This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its March 1995 determination in Re Carsen Group Inc., the Canadian International Trade Tribunal ordered the government to award the complainant a contract at its original bid price after finding that the government improperly cancelled a bidding process after unsuccessfully attempting to force the sole bidder to lower its price. The case dealt with a Department of Defence Request for Proposals (RFP) for the supply of borescopes. The complainant argued that the government breached the trade treaties rules by improperly cancelling the process. The Tribunal agreed, finding that the terms of the North American Free Trade Agreement (NAFTA) required the government to award the contract unless it had a valid reason to cancel the process:
The Tribunal is of the view that, on December 21, 1994, the Department was satisfied that the complainant’s offer was the only acceptable offer in terms of technical compliance. In the circumstances, under Article 1015(4)(c) of NAFTA, the Department was obligated, unless it decided that it was not in the public interest, to award the contract to the supplier whose tender was determined to be the most advantageous in terms of the specific evaluation criteria in the tender documentation. Nevertheless, on December 21, 1994, the Department negotiated with the complainant to secure the lower price, even though the lower price clearly ceased to be valid on December 1, 1994, and a higher price was valid at that time. In the Tribunal’s view, the Department was not authorized to initiate negotiations, since the limited circumstances under which negotiations may be conducted, as provided by Article 1014(1) of NAFTA, did not exist in this case.
The Tribunal found that the government’s post-bid attempt to negotiate better pricing was improper and that its cancellation of the bidding process after it was unable to obtain better terms was a breach of the procurement rules. The government was therefore ordered to award a contract to the complainant for the originally bid amount.
