian case law that recognizes government contracting as “governed entirely by the law of contracts, not by the statutes” and concluded that the Judicial Review Act did not apply to the government’s bidding process. It therefore dismissed the case.
Yet, notwithstanding the above, in May 2017 Australia’s government introduced the Government Procurement (Judicial Review) Bill 2017 for second reading in Australia’s House of Representatives. As the responsible Minister noted, the new law will “establish an independent and effective complaints mechanism for procurement processes that will be consistent with obligations in the World Trade Organization Agreement on Government Procurement, as well as the Trans-Pacific Partnership.” The new bid enforcement regime will give Australia’s federal court the power to grant injunctions or payment of compensation for contravention of the Commonwealth Procurement Rules. This means that losing bidders in Australia will soon be able to seek redraft, re-evaluation, rescind, and redirect remedies against public institutions. Those remedies will be in addition to the lost profit remedy that is recognized in Australia under the Contract A process contract, but rarely applied in practice since government institutions appear to largely avoid those tendering rules in order to avoid lost profit risks.
Final Considerations: Global Convergence
While the availability of procedural remedies will vary depending on the jurisdiction, in most Commonwealth jurisdictions, losing bidders can seek procedural remedies based on statutory or common law rules, or both. In this era of global convergence, many jurisdictions are aligning their statutory bid protest systems with those that are common across Europe and throughout the United States at both the federal level and across most state-level procurement systems. These increasingly similar bid protest remedies form part of a larger body of common core global standards that are integrating global procurement systems worldwide.
