This article is an excerpt from Government Procurement, which is available for purchase.
In its February 2015 decision in Airbus Helicopters Canada Ltd. v. Canada (Attorney General), the Federal Court of Canada rejected the legal challenge of a supplier who alleged that the government’s specifications were biased in favour of a competing supplier. The case dealt with a federal government tender call for a $172 million light-lift helicopter purchase. The applicant, Airbus Helicopter Canada Ltd., brought a judicial review application after it engaged in pre-bid consultations with the government but then refused to bid due to what it alleged were biased specifications.
As the court noted, the case was unique when compared to most other judicial review challenges in that the complainant never actually submitted a bid in the challenged process. One of the key issues in the decision was whether the complainant had the right to initiate a legal challenge in those circumstances. The court ultimately concluded that the applicant did have standing to bring the lawsuit since the government had engaged in pre-bid consultations regarding its requirements. The court found that the government was under a duty to develop fair and unbiased specifications and also found that the government’s market outreach created legitimate expectations that all consulted suppliers would be treated fairly during the consultation process. While the court determined that the government’s specification setting decision was subject to a more deferential reasonableness standard, it also concluded that the consultation process leading up to the creation those specifications was subject to a more stringent correctness standard.
However, notwithstanding the right to challenge the specification setting decision and the process that led to that decision, the court ultimately held that the complainant failed to make its case. With respect to the Minister’s technical decision on the helicopter specifications, the court found the favouritism alleged by the applicant was never proven:
93 Here, the evidence presented in support of the application does not meet the burden. With respect, I could not find in the evidence how the process followed could have been faked or arbitrary. In my opinion, the alleged favouritism was never demonstrated.
94 The Crown presented very strong evidence of a transparent and intelligible process run by the Minister of PWGSC, who had no interest in the matter other than to conduct a request-for-proposals process that satisfied the commitment set out in section 40.1 of the Financial Administration Act. The governance structure, the participation of a number of people and experts, the involvement of several departments and the use of an independent expert (who was not even paid by the CCG) all argue in favour of a framework that provided for reasonable decisions in terms of administrative law. Indeed, the evidence shows that nearly 25 recommendations, some favourable to Airbus, were accepted and resulted in amendments to the technical requirements. We are far from the applicant’s allegation that the Minister refused to reconsider the technical requirements. This is quite simply not the case. The Minister refused to make some of the changes that were requested. That is not the same thing.
As the court determined, the failure to accept a supplier’s request to change specifications in a solicitation document does not automatically equate to an unfair or biased process. In fact, in this case the court found no evidence that the government had overstated its technical requirements to bias the process in favour of the complainant’s competitor:
102 That the applicant was disappointed that some of its recommendations were not adopted is all very well. But that certainly does not make the decisions unreasonable. In fact, I was not convinced that the technical requirements were not based on CCG operational requirements. Quite the opposite. The applicant’s evidence was sorely lacking on this front. This evidence comes down to allegations of bias that never reached the point of demonstrating that the operational requirements were exaggerated. From the outset, Airbus saw that the technical requirements were high and chose instead to address the mission profiles. If these did not match the operational requirements, then the claim could be made that the technical requirements exceeded actual requirements. Unfortunately for the applicant, this was not proved, and it is not possible to draw inferences of this nature from unsupported allegations.
Rather, the court found that the government provided ample evidence as to the fairness and reasonableness of its technical requirements:
113 In any case, if the applicant could argue that the type of use was exaggerated, this might have led to reduced technical requirements that would have made it more competitive. However, the technical requirements were neither unfair, nor unreasonable, nor arbitrary according to the evidence before the Court. Airbus has never demonstrated that the technical requirements exceeded the identified operational requirements. This is consistent with the findings of the independent expert, whose conclusions were not seriously questioned, that these requirements are “reasonable, achievable and fair.” The applicant did not demonstrate that the Minister was unreasonable in refusing to reconsider and modify the technical requirements. Rather, the file points to a systematic review of technical needs, and this is backed by abundant documentation submitted as evidence. Nor was it proven that the request for proposals was tailored so as to favour Bell, since the process followed and its elaborate governance produced reasonable, achievable and fair requirements, according to an independent expert.
Turning to the process undertaken by the government to reach its technical specifications decision, the court confirmed that the government was subject to the strict correctness standard, under which no deference is normally owed to the institution by the reviewing court or tribunal:
114 The other component of the judicial review is the contention that there was a breach of procedural fairness. The standard of review in this area is that of the correct decision (see, among others, Dunsmuir, above, Mr. Justice Binnie at para 129). No deference is normally owed.
However, the court also noted that the degree of procedural fairness owed to an applicant will vary based on the specific circumstances of each situation and the consideration of a five-part test:
The case law is clear that the quality of procedural fairness should vary with the context, the circumstances. Thus, in Baker v Canada (Minister of Citizenship and Immigration),
[1999] 2 SCR 817, the Court developed a framework of analysis for determining the applicable standard. The various elements were helpfully summarized in Congrégation des témoins de Jéhovah de St-Jérôme-Lafontaine v Lafontaine (Village), 2004 CSC 48, [2004] 2 SCR 650, at paragraph 5:
5 The content of the duty of fairness on a public body varies according to five factors: (1) the nature of the decision and the decision-making process employed by the public organ; (2) the nature of the statutory scheme and the precise statutory provisions pursuant to which the public body operates; (3) the importance of the decision to the individuals affected; (4) the legitimate expectations of the party challenging the decision; and (5) the nature of the deference accorded to the body: Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817. In my view and having regard to the facts and legislation in this appeal, these considerations require the Municipality to articulate reasons for refusing the Congregation’s second and third rezoning applications.
Generally speaking, if one were to place the guarantees of procedural fairness along a spectrum, they would be significantly more elaborate where fundamental human rights are being adjudicated, with the other end of the spectrum being occupied by cases in which commercial interests are at play. Here, the discretion conferred on the Minister is considerable. There is no dispute on that front. The consultation that was held was by choice, with no legal obligation. There is no doubt that the Minister must act impartially and in good faith. But this was not an adjudication or a process that can be likened to the quasi-judicial function. In any case, I believe the process followed by PWGSC is irreproachable in terms of procedural fairness. There is no need to elaborate further on the analysis framework, given that in my opinion, PWGSC met its duty of impartiality and procedural fairness in that all participants in the process were treated equally.Therefore, while the court ultimately concluded that the government was subject to a correctness standard in administering the consultation process leading up to the creation of its specifications, it ultimately found that the government met that standard by treating all participants in the consultation process equally.
As this case illustrates, in addition to being subject to legal challenges to its tendering processes, a public institution can also be challenged on the pre-bid technical standard setting decisions it makes to create is tender call documents. In this particular case, the government opened the doors to a judicial review challenge based on allegations of bias and unfairness by initiating a pre-bid consultation process to help in it establish its technical specifications. While a public institution’s decisions on setting technical specifications may be afforded a more deferential reasonableness standard of review that allows the government some latitude in determining its operational requirements, the process used to consult and create those standards can be subject to a more stringent correctness standard that calls for the fair and equal treatment of all consulted parties. While the complainant ultimately failed to prove its allegations of biased specifications, this decision could serve as a significant precedent in the future for suppliers who seek to impugn the specifications established by public bodies in their bid solicitation documents.
