This article is an excerpt from Government Procurement, which is available for purchase.
In its October 2012 determination in Secure Computing LLC v. Department of Public Works and Government Services, the Canadian International Trade Tribunal acknowledged that it generally does not have jurisdiction over the post-award contract administration phase of the procurement cycle. However, it held that where the products delivered under an awarded contract vary from the product specifications set out in the originating solicitation, the acquisition constitutes a new procurement over which the Tribunal does have jurisdiction. The case dealt with the acquisition of networking equipment by the Department of National Defence under a previously tendered and awarded contract. The complainant took issue with the acquisition, alleging that the products provided by the winning proponent varied from the specifications that were set out in the originating solicitation. The Tribunal held that it could claim jurisdiction in post-award situations if during contract administration the delivered products varied from the original specifications:
Despite the foregoing, the Tribunal cannot ignore that PWGSC has admitted that, after the award of the contract to Conexsys, the equipment that was delivered by Conexsys did not comply with the technical requirement pertaining to the requisite number of hard drives. In such situations, the general rule is that, if it becomes known, after the award of the contract, upon delivery of the procured goods, that the latter does not meet a mandatory requirement, the issue then becomes one of contract administration or contract performance and, therefore, does not fall within the Tribunal’s jurisdiction.
However, it is not a simple matter of contract administration if, by accepting products that are different from those that were proposed in a bid and that do not comply with the requirements of the solicitation, the procuring entity effectively initiates a new procurement process with different mandatory criteria without a proper call for tenders. (paras. 47-48, footnotes omitted)
However, in this instance, the Tribunal did not seize jurisdiction over the matter since, after first accepting delivery, the Department of National Defence rejected the goods in question for failing to meet the required specifications:
On August 27, 2012, the Tribunal requested PWGSC to provide additional information and evidence in support of its statements that PWGSC would not, “without objection”, accept products that did not comply with the requirements of the solicitation and intended to require Conexsys to supply products that comply with such requirements. On August 30, 2012, PWGSC provided a confidential and a public response to the Tribunal’s request and filed a confidential document to substantiate its statements concerning the steps that it has taken to enforce the contract. In particular, PWGSC confirmed that it sent a notice of default to Conexsys regarding the contract into which it entered with the Crown and publicly stated that, in the event that the default is not remedied and the contract is cancelled, it would consider the issuance of a new solicitation for the requirement. Subsequently, on September 19, 2012, PWGSC informed the Tribunal that Conexsys had remedied its default and delivered equipment that complied with its initial proposal and the terms of the contract.
In light of this evidence, the Tribunal is satisfied that PWGSC took the necessary steps to enforce the contract that was awarded to Conexsys and that this matter must be treated as one of contract administration or contract performance over which the Tribunal does not have jurisdiction. The facts in this case are distinguishable from those that were at issue in AdVenture Marketing, in that it cannot be said that the procuring entity accepted products that completely contradicted the original specifications. To the contrary, the preponderant evidence indicates that PWGSC ultimately refused to accept the products that were initially delivered.
In view of the foregoing, the Tribunal concludes that, in this case, PWGSC’s did not in effect create a new procurement process or improperly negotiate a sole source contract for a different requirement with Conexsys. This is not a situation in which the procuring entity appears to have changed the original requirements by accepting the delivery of products that did not meet the mandatory conditions set out in the solicitation documents. (paras. 52-54, footnotes omitted)
While in this case the Tribunal did not formally claim jurisdiction over the matter, this case illustrates how, in effect, the Tribunal can and does monitor contract administration to ensure compliance with the original scope of an awarded contract. Public institutions should therefore be careful to avoid any divergence between that initially tendered contract award and the scope of subsequent acquisitions under that contract since this can constitute a breach of the relevant trade treaty open competition requirements and, for federal government entities falling under the Tribunal’s mandate, trigger the intervention of the Tribunal.
